The Private Sector as a Model for Government Compliance and Ethics Programs

Emil Moschella and Donna Boehme

Corporate Counsel

10-12-2012

It’s the culture, stupid.

If private sector companies are expected to self-govern with internal programs that promote good corporate culture, train and monitor employees, and communicate problems to senior management before they become media headlines, what about government?

As two experts with extensive experience in the compliance and ethics field (and members of the board of the Rutgers Center for Government Compliance and Ethics), we think it’s clear that government—and in particular federal agencies—need a new and better approach to managing culture and compliance. Because the current methods, including use of an inspector general to investigate misconduct “after the fact,” clearly aren’t enough.

The list of public sector scandals in recent years is long and sometimes shocking: Securities and Exchange Commission staff using government computers to download pornography; General Services Administration (GSA) officials raiding the taxpayer piggybank for lavish conferences and secret bonuses; and Secret Service agents partying with prostitutes, to name just a few. Government agencies also have a special history of retaliation against whistleblowers, including a U.S. Air Force mortician who reported on the mishandling of the remains of fallen troops, and scientists who were critical of medical imaging device approvals at the Federal Drug Administration. Where the private sector is expected to establish internal compliance and ethics programs to detect and prevent misconduct, the vast majority of federal agencies seem to not even try.
 
The current Transportation Security Administration luggage-screening scandal is particularly telling. In an ABC news report, convicted former TSA screener Pythias Brown describes a culture of indifference, impunity, and entitlement that encouraged him to pilfer baggage and for co-workers to look away as he and others walked away with passengers’ personal property. He estimates his theft to amount to about $800,000. Brown rationalized his actions: “They aren’t paying me. They’re treating me wrong. They’re doing this and they’re doing that. And they just don’t care.” While his cautionary statement to travelers certainly is eye opening, the real question is: How should the TSA address a culture of indifference to the bad behavior that allows this to occur in the first place?

Fixing problems in an embedded culture is no easy task, but this is what government expects from the private sector every day. The effort to comply with regulations requires companies to demonstrate organizational leadership in words and action. Training and standards must be underscored by monitoring, audits, visible discipline, a safe internal reporting system, and a self-evaluation process geared toward early detection of organizational misconduct.

Unfortunately, governmental leadership is often built around the concept of “Do as I say and not as I do.” At the GSA, the embedded culture was led not by strong ethical leadership, but by a senior official in a Las Vegas hot tub with two glasses of wine.

Fortunately, the federal government does not have to re-invent the wheel to fix its compliance and ethics issues. It can look to the 20-plus years of private sector compliance experience based on the Federal Sentencing Guidelines for Organizations (FSGO). While FSGO programs are now prevalent throughout the private sector, only a few federal agencies—the FBI and the Veterans Health Administration—have applied these principles to the public sector.

The Rutgers Center for Government Compliance and Ethics is a resource to all government agencies considering the establishment of FSGO programs. The underlying premise for the Rutgers effort is to improve government ethical culture, effectiveness, efficiency, and public trust in the instruments of government through the adoption of the management principles set out in FSGO.

Furthermore, the Office of the Inspector General at the U.S. Department of Justice views the FBI effort as significant. In December 2011, it reviewed the FBI’s FSGO-style program and issued a report [PDF] that found the FBI program “has the potential to significantly reduce legal compliance risk in FBI operations.” It goes on to tell other agencies, “We believe that the concept of the FBI’s OIC [Office of Integrity and Compliance] program has been beneficial to its efforts to monitor and enhance compliance with legal requirements, and that other agencies may wish to consider implementing a similar kind of program.”

Similarly, in May 2012, an Ethics Resource Center report [PDF] made recommendations to the United States Sentencing Commission, the private sector, and the federal government (including government agencies), suggesting that they “develop and implement their own compliance and ethics programs, applying the FSGOs standards. The President should use available authorities to direct all executive branch agencies to do so as well.” (The report cites the work of the Rutgers Center.)

The federal government should adopt the same rules for itself that it requires of the private sector. As James Madison noted in his Federalist Paper No. 51 in 1788:

In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.

Over 200 years have passed since those wise words were written. It’s clearly time, by taking a page from the private sector, for those governing to start to govern themselves.

Emil Moschella has over 28 years of FBI experience as an agent-attorney and is former chief of the legal advice and training section of the FBI. Between 1997 and 2003 Moschella was director of corporate compliance for Horizon Blue Cross Blue Shield of New Jersey. He helped to establish the Rutgers Center for Government Compliance and Ethics and is a member of its advisory board. Donna Boehme is an internationally recognized authority and practitioner in the field of organizational compliance and ethics, designing and managing compliance and ethics solutions within the U.S. and worldwide. As principal of Compliance Strategists LLC, Boehme is the former group compliance and ethics officer for two leading multinationals and currently advises a wide spectrum of private, public, governmental, academic, and nonprofit entities through her NJ-based consulting firm.