Follow the link of an SEC civil complaint (c. December 2014) against Avon Products (NYSE: AVP) – http://www.sec.gov/litigation/complaints/2014/comp-pr2014-285.pdf. This official, independent agency narrative contains numerous assertions, including financial statements, purportedly illustrating dysfunctional corporate dynamics involving AVP’s legal and internal audit departments (among other internal and external related and independent parties). Initially, there are at least three points that need to be made:
- The SEC narrative may be materially misleading (i.e., the law enforcement agency got it wrong).
- If materially truthful, the narrative may indicate generally the responses taken by many organizations in substantially similar circumstances (i.e., the case is common).
- If materially truthful, the narrative may not indicate generally the responses taken by organizations in substantially similar circumstances (i.e., the case is uncommon).
The supply and demand of corrupted and corrupting agents is not subject to precise measurement as these agents operate in secret for as long as they can. Presumably, an omniscient eavesdropper able to penetrate public and private security systems would have the capacity to develop reasonable estimates of the nature and extent of global corruption, though such information, if technologically obtainable, is not available to the public at large presently.
The alleged methods of operation of AVP per the SEC are not novel (e.g., the use of consultancies to launder funds and peddle influence, the failure to maintain accurate books and records, the failure to implement effective internal controls, the improper use of related parties, the failure of remedial measures). If materially truthful and common, the narrative points to the unexpressed intractability of the problem: where existential threats are immediate (e.g., career-destroying effect of failure to obtain / retain business), the existential threats that are less immediate (e.g., career-destroying effect of being an SEC target) are muted. Unless the SEC reaches the status of an omniscient eavesdropper – a development that few would favor – corruption is a strategy and response that will persist ironically in the quest to extend goodwill.