April 3, 2009 -
In a recent
Deloitte survey
of companies from around the world, 41 percent of executive respondents
"indicated that senior management should investigate and deal with
matters internally or wait to see if there are consequences rather than
make a voluntary disclosure to authorities if a significant incident of
corruption was uncovered at their organizations."
On the
surface, this might lead one to believe that new US government
contractor regulations requiring disclosure are being ignored if
government contractors responded in the same manner. These regulations,
which are part of FAR 3.10, require mandatory disclosure when a
contractor has 'credible evidence' that their firm has violated the
civil False Claims Act (FCA) or has committed certain violations of
federal criminal law.
Unfortunately, the survey does not have
information about how executives would have responded to this question
10 or 20 years ago; 55 percent of respondents said they would
investigate and then make a voluntary disclosure to authorities. So,
it's possible that the number of those who would investigate and make a
voluntary disclosure is rising.
It's also important to note that
only 24 percent of respondents were from the United States. Each
country (and even industry and organization type) has its own
regulations regarding disclosure. A private or non-profit organization
in Asia Pacific would have entirely different disclosure requirements
relative to a public firm or government contractor in the US.
Ethical Advocate would like to see a similar survey of just those in the US government
contractor space to learn how the results compare to the Deloitte
survey. It's our expectation that more US government contractors would
make a voluntary disclosure based on the recent regulations. These
organizations are required to develop compliance programs, ethics
training, and a reporting mechanism, such as an employee hotline. And,
those organizations that do not voluntary disclose fraud or government
overcharges could face debarment. In the Deloitte survey, the top
reason indicated for paying bribes was to garner more business. In the
case of government contractors, not disclosing unethical acts could
lead to lost business or worse, debarment. So, it stands to reason that
more government contractors will line up behind the voluntary
disclosure rules...