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Another Voice: Businesses need compliance tools to ensure ethical culture

By Paul M. Moskal

The Buffalo News recently published an article advising that local developers use more caution in dealing with the government bidding process after the conviction of several New York State developers. Those interviewed cautioned of chilling effects on business and intimated the community may not be well served because of fewer companies bidding on public projects.

Unfortunately, this conclusion misses the forest for the trees.

What the public demands in today’s business world, as reflected in our public procurement rules, is that everyone seeking access to public monies plays on the same level and transparent playing field. That is the real lesson to be learned in this series of corruption convictions in New York.

In our personal lives we select our friends because of who they are – their ethics and integrity – and how they put those into play in their daily actions. All things being equal, it is rational to select our business partners the same way.

Businesses must create and ensure an ongoing culture that not only supports the rule of law but one that demands and makes paramount an ethical decision-making process to do the right thing.

We all make mistakes every day, individuals and companies. The question then becomes if we know we will make mistakes, yet the public demands we think and act with unfailing integrity, how can we reconcile those two realities?

The answer calls for businesses to inculcate well-designed compliance programs into their models. This would allow them to build infrastructures that promote not only an ethical culture but one that can effectuate it by providing the realistic tools to identify and minimize risk.

Increased government scrutiny and increased public expectations have resulted in the geometric growth of ethics and compliance programs in the business world. Unfortunately, this commitment is lacking in many industries that have been less regulated or that have been removed from the public’s direct vision. Businesses have in part failed to make this commitment because of the perceived costs associated with them.

This myopic vision has resulted in many companies succumbing to corruption or scandal when it would have been cost-effective to build and maintain a responsible compliance program from the onset. As the late M&T Bank Chairman Robert Wilmers noted, when it comes to compliance, “The task of catching up is far more costly than simply keeping pace.”

The message being sent to the business world in these recent scandals is not to shy away from doing business with the government but to conduct it in open and transparent ways following the best ethical and compliance practices.

Paul M. Moskal teaches an ethics and compliance course at the University at Buffalo School of Law and is a director at CORE Consultancy.

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