Breaking the silence – why GCs should be wary of being kept in the dark
"It is striking how often the finger is not pointed at general counsel when things go wrong at banks, as if there is an understanding that the GC couldn't possibly have known what was going on. This suggests there is still some way to go before GCs achieve the ideal set out by former General Electric GC Ben Heineman..."
September 19, 2013 at 07:03 PM
3 minute read
"The dean of American general counsel" is how Staples GC Michael T Williams introduced keynote speaker Ben Heineman at this week's Legal Week Global Corporate Counsel Forum in New York.
Now an academic, the former General Electric general counsel, who worked closely with GE's former chairman Jack Welch for many years, formulated an inspiring vision of the role GCs must perform.
For Heineman, GCs must be the partner of the chief executive, helping their companies to achieve 'high performance' at the same time as acting as the guardians of their employers' ethical compasses. This means ensuring that they operate with a high level of integrity that can often go beyond merely conforming to the letter of the law.
A typical manifestation of the latter approach, he told the conference, was GE's policy during Welch's tenure to adopt global standards that went further than local laws in many jurisdictions. The conglomerate also required its suppliers to adhere to similar standards in every country.
"There is pressure for corruption in every company," acknowledged Heineman, particularly given the unavoidable fact that people are often measured by financial results. He said it was crucial that companies operated a culture that encouraged people to raise their concerns, and those who turned a blind eye should be dismissed. "You have to give employees a voice," he said. "I cannot tell you how important it is to beat the culture of silence and make sure people know what is happening."
This is, of course, more easily said than done, as testified by the wave of scandals that has afflicted financial institutions on both sides of the Atlantic, and Heineman did concede that some companies might simply be too big to manage.
But it is striking how often the finger is not pointed at general counsel when things go wrong at banks, as if there is an understanding that the GC couldn't possibly have known what was going on. This suggests there is still some way to go before GCs achieve the ideal set out by Heineman.
He himself argues that GCs are powerless if they do not have the trust of a chief executive who is fully committed to achieving similar goals. For this reason, he urges GCs to do their due diligence on potential employers before deciding whether to accept job offers.
"You have to negotiate that highly delicate and sometimes conflicting ground between being a partner to the chief executive and the guardian," he concluded. "Yaysayers go to jail; naysayers aren't listened to."
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