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PAGE 4 NEWS Don't forget about integrity, prominent U.S. corporate lawyer says BY MATT POWELL Law Times C ompanies often over- look corporate integri- ty in favour of fi nancial benefi t, something a promi- nent former U.S. corporate lawyer says is a big mistake. "Corporations are built on said reputation," Benjamin Heineman Jr., former corporate counsel for General Electric. "Each senior leader needs to un- derstand that they will be held personally accountable." Heineman was at the Schu- lich School of Business at York University last week to talk about the importance of corpo- rate and legal integrity at mul- tinational companies as part of the Davies Fund Business Law Lecture. Th e talk was packed with lots of war stories from Heineman's work at GE and with its famed former CEO, Jack Welch, whom Heineman advised exclusively. Heineman spent 16 years with the company. As general counsel, he managed more than 1,100 lawyers in 100 dif- ferent countries and is said to have helped develop the roles of in-house counsel in business and management. He is cur- rently working with Harvard Law School, where he has been named a senior fellow. Th e lecture explored the idea of corporate governance and its relation to the concept of corpo- rate integrity, especially for mul- tinational corporations. Accord- ing to Heineman, companies have to demonstrate committed and consistent leadership, and top executives need to be proac- tive to ensure integrity. "You can miss numbers and survive but you absolutely Benjamin Heineman Jr. speaks to students at York University's Schulich School of Business last week. cannot miss out on integrity," he said. "Th at's the attitude I made sure was introduced at GE." Heineman went on to discuss specifi c incidents where he felt GE had violated its own poli- cies on integrity and the actions it took in response. Heineman recalled one incident, for ex- ample, involving the company's military engine sector. In that case, the Israeli government had purchased fi ghter planes from GE but led the company into an off - shore embezzlement scheme that involved more than 25 employees and a top executive, he said. Ultimately, the 25 employ- ees were fi red, but letting the executive go was a slightly dif- ferent process. "Technically, he hadn't done anything wrong because he hadn't been personally involved in any fi nancial gains," he says. "But, I advised the board that this person, who had been with the company for 30 or so years, had violated the type of culture we wanted to instill and ulti- mately violated our policies on integrity. I felt, in the end, we had no choice but to fi re him." He noted the company's The Ontario Municipal Service Directory: A Comprehensive Guide for Real Estate Professionals, 2010 views on integrity played a big role in the decision. One of the worst things that can happen at a multinational corporation is the development of a culture of silence in which employees feel intimated to speak up, he said, adding that trust is key. "It comes down to trust," he said. "Employees need to be trained to a point where they can learn to trust its leaders and the company itself. Only then can a company develop higher integrity levels." A major issue that has de- All the municipal services information you need for real estate searches under one cover This handy resource helps you process your real estate transactions more efficiently, saving you time and energy. Published annually, The Ontario Municipal Service Directory: A Comprehensive Guide for Real Estate Professionals, 2010 gives you up-to-date and easily accessible municipal contact information. 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Perfectbound • March 2010 • One time purchase • $86 • P/C 0517010999 On subscription • $81 • P/C 0517140999 • ISSN 1206-694X veloped recently among multi- national corporations involves the confl ict between local laws and global standards, he said. Heineman cited, for example, the diffi culties strict policies by the Chinese government can create for companies trying to maintain integrity. As a result, it's often diffi cult for compa- nies to draw the line between understanding local laws and recognizing global standards. Heineman mentioned a specifi c case involving a GE employee who was being inves- tigated by the Chinese govern- ment because of his religious beliefs. In the meantime, au- thorities insisted they be al- lowed to access GE's computers and fi les on the employee in question. GE refused because it violated internal policies that laid out employee rights, which include freedom of religion. "It's really important for corporations to understand that there will be hard choices and decisions, but these deci- sions need to relate back to the company's integrity policies," he said. "We had not violated any laws by employing this man, and in our view, he was doing nothing wrong because our policies clearly outlined that he is allowed to believe what he wants. For a 30-day, no-risk evaluation call: 1.800.565.6967 Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. www.lawtimesnews.com OMSD - 1/2 pg - 4X for LT.indd 1 3/2/10 4:28:50 PM "Companies need to learn to foster employee awareness, knowledge, and commitment to the corporation. Employees need to be trained very heavily on the reliance of integrity policies within a company's structure if the company wants to make use of these policies. Providing em- ployees with a culture where they are welcomed and heard is very important and it's been shown to work. It did at GE." LT march 22, 2010 • Law Times W ith Introduction and H by Michael L. Y istorical Linkages oung, LL.B. Photo: Matt Powell