Compliance

In all of the cases before the scandal, the companies stated that they were complying with laws and regulations applicable to them. All of the companies had some focus on compliance at the time when their respective corruption cases were exposed. In Siemens’ case, for instance, they had one compliance officer and his job description was to review any reported misconduct. Though it can be argued that in a big company like Siemens this should not be a one-person job. At the time, Siemens did not have employee training in compliance or a whistleblower scheme in place. Daimler, Yara, and GSK all had similar measures before the scandal. They had compliance departments, whistleblower schemes, and training programs in compliance and the companies’ Code of conduct. Telia had a whistleblower scheme and training program, but no mentions of a compliance department. Thus, it can be seen that all of the companies had some sort of compliance measures before the scandal.

After accusations of corruption, we found from the mentions in the annual reports (table 21) that all of the companies except GSK, increased focus on compliance. The reason for the decrease in mentions from GSK could be that they had one of the best compliance measures before the scandal, and already mentioned it many times in their annual report at that time. The biggest jumps in mentions are from Siemens and Telia, which can be rationalized as they were the two companies that did not have all three measures, that is, compliance department, whistleblower scheme, and a training program, like the other companies had before the scandal which could result in them applying even more focus than the others.

All of the companies responded by improving their compliance departments. Telia, the only company with no compliance officers or department before the scandal, established a new ethics and compliance office.

Siemens, as mentioned before, only had one person serving as their compliance officer and implemented a compliance department. Daimler, GSK, and Yara all increased their number of compliance officers.

All companies, except GSK, responded by increasing training for their employees. Siemens, the only company that did not have employee training before the corruption, developed an employee training program on compliance and their Code of conduct. The other three companies all improved their training measures, with Daimler and Telia implementing e-learning tools to make it easier for all employees to access, no matter where they operated. Siemens, the only company that did not have a whistleblowing scheme before the scandal, implemented one as a response. Hence, at that point, all of the companies had a whistleblower scheme as part of their measures.

All the companies implemented or improved their anti-corruption guidelines and created a statement on zero-tolerance of corruption. Three of the companies hired specialists to assist with the new compliance programs, two of these companies started evaluating each of their markets depending on the level of corruption. Siemens mentioned especially that all these increases in measures were because of the accusation of corruption, which then eliminates the changes being because of some other reasons.

GSK was the only company to mention a change in its incentive system. The reason for that can be that they operate in the pharmaceutical industry and had before the scandal paid sales representatives compensations for how many drugs they sold, which could create incentives for bribery. Thus, by eliminating that they reduced the risk of bribery from sales representatives. In addition to changing their incentive system, their employees had to send expense statements through the compliance department for approval.

When looking at the long-term responses of the companies and their mentions in the annual reports (table 21), it can be seen that only Siemens reduced the mentions of Compliance in their annual report, though it is still significantly more than they had before the scandal. All other companies increase, with Daimler increasing the most. Hence, as a long-term response, most of the companies continued to increase their focus on compliances.

As a long-term response, all of the companies continued to state their zero-tolerance towards corruption and that they were complying with all laws and regulations no matter where they operate. There was no noticeable decrease in focus on compliance, on the contrary, it is now easier to find all of their compliance statements and measures on the companies’ websites.

The companies have all continued to improve their compliance systems, training programs, compliance guidelines, and whistleblower schemes. GSK, the only company that did not respond in the short-term with a training program, implemented a new training program in the long term. Moreover, they created a Compliance Academy where they train employees to become certified compliance professionals.

Summary

It can be seen that the companies responded in a very similar way and there are more similarities than differences. As a short-term response, their focus on compliance increased considerably. The companies expanded their compliance departments and the company that did not have one before established one.

They created compliance guidelines and created zero-tolerance statements towards non-compliant behavior.

Three companies hired specialists to assist with the new compliance programs. Furthermore, as a short-term response, most of them improved or implemented training for employees and whistleblower schemes. The biggest difference was with GSK, who did not implement compliance training for employees. Moreover, they differentiate themselves by changing their incentives system, the reason for them differentiating themselves is that their corruption was driven by illicit conduct primarily in the sales department. Some cases mentioned especially that the change was due to the investigation of corrupt behavior, thus, it can be argued it was, in fact, the corruption scandal that generated the response.

As a long-term response, they continued to put emphasis on compliances and improve their measures. In addition, the only company that had not implemented a training program, did so, exemplifying its importance and confirms what was said in section 2.4. that it strengthens companies’ compliance. Figure 14 below shows the companies’ responses related to compliance.

Figure 14: Companies’ responses related to compliance