Corporate integrity and culture

Ben Heineman, Jr, former General Counsel of GE, has written about the role that general counsels play in corporate affairs based on his experiences, emphasizing how they can help ensure that a business is managed to achieve both high performance and high integrity.

In Avoiding Integrity Land Mines (pdf) Heineman argues that " It is now time to shift this debate about corporate integrity from board oversight of the CEO to how the CEO and top company leaders can most effectively fuse high performance with high integrity at all levels in a challenging, fast-changing, and at times hostile world. This is a grinding, complex, day-in, day-out task that is difficult in the best of circumstances to do well."

He gives the example of when a senior leader was removed not for failing to follow key rules but for failing to create the right culture. "During my time, there were two seminal examples. Both involved acts hidden for a number of years that were clearly understood by many in the respective business units to be suspicious or wrong but had been tolerated to keep difficult customers satisfied. The first involved fraud in a Middle East procurement contract financed by U.S. government funds in the late 1980s and early 1990s. The second, early in this decade, had to do with acquiescing to an Asian customer’s request that GE falsify supplier documents included in regulatory submissions."

(via Harvard Law School Corporate Governance Blog)