Compliance and Ethics in Review: September 7, 2018

The Latest and Greatest Industry News

Examining the ethics of secret recordings, how inclusive workplaces bring economic benefit, the rise of financial fraud in Asia, and more.

Each week, Convercent highlights some of the top stories and most newsworthy events in the ethics and compliance industry. The focus is global, but you might be surprised by how relevant these stories are, both across borders and businesses.

Bugged At Work: How Secret Recordings Are Changing The Workplace

Secret workplace recordings

Is it ok to record someone with or without their knowledge at work? Legally, the answer varies between states. And in some cases, like with Omarosa Manigault Newman, a former presidential adviser who says she recorded multiple conversations at the White House, there are federal rules that might also apply. Additionally, whistleblower protections, labor laws and free speech laws could also be relevant. So the short answer is, it’s complicated.

While some advocate for surreptitious recordings to prove misconduct, others say it’s a violation of trust and could change the organization’s dynamic. See how secret, or acknowledged recordings could affect the workplace as a whole.

Barnes & Noble Says Former C.E.O. Demos Parneros Was Fired for Sexual Harassment

Barnes & Noble fires CEOThe bookseller didn’t say much when they fired their chief executive officer, Demos Parneros, last month. Recently, however, Parneros filed a lawsuit against Barnes & Noble claiming defamation and breach of contract. While he contends that he was fired without warning, the company has said that he was terminated because of “serious sexual misconduct.”

This ongoing story relates to a rising number of ousted CEOs following ethical lapses. According to a 2017 study on CEO departures, the number of CEOs forced out for ethical lapses went up from 3.9% to 5.3% from one five-year period to the next, an increase of 36%.

Balliett named director of Center for Character, Conscience, and Public Purpose 

Tim Balliett, Penn State University

Penn State has named Tim Balliett, University ethics officer, as the first director of the Center for Character, Conscience, and Public Purpose. The center provides programs and services that challenge students to reflect on topics around personal conscious and character, while giving them the understanding, motivation and skills that reflect responsible citizenship. The center works to fulfill Penn State’s land-grant mission of preparing engaged citizens and enhancing the University’s general education learning objective of social responsibility and ethical reasoning.

Penn State’s Center will prepare students for thoughtful and committed ethical leadership in effort to advance the public good and a sustained and successful democracy. Damon Sims, vice president for Penn State Student Affairs says, “A sustainable and successful democracy fundamentally requires morally discerning and engaged citizens.”

Fifty years of economic history proves that inclusive workplaces make  us all richer

Inclusive workplaces

Economists are attempting to quantify the benefits of reducing barriers for women and people of color in high-skilled professions, perhaps for the first time. While the results are not yet published, they have been reviewed by top economists. The study found, “that improved access to high-skill jobs for women and people of color accounts for around 25% of all economic growth from 1960 to 2010 – GDP per person increased by about 2.5 times over that period.”

Improved educational opportunities and reduced employer discrimination were large factors in the increase of economic growth. With that said, there are still obvious issues preventing an equal allocation of talent. If education was fully equal and discrimination were to disappear, researchers estimate the U.S. GDP per capita would grow by another 15-25%, thereby making everyone better off.  

White House ethics lawyer leaving

White House turnoverStefan Passantino, the deputy White House counsel overseeing compliance and ethics issues, is leaving his post along with White House counsel Don McGahn. Ethics lawyer, Passantino’s duties included offering ongoing ethics and legal compliance training and assistance for both new, and current, executive office staffers. Among other responsibilities, Passantino also helped staffers complete required financial disclosure forms.

Passantino’s departure comes after months of him telling family and colleagues that was looking for ways to serve the president outside of the White House. Many of the ethics and compliance matters he was responsible for will now be handled by two White House staffers who worked with Passantino previously.

Economic crime in Malaysia on the rise, says PWC survey

crime in MalaysiaBusiness conduct/misconduct took the top spot in PwC’s Global Economic Crime and Fraud Survey in Malaysia in 2018. Asset misappropriation, bribery and corruption also fill the top spots of the survey. While economic crime in Malaysia has risen over the last two years, it remains consistent with the global trend.

Seventy-five percent of respondents had a formal business ethics and compliance program in place. PwC Malaysia Managing Partner, Sridharan Nair said, “for such measures to be effective, C-suite executives themselves should encourage employees to speak up and report dishonest behaviors without fear.”