(Keith T. Darcy, Executive Director of the Ethics & Compliance Officer Association (ECOA), has written a wonderful piece summarizing the historical rise of the ethics and compliance profession around the world, and its extreme importance to sustainable capitalism. Excerpts and the full report are below.)
In the early 1990’s, a number of companiesin other industries began to draw on theexperience of defense contractors gainedthrough DII. Through the efforts of theCenter for Business Ethics at BentleyCollege, executives from a number ofnon-defense companies started exploring
the prospects of creating a non-profit,multi-industry membership associationwhere they could come together andshare best practices.
Concurrently, on November 1, 1991,the United States issued Chapter 8 ofthe Federal Sentencing Guidelines4pertaining to crimes in the workplace.This landmark pronouncement raisedtwo new risks:
a personal threat, and
a corporate threat.
The personal risk meant that executivescould become subject to civil and/orcriminal charges when an employee oftheirs commits a crime in the workplace.Willful ignorance and willful blindnessare not defensible.
In addition, thecorporate threat resulted from the factthat companies could be subject tomandatory fines of up to $290 million.
The Commission, however, intentionallyand creatively offered a carrot with thestick, i.e. incentives to those organizationsthat take meaningful steps to developeffective ethics and compliance programsthat can mitigate those risks. A carrot,whose value can only be measuredagainst the anticipated, potential pain ofthe stick.
While many business people werewary of these new risks, the implicationof new developments was not lost on theexecutives who were meeting at BentleyCollege. It was time to allow the earlyshoots of compliance to blossom. In1991 the Ethics and Compliance Officer
Association was formed in the USAwith nineteen ethics officers as charter
members. Through this act of mutualrecognition and collaboration, the ethicsprofession in the USA was born.
3 http://www.dii.org 4 www.ussc.gov/Guidelines/index.cfm
Keith T. Darcy is Executive Director of theEthics & Compliance Officer Association (ECOA)and Chairman of the ECOA Foundation. Darcy
has combined a 40-year career in the financialservices industry with his profession as an educatorand his long-term involvement in business
ethics, corporate governance and organizationalleadership. Since 1994 Darcy has been teachingEthics and Leadership in the Executive Programs atThe Wharton School, University of Pennsylvania.He is an Executive Fellow of the Ethics ResourceCenter in Washington, D.C., and served on theGlobal Anti-Corruption Council of the WorldEconomic Forum headquartered in Davos,Switzerland From 2007-2012