Three Things I Know

There aren’t too many weeks in the year that I’m not out speaking somewhere on the importance of integrity in the workplace or sharing benchmark and other statistical data on the risks faced by organizations around the world. These past two weeks were no exception. On May 17th, I traveled to London to attend the Society of Corporate Compliance and Ethics’ (SCCE) conference on “Managing Third Party Anti-Corruption, Compliance and Ethics Risk.” And this past Monday, EthicsPoint hosted a breakfast on the recently passed UK Bribery Act in which we were extremely fortunate to have Vivian Robinson of England’s Serious Fraud Office and Neill Blundell a partner with Eversheds as additional speakers. The event had an incredible turnout of over 100 senior executives from the London area.

Lately, I have been beginning my speaking engagements with the “three things I know.” The first thing I know is that the level of regulations and regulatory pressure on organizations around the world is constantly increasing. The second is that this constant influx of new rules, laws and guidelines makes it very difficult for a multi-national firm because many of these requirements are in conflict. For example, Sarbanes Oxley requires any company listed on a US stock exchange to have an anonymous whistleblowing mechanism for reporting misconduct. However, these types of systems are illegal in Spain and Portugal - this is just one example and unfortunately there are many, many more. The third thing I know is that every regulatory agency has shifted their focus from writing these guidelines to enforcing them with a vengeance - the monetary fines associated with regulatory non-compliance are often upwards of hundreds of millions and can even include jail time for culpable individuals.

This April, the United Kingdom passed the Bribery Act. While similar to the Foreign Corrupt Practices Act (FCPA) in the United States, the jurisdictional reach and view of facilitation payments (legal under the FCPA) is considered bribery under the Bribery Act. This presents a significant conflict between these two Acts.

While addressing the audience in London, I couldn’t help but think it was 2002 all over again, when we were just learning about the potential impact of SOX and the mountain of undefined work ahead of us. Based on the very broad jurisdictional reach of the Bribery Act, a UK company, as well as any non-UK company that conducts business in the country will fall under the scrutiny of the Serious Fraud Office – this provision certainly provides for a great deal of anxiety for obvious reasons.

I had the opportunity to have lunch with Neill following the session and he told me that his multinational clients, especially those from the US, had no real fear of the Bribery Act. This lack of alarm may stem from the fact that companies have become desensitized by the onslaught of regulatory pressures and view the Bribery Act as just one more requirement. On the other hand, the Brits, who have never seen such enforcement, do indeed harbor serious fear, uncertainty and doubt (FUD). The FUD surrounding Sarbanes generated three years of “full employment and empowerment for all US legal and accounting firms” - no doubt it will have a similar affect in the UK.

In 2004, I had the privilege to work with some very bright and dedicated people while helping to craft the original Open Compliance and Ethics Group (OCEG) Red Book guidelines for Sarbanes compliance, I therefore feel I have a solid understanding of what needs to occur in the UK. I have tried to boil it down and I am in the process of completing a white paper on the “Ten Simple Steps to UK Bribery Act Compliance.”

These 10 simplified steps are as follows:

1. Assign an individual the authority and responsibility to understand and address the requirements of the Bribery Act and if/how they apply to your organization


2. Assess and prioritize your risks

a. Look for potential impact areas and stakeholders
b. Devise your organization’s “risk profile” and understand how to apply your organizations unique sensitivities to risk


3. Create, gain approval and communicate your strategy for reacting to these risks


4. Review, revise or create a Code of Conduct that includes all salient requirements of the risk and regulatory requirements your organization faces

a. Build a separate code specifically for vendors, suppliers and agents
b. Don’t overlook the impact of reputational risk when crafting a Code of Conduct


5. Review, revise and train to the policies, procedures and guidelines that support the principles contained in your Code of Conduct


6. Ensure you have a proven and effective means for gaining stakeholder feedback

a. Track “open door policy” communication
b. Create an “alert criteria” for exit interviews
c. Have a publicized and visible “whistleblowing” system


7. Workflow Consistency is the key to the Serious Fraud Office’s satisfaction with your solution

a. Triage all reports according to the same check list
b. Investigate reports of misconduct following a standard workflow
c. Ensure resolution and adjudication is consistent across your geographies
d. Have a system to audit and monitor all the above


8. Create or extend your internal controls to ensure compliance with policies, procedures and guidelines that support the Act


9. Report regularly on the status and impact of your compliance solution

a. Develop incident and trending reports
b. Foster Board of Director access and awareness
c. Publish sanitized reports of misconduct as training aids to your stakeholders


10. Review all of these processes at least once a year and refine any and all that can be improved or enhanced

These steps are merely the product of my experience and are an extrapolation of the Seven Essential Elements found in Chapter 8 of the US Federal Sentencing Guidelines and the OECD Guidelines for Multinational Enterprises. Since 1991, the US Sentencing Commission has worked to revise these guidelines and provide organizations an instruction manual to help mitigate the risk of prosecution. These guidelines have been revised in 2003, 2007 and are currently under review for revision once again in 2010. Our friends across the pond will do well to study these “essential elements” and learn from the mistakes we made formulating a strategy of compliance.

27625 The UK Bribery Act

I’ve been on an airplane quite a bit these past few weeks and this last week was no exception. The Conference Board of Canada was kind enough to invite me to address their Corporate Ethics Membership Council in Vancouver and on my return flight I was able to catch up on some reading. We have a few analysts on our EthicsPoint team and one supports me by looking at hundreds of websites and blogs that address trends in our industry and passing on the most important or informative of these for my review.

In all honesty, it is a necessity. I couldn’t possibly do what I do without Bryan keeping me “in the know” with information from a variety of sources. I read hundreds of pages a week on new developments which means that he must read thousands. (Note to self: remember to say thank you more often.)

Looking through this week’s folder, I found a tremendous amount of detail surrounding the new UK Bribery Act. The Bribery Act is the companion regulation, if you will, to the United States’ 33 year-old Foreign Corrupt Practices Act (FCPA). The Bribery Act has not yet been fully promulgated by England’s Secretary of State, but the hand-writing is clearly on the wall.

The Bribery Act extends its reach far beyond the FCPA and as it is currently written should send shivers down the spine of every multinational company with operations or sales in the United Kingdom. It does not just deal with corporations, it also empowers the Serious Fraud Office to set fines and demand jail time for individuals associated with answerable organizations, corporate managers & officers and even board directors. Like the FCPA, the Bribery Act also makes organizations responsible for the actions of their vendors, suppliers and agents.

However, the Bribery Act goes further than the FCPA in other areas as well, such as rejecting facilitation payments as acceptable behavior- this will be important to watch how this conflict of opinion plays out. Facilitation payments are payments for services or positioning to which you are entitled. For example, suppose your passport has expired and you need to travel immediately. You can fly to a passport office and stand in line to get an expedited passport, or you can overnight your information and pay $300 to a “facilitator” who will immediately furnish the passport you were entitled to receive. Under the FCPA, this type of payment is fine but the Bribery Act deems it as bribery.

The territorial reach of the Bribery Act is also broader than that of the FCPA. The US Department of Justice’s (DOJ) involvement is somewhat restricted and requires local cooperation. However, under the Bribery Act, even if a company “conducts business” in the UK, the Serious Fraud Office (SFO) has the jurisdiction to take a primary position in punishing organizations for misconduct.

As concerning as this jurisdictional reach may be, I began to realize that the typical fines imposed as a result of a bribery violation are ‘chump change’ when compared to the other related costs. For example, Daimler paid a combined $185 million dollar fine for bribery and improper influence. A tidy sum, but they reportedly paid over $400 million in additional legal and accounting support. This realization was an inflection point for me. It isn’t just the fines but also the related costs and business distractions associated with these types of violations that organizations should be concerned about.

To make matters worse, just as we saw with Sections 404 and 302 within the Sarbanes-Oxley Act, the oppressive fines, fees and reprioritization of management time do not discriminate between small to mid-sized businesses and larger corporations. Therefore, the 3 to 4 times expense ratio for legal and accounting fees to support the actual fine amount are the norm. This total magnitude is far more impactful and injurious to a small organization when you consider it as a percentage of EBIT.

There is hope, however. The Bribery Act and FCPA are mandates that can be mitigated, but it takes an acute understanding of the risks associated to the individual organization, a demonstrated plan of action to minimize these risks and an audit trail that the organization is walking the talk. The Federal Sentencing Guidelines established a direct link between the ‘Seven Essential Elements’ contained within Chapter Eight of the Guidelines and mitigation. I have long been both a student and believer of these seven elements and the mitigation value they hold for organizations.

This is a big proactive bill to fill (pun intended), but when you consider the financial and reputational consequences and damages, it is the most cost effective and prudent position for an organization to take.

What do you think?

Another Sh*tty Deal

For the past few days I’ve been following the news surrounding the testimony of Goldman Sachs executives before a Senate panel investigating the investment bank’s role in the financial crisis. Wow! If you haven’t followed this crazy ride, the transcripts from the hearings can be found all over the web and while there are still more questions than answers, it points to a major disconnect in our capital system.

The dialog is almost comical. Certain lawmakers compared the bank’s mortgage bankers to bookies – with the senator from Nevada further expressing his displeasure by saying, “Bookies have more ethics than Goldman.” Senator Carl Levin asked repeatedly why Goldman Sachs sold securities that their internal emails called “really sh*tty deals.” If the frauds perpetrated here weren’t so frustrating and disheartening, the dialog would make Lenny Bruce laugh out loud. Levin used the term “sh*tty” 11 times in one set of questions and began to ask the Goldman executives if they could define degrees of “sh*tty” in the deals they promoted.

Levin also asked Daniel Sparks, who ran the bank’s mortgage unit at the time, “How about the fact that you sold hundreds of millions of that deal after your people knew it was a sh*tty deal. Does that bother you at all?” While there was a great deal of polite posturing by Mr. Sparks, the apparent unspoken answer was not only “No”, but “Hell No!” Other questions related to Goldman’s “moral obligation” or “duty of care toward the best interest of the client” also received a “yeah, not so much…” response - really scary and sickening.

This past Monday I had the pleasure to be in New York for McGraw Hill’s publication premier of Buffett's Bites: The Essential Investor's Guide to Warren Buffett's Shareholder Letters. Buffett’s Bites is a stellar book written by a good friend of mine, LJ Rittenhouse. Rittenhouse has been fighting for transparency and improved corporate communication for years. She helps CEO’s formulate their shareholder letters and has created a very interesting ranking based on the candor, or lack thereof, found in many CEO letters. Rittenhouse recognized that Buffett’s letters are his legacy. As you read these letters, you realize his demand for an appropriate use of capital and you begin to understand the core of his investment philosophy.

Rittenhouse blogged early on about the 2009 Goldman shareholder letter and sensed there was trouble in River City. She was right - but I have learned she generally is. By looking at the word choices and the vocabulary utilized in shareholder letters, Rittenhouse has proven a correlation between the amount of “fog” in a letter and downstream share value.

Later that night at dinner with friends and colleagues, Goldman was one of the topics of conversation - at the end of the night we all shared a collective sigh of disgust and cynicism. The problem is clear. The dollars associated with making the deal are worth more than the value of the deal. Therefore, there is no duty of care or moral responsibility to the investor – and, if it is a “sh*tty deal”, the deal maker just invests in derivatives that bet against the deal so they make money when the deal tanks.

Senator Levin summed it up when he said, “You shouldn't be selling junk. You shouldn't be selling crap. You shouldn't be betting against your own customer at the same time you're selling to them." While not as a direct response, Goldman Sachs CEO Lloyd Blankfein indignantly expressed that clients who bought subprime mortgage securities from Goldman in 2006 and 2007 came looking for risk "and that's what they got."

Although we were at dinner to celebrate Mr. Buffett’s letters, it was another Buffett, Jimmy, whose words we sought for solace. “We need more fruitcakes in this world and less bakers! We need people that care! I'm mad as hell! and I don't want to take it anymore!" ...

Self-Governance, An Abstract Concept.......

Satellite technology is a wonderful thing. While traveling to Dallas this past Sunday, I was able to watch the Verizon Heritage golf tournament live from my coach seat on Continental Airlines. It was a particularly tight match - by the 10th hole, three players were in close contention for the championship. In professional golf, there are significant spoils to the winner. In this particular event, the winner received $1.03 million and second place received a paltry $616 thousand - with the dollars falling off to where 60th place made just over $11 thousand. This doesn’t even take into consideration the value of the FedEx Cup points, but I digress.

Going into the 18th hole, tournament leader Jim Furyk held a one stroke advantage over his playing partner Brian Davis. On the 18th, Davis hit a combination of great shots and tied the tournament with a birdie - at the end of regulation both players were tied at 13 under par and a sudden death playoff ensued. The Verizon Heritage golf course is one of the most precise courses on the PGA tour. The fairways are narrow, the greens are small, the bunkers and trees are large and the wind is brutal. The course was actually carved from a swamp and the remnants of reeds and undergrowth still abound.

As the players engaged the first hole of the sudden death playoff, Furyk’s second shot landed safely on the green about 30-40 feet from the pin. I’ve learned to never underestimate the prowess of professional golfers, but this clearly set up Furyk for a “Hail Mary” birdie putt to win. Davis’ second shot approached the green but caught the greenside bunker. The commentators expected the playoff to continue to the next hole - anticipating Furyk to 2-putt for par and Davis to successfully get “up and down” from the bunker for a similar par. Then something totally unique to golf occurred.

Immediately after hitting his bunker shot, Davis called a penalty on himself. In real time, no one saw his miniscule mistake, but the world collectively groaned as the TV replay showed his sand wedge ever so slightly tap a reed twig laying in the bunker on his backswing. The rule is clear, moving a twig in a bunker is against the rules, and Davis knew he had broken it. After a very painful five or six minute interval of muffled dialog and continuous TV replay of the infraction, the PGA rules officials confirmed it was a two stroke penalty – Furyk wins. After this righteous display of “self-governance” by Davis, I looked up this term on Wikipedia which classified it as an “abstract concept.”

My golfing partners and I play reasonably well, but not anywhere close to the level of the pros. In my group of 14-16 handicappers we don’t hold ourselves to this level of rule scrutiny, in fact, a foot wedge is one of the most commonly used clubs in our bag. We generally consider being in the rough punishment enough, so if your ball lands in a divot you get to move it out. After all, we aren’t playing for a million dollars.

As I continued my airborne journey, it just so happened I was on a connecting flight with a PGA official so I asked his opinion on the matter. He said something that made me think – “This is what makes golf special.” I couldn’t agree more, so when I got to the hotel I looked up how often this situation has occurred. The most extraordinary example of self-governance in professional golf was the 2008 self-disqualification of golfer J.P. Hayes. Hayes played a non-conforming (illegal) golf ball by mistake for one hole of a PGA Tour qualifying event in Texas.

Hayes subsequently disqualified himself from the tournament which made him ineligible to play fulltime on the PGA Tour in 2009. What an incredible example this sets for those of us who honor the game and struggle to get better. I then began to think. Wouldn’t it be great if the top corporations, the ones that I aspire to model EthicsPoint after, held themselves to this level of scrutiny?

I then recalled the complaints from many of my peers that the Sarbanes-Oxley guidelines and regulations under Section 404 were too onerous for small corporations. The smaller, less established corporations didn’t have the revenue to support these requirements. It was estimated that 404 controls cost $3-8 million to manage regardless if your company generated $1 million or $100 billion. Thankfully this law has been changed.

Just like the rules of golf are more appropriate for the pros, the 404 SOX controls were more appropriate for very large corporations, but tedious and overly burdensome to smaller organizations.

But back to self-governance. Why is it that we see the Enron’s of the world as the poster children for greed and deceit when they should be the shining example for self-governance? I could pontificate for another 1000 words on the why and what I think they should do, but I am more interested in what you think?

A Life Well Lived

A couple of weeks ago I received a call in the wee hours of the morning that I had been dreading for months. My good friend and cousin called to tell me that his dad, my uncle, Howard Glenn “Jiggs” Childers had passed away at the age of 89. His health had been slowly deteriorating for several months and I knew it was just a matter of time before he succumbed. I share this story with you only because I think there is a message here we need to embrace.

During childhood and even into my 20’s and 30’s, my uncle’s children, grandchildren, siblings and other extended family complained about his controlling nature. They complained about his demanding personality and brutal honesty when you wandered outside his scope of approval. People would also comment that he never got his hands dirty – but as it turns out it wasn’t because he was lazy, it was because he insisted on orchestrating the tasks and organizing the projects.

He had an eye for detail, a sharp pencil when negotiating terms and a soft heart for any project that improved his community. He also loved the land. Many of you know that my parents were first generation ‘off the farm’ – both my dad and uncle were born in a 3-room house on the acreage their father farmed. I am proud to say, like my father, my uncle never forgot his roots. He was grounded by the land and the majesty of nature.

I flew to Oklahoma for the funeral and was immediately immersed with family, many of whom I had not seen since my dad’s funeral in 2007. I come from a big family and when you have a big family there tends to be a lot of bickering and strife. That wasn’t the case on this day. Everyone was there to honor my uncle who we recognized had touched each of our lives.

By the time I got to the service, it was apparent my uncle had touched the lives of many people. The 750+ people in attendance filled the neighborhood church, its gym and every other overflow area available - a truly amazing sight.

As the eulogies started I began to reflect on my uncle’s influence on my life. He was a man of integrity and insisted on honesty, fairness, love of God and family. He always put family first. As my peers began to express their sentiments I realized that what they were saying was true. During my 55 years on this Earth, I had never heard my uncle utter a harsh word – a stern word yes, but never in anger and always in love and directed at the best possible outcome for the situation. They spoke of his kindness and his compassion and how he made time for people and listened to their needs. The minster spoke of when he needed something done in the church – money, building, and supplies – he only needed to make one phone call. My uncle would tell him not to worry and the minister knew that someone would be calling soon to volunteer, provide the necessary items or discount their work to make it affordable for the church.

I also heard from every person I had grown up with who had so often criticized or bemoaned my uncle’s controlling nature and rigid expectations, acknowledge and appreciate his unwavering expectation of principled behavior. This day they spoke of how he had made them better and shaped them into who they were today. They also spoke as mature adults (most of us are 45+ today), of how his values and guidance had helped them formulate the way in which they shepherded their own families.

I began to reflect myself and I could only agree. I admired my uncle. His immediate family was just as idiosyncratic as mine, but they were tight and mutually supportive. They were all educated and had been provided the opportunity to excel. They each also carried a responsibility to serve their family, church of choice and community. I had a sobering moment because I realized these are character traits I demand from my six children and their spouses.

As the expressions of love and respect continued, I began to ponder and in fact question my own corporate leadership. I asked myself – am I demanding enough? Do I balk to be politically correct or “keep the peace”? Am I harsh with my tone or do I express my expectations with love and a calm firmness and set expectations that are both realistic and unwavering?

Then I began to reflect on what we do at EthicsPoint as compliance professionals. I realized we should set the same expectations for our organization – realistic and unwavering. I realized I worry too much about being loved in the moment and so I tread too softly when my management team fails to meet my expectations. Do you do the same in your company?

Have we become more concerned about turnover, morale, creating a “hip culture” or just avoiding the work it takes to stay the course instead of creating an unwavering expectation of principled based performance?

For me, I plan to dig deeper this year, work harder to inspire great leadership with my team and ensure that my values and expectations are visible and verbalized.

The Unintended Consequences of Sunshine Laws

Laws created to ensure the open review of government information on the local, state and federal level, such as the Freedom of Information Act, are a good thing. Typically referred to as sunshine laws, these requirements were designed to make previously inaccessible government information available to the public. These laws not only apply to government documentation, they also grant the public and media access to government meetings.

I’m a huge proponent of the public’s right to know and of transparency. However, some consideration must be given to what falls within the public’s right to know when it comes to an organization’s internal issues, especially when an issue is communicated to a supervisor, manager, HR professional or through an employee hotline or other method for anonymous reporting.

EthicsPoint operates reporting hotlines and delivers case management solutions to more than 2,300 clients around the world. Last year, we collected over 150,000 cases from both the hotline and our clients’ web-based report forms. An analysis of these cases shows that 15-18% were found to be frivolous or unfounded, e.g., a rant or a malicious attempt to cast doubt on a co-worker or manager, while 10-15% were immediately actionable and/or contained enough specifics to allow the case manager to quickly resolve the issue or concern. The remaining 70+%, however, required a certain degree of finesse, exploration and as much ‘art as science’ to reach a point of resolution.

Recently, a high school principal in Texas abruptly retired after learning he was under investigation for allegedly sexually harassing one of his staff. His actions are not the subject of my concern, by all appearances the school district was doing a great job of seeking information and investigating the validity of the allegations. However, what does concern me is the media’s open records request for any documents pertaining to the investigation under the auspices of open records laws.

The school district’s counsel has wisely requested an opinion from Texas’ Attorney General seeking exemption from producing the documents. In her request, the counsel stated the document(s) “contains highly intimate or embarrassing facts, which if publicized would be highly objectionable to a reasonable person, and the information contained in the report is not of legitimate concern to the public.”

In 2007, another Texas school district took an entirely different path. They suspended the use of their hotline and case management system to avoid the unnecessary scrutiny the state’s sunshine law had created. In this instance, the sunshine law created the opposite effect for which it was designed. The school district retreated and many of the proven tools used to mitigate fraud and abuse were abandoned. As a result, the school district’s interests weren’t served and the people charged with protecting the school district’s interests were technologically handicapped in their ongoing efforts.

This isn’t just a Texas phenomenon. In 2009, an Arizona reporter acknowledged – “Official action by government should be public and transparent. But I think the body politic suffers – in terms of competence, efficiency and effectiveness – by making our government employees work in a fish bowl. But these broad, sweeping public-records requests are clearly fishing expeditions, intended to harass and intimidate. And as such, they constitute a threat to the rule of law.”

So while I passionately believe in bringing visibility and transparency to the issues and events that pose risk to any organization, I also feel the unintended consequences of sunshine laws have the potential to dramatically limit accountability unless they are limited in scope. How do you feel about this and do you think that open information laws should have some governing guidelines in protecting privacy, relevance and appropriateness?

Play by the Rules?

For the past few years I’ve used every forum at my disposal to discuss the inequity of a rule-based environment. You can never have all the rules, and even if you try to have all the rules you ultimately end up with an exhaustive list of requirements that no one can understand or hope to follow.

Instead, I’m a huge believer in principle-based performance: Educate to values and integrity, establish clear guardrails and the “rules” for the most part will take care of themselves. The reality, however, is there are people who will choose to break a rule, push a line or tread on thin ice regardless of how much you instruct them otherwise.

One example of an organization that maintains too many rules is the NCAA. For the record, to the disdain of most of my children (Go Ducks!), I bleed crimson and gold. My youngest daughter graduated from the University of Spoiled Children (or USC) and during her four years in Los Angeles I found myself completely rooted within the Trojan family. So, like every other loyal Trojan, I’ve been avidly following the NCAA’s attempt to discredit the University of Southern California.

Bear in mind there is no allegation whatsoever that USC did not play by the NCAA’s rules. However, the NCAA claims that the family of former USC running back Reggie Bush sought and obtained virtually free housing in the Los Angeles area from an individual that had no direct affiliation with the university. In fact, there isn't even an allegation that any university officials or boosters were involved or even aware of the Bush family arrangement.

Just like many other universities, USC took all the necessary steps to educate players and their families on NCAA rules regarding improper behavior. This is essentially what is referred to as compliance training in the corporate world. The issue is that a player and his family, along with an agent, chose to break the rules – not the university. However, the university is somehow held accountable.

For those who’ve been reading my blog, you know I have been focused on the extension of compliance concepts to vendors, suppliers and agents because when they screw up it is the corporation who is found guilty – either in the courts or in the court of public opinion.

USC has been serving time in both of these “courts” lately. USC will likely be found guilty of a violation of something – because the NCAA unfortunately has enough major and minor rules to make this happen.

However, USC didn’t help its cause when it hired Lane Kiffin from the University of Tennessee as its new coach following the departure of Pete Carroll to the Seattle Sea-Chickens. Kiffin is no stranger to questionable behavior and he would not have been among my candidates for the job. According to the New York Times, in less than 14 months at Tennessee, Lane Kiffin committed six secondary violations and is under investigation for the use of student “hostesses” in recruiting. Three of Kiffin’s recruits were also dismissed from the team after they were arrested for armed robbery.

Despite promising that his number one priority at USC was to run a clean program, Kiffin has already committed a minor violation by picking up a USC recruit at the airport in a limo. I fly into LAX quite often and while limos may be an odd sight in Ann Arbor, they are pretty common in Los Angeles. I’m not saying what he did was right, I’m just trying to focus on the situational norms – not a bunch of rules. If Kiffin was trying to impress some kid by showing him the ‘So-Cal’ lifestyle, then Kiffin was in the wrong. If he just didn’t want to fight the traffic on I405 and wanted to talk to the kid along the route, what was the harm? Plenty. Kiffin knew what he was doing was wrong. The principle is “inappropriate influence” and he chose to ignore it.

I am not suggesting that if the NCAA gets rid of all of its rules that universities will automatically clean up their athletic programs. I am simply suggesting that all the silly little rules get in the way. Minor rules must be made for breaking otherwise they wouldn’t be classified as minor?! If the NCAA created and verbalized a clear set of guidelines to every stakeholder (coaches, players, athletic directors, boosters, agents and family members) and enforced them swiftly and fairly, then I think everyone would get the message.

I've been preparing this week for a talk I will give in a couple of months on gaming fraud – specifically focused on Native American casinos. What I have learned is that Native American gaming establishments are not unique and the fraud and abuses that are prevalent in Las Vegas are just as prevalent in Tulsa, Oklahoma. What I have also learned is that the sophistication and pride within Native American tribes makes a huge amount of difference in the volume of fraud-based activity. The tone from the Principal Chief and the value set by which the tribe members hold themselves accountable is the real measure by which you should begin to rank or rate the fraud potential.

It should be the same for college athletics. Coaches should set the tone and lead by example, and the alumni must remember that the true sense of winning in college athletics isn’t always measured by trophies or scoreboards.

College sports are dominated by the “what have you done for me lately" or "we need to win now" attitude. This can be likened to the sentiment in the corporate world which saw the downfall of Enron and the like, too much focus on short-term profits and not enough focus on long-term growth. Universities need to realize the eventual damage this attitude may inflict down the road if they don’t build a program based on integrity and principle-based performance.