Beyond Remediation: How NAVEX Global Helped SL Industries Avoid Prosecution and Strengthen Their Connection to Employees.
“For a reasonable cost, we’re getting feedback from employees on the hotline about a lot of things that hopefully prevent future investigations.”
William T. Fejes, Jr., Chief Executive Officer and President, SL Industries, Inc.
SL Industries, Inc., through its worldwide subsidiaries, designs and manufactures a wide range of equipment that is used in medical, aerospace, computer, transportation and utility applications.
Before NAVEX Global
After NAVEX Global: Results & Benefits
- Bribery allegation from subsidiaries in China
- Lengthy, expensive internal investigation and self-reporting to DOJ and SEC
- DOJ declared no criminal charges warranted
- Avoided at least six potential bribery events in two years
- Rapid, cost-effective implementation of DOJ-approved anti-corruption remediation plan
- Ability to reach global, multi-lingual audiences quickly
- Set the right tone through executive leadership by establishing policies and offering tools to maintain a healthy culture while better avoiding risk
- Increased employee awareness of critical workplace issues that fostered a “speak-up culture”
- Ongoing, regular employee use of hotline beyond corruption reporting
- 1,500 employees received anti-corruption training over a four week period
- Anti-corruption hotline and training offered in three languages
- Employee Hotline Reporting Services
- Online Ethics and Compliance Training
- Third Party Risk Management Platform
- Convenience and cost-effectiveness of working with single vendor for multiple, tailored solutions
Challenge: Potential Bribery Activity Sparks an Internal Investigation
The investigation began with an anonymous email sent to SL Industries CEO and President William T. Fejes, Jr. That day in 2012, he learned his design and manufacturing equipment company was facing potential bribery activity in two of the company’s subsidiaries in China. “We shared that information with the board and immediately started an internal investigation into the allegations,” Fejes said. Based upon the results of the initial investigation, the company contacted the Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) to report the internal investigation and to agree to cooperate fully.
“With our legal counsel, we interviewed people in several facilities in the U.S. and in China,” said Fejes. “It was a long, expensive process.” The internal investigation ultimately found that employees in two China subsidiaries had improperly provided gifts and entertainment to government officials. SL Industries reported their findings to the DOJ and SEC, and started aggressive anti- corruption remediation using NAVEX Global solutions.
Solutions: A Swift, Effective, Holistic Approach to Implementing Anti-Corruption Measures
“Before working with NAVEX Global, we had very few formal policies in place. In fact, our code of conduct didn’t even include specific anti-corruption policies,” said Fejes. “We needed to get a more comprehensive anti-corruption program in place as quickly as possible.” According to Fejes, NAVEX Global was the clear choice because of the range of services available, their reputation for excellence in training and their effective, easy-to-implement solutions.
SL Industries hired NAVEX Global to provide a holistic anti-corruption solution, which included:
- Employee Hotline Reporting Services. “Establishing a hotline was a key piece of the remediation plan to meet DOJ and SEC expectations,” Fejes said. The hotline NAVEX Global implemented was anonymous and available in three languages. Fejes said he especially appreciated the ability to contact hotline users for follow up and clarification, while keeping the reporters anonymous.
- Ethics and Compliance Training. “We needed to get training going as quickly as possible,” Fejes said. “The investigation started February 2012, and with NAVEX Global we were able to offer training in November 2012.” Fejes said that implementing the training was quick and straightforward. “We had all 1,500 employees trained over a four-week period in November 2012,” Fejes said. Since then, SL Industries has conducted training every November.
- Third Party Risk Management. SL Industries also added NAVEX Global’s Third Party Risk Management platform to their portfolio of anti-corruption solutions. Fejes said he appreciates the peace of mind that comes knowing his company’s sales partners and suppliers are being continuously vetted and monitored in emerging markets.
Results & Benefits: A Declination—And Much More
On September 26, 2013, the DOJ notified SL Industries that it had closed its inquiry into this matter without filing criminal charges. “Having NAVEX Global solutions in place had a big impact on the declination decision,” said Fejes. “In addition to self-reporting, and the way we kept the DOJ informed all along, the remediation helped give us a favorable outcome with the DOJ.” “For a reasonable cost, we’re getting feedback from employees on the hotline about a lot of things that hopefully prevent future investigations.”
William T. Fejes, Jr., Chief Executive Officer and President, SL Industries, Inc.
Employees Get Efficient, Highly Effective Ethics & Compliance Training
Fejes said that the training offered by NAVEX Global stood out for its user-friendly, video-based format. He knew this helped engage employees with the material instead of sitting through “dry, bulleted lists.” “We knew the news reporter, storytelling style helped reach employees,” Fejes said. Another key advantage was having the training available in three different languages. In addition, Fejes and his staff could easily monitor training sessions to make sure people were really listening to and completing the material.
He also appreciated being able to tailor the training to different kinds of employees. “We offered three levels of training,” Fejes said. “The higher level, salaried positions— those that would potentially encounter more corruption issues—got a longer, more in-depth training.” In addition, the company welcomed the option to add additional training from NAVEX Global as needed. They are in the process of piloting harassment training in their U.S. headquarters, with plans to roll it out to more facilities soon.
The impact of the training has been clear and measurable. “In the two years we’ve “Online training from NAVEX Global definitely helped us eliminate more potential violations.” William T. Fejes, Jr., Chief Executive Officer and President, SL Industries, Inc.
Hotline Benefits Exceed Expectations
After SL Industries set up their anti-corruption hotline through NAVEX Global, there was a noticeable uptick in employee morale. Employees started using the hotline to report on potential ethics violations, but also on issues that weren’t related to corruption. “We see that as a positive, and brings us excellent value,” said Fejes. “We prefer our employees use the hotline so we can handle any issues internally, rather than go to the authorities. As soon as that happens, costs go through the roof.”
Fejes said they called it the Employee Help Line. “People think our Employee Help Line is fantastic. They can communicate about an issue that they feel isn’t right, and something gets done about it.”
For example, an employee recently reported that the company might not be in line with local regulations for its employee savings program. “We looked into it and sure enough, the program was not being handled in a proper manner,” said Fejes. “We worked with the appropriate teams to revamp the program. We also set up a communication effort to make sure the employees fully understood what it was about, and could get hooked up with an investment advisor so they were making proper investments.”
Third Party Risk Managed Proactively, Efficiently
In every 2013 FCPA-related DOJ/SEC enforcement, third parties had been used to facilitate or disguise bribes. A critical component of any anti-corruption program must include a third party due diligence program. SL Industries recognized this need and added NAVEX Global Third Party Risk Management to help automate their due diligence processes. This is particularly important given the number of suppliers and partners SL Industries works with in emerging markets.
“If you have operations or sales in countries with poor corruption ratings, it’s definitely worth putting training, hotline and third party risk management in place,” William T. Fejes, Jr., Chief Executive Officer and President, SL Industries, Inc.
Single Vendor Offers Efficient Program Management
Like many companies, SL Industries tries to limit the number of vendors they work with to keep administrative and staffing costs down. “Having one vendor for all our needs in this area is a real value for us,” said Fejes. “If we have to look into due diligence or training on a corruption issue, we just pick up the phone and call NAVEX Global. We don’t have to worry about which vendor to go to.”
Fejes recommended that companies put these types of programs into place before an issue comes up. “If you have operations or sales in countries with poor corruption ratings, it’s definitely worth putting training, hotline and third party risk management in place,” Fejes said. He knows firsthand how these services can help a company successfully navigate a bribery investigation—and prevent them in the future.
With NAVEX Global solutions such as online training and the hotline, SL Industries benefits from increased employee awareness of critical workplace issues to better avoid risk. With NAVEX Global Third Party Risk Management, they can efficiently screen and monitor their subsidiaries. Along with creating a “speak-up culture,” and fostering communication and trust with employees, SL Industries enjoys the confidence that they have cost-effective, proven solutions in place for the future.
About NAVEX Global, Inc.
NAVEX Global’s comprehensive suite of ethics and compliance software, content and services helps organizations protect their people, reputation and bottom line. Trusted by 95 of the FORTUNE 100 and more than 12,500 clients, our solutions are informed by the largest ethics and compliance community in the world.