If you haven’t yet read Matt Kelly’s Compliance Week piece on the Duke Energy/Progress Energy mess, give it a read. I’ve always loved Matt’s writing style and it suits this topic perfectly.
You’ve no doubt already heard the details: Duke Energy bought Progress Energy and then disclosed their intention to have Progress’ CEO Bill Johnson become the chief exec of the whole company… until a few hours after the sale closed when they decided Duke’s CEO Jim Rogers would continue as the CEO and Johnson would leave, with a severance package worth $44 million. Not surprisingly, government officials are already investigating and the public is in an uproar.
Matt’s point is that even though Duke Energy may not have done anything illegal – we will know soon enough – it still stinks to the public, and Duke’s leaders apparently failed to follow standards of good behavior. I’m not sure why we are still surprised by these kinds of goings-on, but I confess that I am: every week we hear story after story of senior executives in major corporations engaging in illegal or unethical activity… and then companies wonder why we tend to over-regulate industry??
The question is, what do we do now? What can compliance officers do, other than advocate training? Training is important, but to me, it seems failures like this require something more drastic. To quote Matt, “Ethics training for board directors is nice, but frankly, if you need to tell a board director that something like the Johnson ouster is inappropriate, then you’ve already lost the battle.” It’s about really embedding ethics into the culture – at the top – and not just stating in your annual report that you “do ethics.”
Matt closes by quoting Steve Koslow, the chief ethics and compliance officer at CUNA Mutual, who has made this statement on numerous occasions: “If I can only focus on an ethics issue or a compliance issue, I’ll take ethics every time, because if you get the ethics problems right then so many of the compliance problems go away.” I couldn’t agree with him more.
What do you think? Can’t we come up with new and innovative ways on how to drive ethical behavior? Can’t we do better at rewarding ethical behavior, rather than capitulating to such an arrogant disregard for proper governance and common ethical sense?