A Tale of Two Cultures
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GUEST BLOGGER
Rupert Evill, CFE
Founder, Ethics Insight
In Richard E. Nisbett’s book “The Geography of Thought: How Asians and Westerners Think Differently... and Why,” Nisbett describes a scenario where Western and Japanese students are asked to describe a painting of a koi pond. Western students focus on the largest fish while Japanese students describe the entirety of the painting, focusing less on one subject.
Of course, it’s a generalization, but what does it mean in the context of anti-fraud? In my experience working with Japanese organizations over the past decade, it means two very different approaches to the same problem.
Surgical strike, with civilian casualties
A few years ago an American General Counsel (GC) asked for investigative support in Malaysia because a whistleblower had alleged that procurement staff in a large manufacturing subsidiary were colluding with suppliers, with kickbacks going both ways. The investigation proved the allegations true. The GC, against advice, summarily fired those involved and terminated the suppliers. There was blowback — in the form of retaliatory actions by organized criminal elements who owned the suppliers — when they physically assaulted a foreman and the spouse of the expatriate country manager.
At the time, my main observation was how quick it all was. Within less than two weeks the GC had flown in, overseen the investigation, fired and terminated the wrongdoers, and delivered an edict for “enhanced audits and mandatory compliance refresher training.”
Then he flew back home, leaving a confused local management team to implement the enhanced audits and training.
石の上にもさん年 – Three years on a rock
This Japanese proverb, roughly, encourages one to work patiently toward something even if it’s sometimes uncomfortable. I didn’t fully understand what that proverb meant when a Japanese GC at a major Japanese multinational corporation (MNC) requested a meeting. He asked, “Is it common for Thai government officials to extort money to award licenses we’re entitled to?” I knew that in some cases, yes, it was common. I asked if I could help, but he politely declined and changed the topic.
Six months later, the GC requested another meeting. He asked, “If it’s common in Thailand, is it also common in other Southeast Asian countries?” I pushed a little more this time and asked why he wanted to know. He explained that nine of his eleven subsidiaries in the region had admitted to having similar issues with public officials after an amnesty was granted to honestly declare such issues.
Over 80%, I thought, yikes! Surely, he’d now want to act?
No.
Another six months passed. This time he asked, “If they’re experiencing problems with public officials, what else might they be struggling with?” We talked about third-party management, language barriers, autocratic management, and how discrimination and harassment often correlated with systemic fraud issues, in my experience. Harassment usually indicates a culture of senior leadership impunity, and what the Japanese call “power harassment”(and sexual harassment) are all too common.
In the struggle between the stone and water, in time, water wins
I didn’t have to wait another six months after that last exchange. He explained some alarming statistics of complaints about harassment across most of the 11 subsidiaries, and further digging revealed a number of indicators of fraudulent behaviors.
Now, the GC was finally ready to act. The action was wholesale change. This MNC rolled out a risk-based anti-fraud, ethics and compliance program that focused on cultural change through a risk assessment exercise followed by bespoke workshops. This was later expanded to a global program across more than 30 sites.
The message was clear: get on board or get out.
負けるが勝ち – To lose means to win
The GC taught me this proverb means that to win you must avoid conflict over every small or foolish issue. He knew that with limited resources his team could not respond to every possible issue. If they had tried to do that, they would have lost the war.
Instead, they assessed the scale of the problem in its entirety first, sought senior management buy-in and then implemented a steamroller of a program that remained risk-based to local market conditions, drew a line under the past and defined a new normal that would be achievable.
It helps that Japanese firms don’t always have the shareholder pressure, disclosure requirements and aggressive domestic regulators that many U.S. and European firms do. It also helps that growth and profit targets are usually seen in the tortoise timeframes of firms that have typically been around for many decades, even centuries.
I am not suggesting that a wholescale switch to this model of patience is possible, but I do think it’s worthwhile to consider the ethos of seeing the whole, the entirety, of an issue and focusing on changing the cultural attitude. Ultimately, this may be a more sustainable approach than the fly-in, find, fire, fix, fly-out alternative.
Rupert Evill is the founder of Ethics Insight. He has 18 years of global experience across more than 30 sectors. He has deep expertise in managing frontline risks, delivering immersive training, conducting intelligence-gathering operations, investigations and managing acute crises. Evill started his career in counterterrorism and political risk analysis. After working across Europe for a decade, Evill has lived in Asia for more than nine years, operating in more than 40 countries over the course of his career.
