Local governments cannot afford to do the level of due
diligence that corporate compliance offices do on a regular basis. But
it is worth looking at how corporate compliance offices and corporate
executives deal with other entities that are found to be
involved in unethical activities. A report just out from Deloitte, Look
You Leap: Managing Risk in Global Investments
, sheds some
light on this, based on a survey done last year.
Before I get into the report, I think it's worth noting the mindset
reflected in the title: dealing with individuals and entities
with a history of unethical or corrupt conduct is, from a professional
point of view, a matter of managing risk. The risk is not only to the
reputation of the officials who deal with such individuals and
entities, but also, more important, to the reputation of the local
government (there are often monetary consequences, as well).