His latest step: How to avoid trouble

WASHINGTON - Big companies in the United States and Europe have been getting into plenty of legal and ethical hot water recently and that has been very good for Joseph Murphy's bank balance.

Murphy is a Haddonfield lawyer - not to mention an accomplished ballroom dancer - who has spent his career advising corporations on how to stay out of trouble, first as an in-house lawyer for Bell of Pennsylvania and later with a firm that provides training for employees on how to avoid legal and ethical pitfalls.

Business has been booming.

Enactment of the Sarbanes-Oxley law in 2002 imposing stiff criminal penalties on executives who misrepresent their companies' financial condition triggered an avalanche of work for accountants and lawyers who root out wrongdoing.

But Murphy and a handful of others have developed their own market niche: helping companies train employees on how to avoid problems in the first place. Having a program can make the difference in persuading the Department of Justice not to indict a corporation for wrongdoing, opting for lesser measures instead.

Murphy consults with companies in the United States, the United Kingdom and Europe, helps edit an ethics newsletter, and is a founder and part owner of Integrity Interactive, a fast-growing online training service aimed at improving adherence to anticorruption laws and bolstering the ethical climate in corporations.

"People mistakenly attribute all organizational misconduct to greed," Murphy said. "It isn't greed. These people have more than enough money. It is arrogance and the use and abuse of power. When you have that kind of power, it is easy to lapse into excuses."

In the rarified world of corporate compliance and ethics enforcement, Murphy is known as a trailblazer. Jim Sheehan, a former assistant U.S. attorney in Philadelphia who is taking over as Medicaid inspector general for New York Gov. Eliot Spitzer, said Murphy's writing and lectures helped influence federal sentencing guidelines that recommend more lenient treatment of companies that offer ethics and compliance training.

Odell Guyton, another former assistant U.S. attorney in Philadelphia who now is the chief compliance officer for Microsoft Corp., said Murphy has had widespread influence.

"He has been tireless in presenting his message around the country," Sheehan said.

The Enron Corp. and Arthur Andersen L.L.P. scandals of 2002 were the first in a long skein of indictments, guilty pleas and convictions obtained by the Justice Department's Corporate Fraud Task Force that have continued unabated. On April 19, a federal jury found former Qwest Communications International Inc. CEO Joseph Nacchio guilty of 19 counts of insider trading.

At the same time, authorities in Germany are pursuing a huge cash-for-contracts investigation involving Siemens AG. Siemens says that its own internal probes have uncovered more than $500 million in suspicious transactions.

Murphy says years of work promoting corporate ethics have convinced him the tone on ethics and corruption is set at the top. Yet most ethics programs make a huge mistake by focusing almost entirely on junior-level employees, he said.

"There is a saying in the ethics field: The big people get in trouble and the junior-level people get ethics training," Murphy said.

For an ethics program to work, Murphy said, top people must be included, too. And there must be an ethics or compliance officer within the corporation with sufficient clout to be able to say "no" to the CEO.

"A CEO should not have the power to walk into the office of a compliance officer and fire him," Murphy said.

Murphy uses a variety of training tools.

At a meeting last week of the Society of Corporate Ethics and Compliance in Chicago, Murphy preceded his talk with a demonstration of swing dancing with another panelist, all to the tune of Glenn Miller's "In the Mood."

He has had plenty of dance-floor practice. Murphy is president of the Delaware Valley chapter of USA Dance, a ballroom dancing association, and an organizer for Dance Haddonfield, a local dance group. As a way to stay in shape, he says, ballroom dancing has it all over going to the gym.

One of his favorite techniques in training sessions is to screen a surveillance video made by the FBI of senior executives at Archer Daniels Midland Co. and other corporations as they discussed a market-rigging scheme. The video of the executives being caught in the act adds an element of drama to an otherwise dry and arcane subject.

Murphy began his career in corporate ethics almost by chance. After graduating from the University of Pennsylvania law school, he worked briefly at the Wolf Block law firm before signing on with Bell of Pennsylvania.

There, his duties included advising the Bell department responsible for making sure that Bell made its network available to start-up long-distance companies such as MCI Inc.

That took place at the advent of the era of telephone deregulation and the temptation for Bell employees might have been to throw roadblocks in the way of new competitors. Yet many Bell employees worked hard to keep the company within the parameters of antitrust rules, Murphy said. He realized then that he could make a career out of ethics and compliance.

He stayed with Bell until the mid 1990s, when he joined a law firm focused entirely on advising companies on ethics programs. That evolved into Integrity Interactive, the online training service, which has more than 300 corporate clients worldwide.

Its clients include Adobe Systems Interactive, Campbell Soup Co., Dow Corning Corp. and Mellon Financial Corp. The firm has headquarters in Waltham, Mass., and has several offices in Europe. Its online training programs focus on a wide range of ethics issues including conflicts of interest, money laundering, antitrust, codes of conduct for pharmaceutical sales representatives, and the Foreign Corrupt Practices Act.

Murphy continues to advise the firm, while also running ethics classes through his own company in Haddonfield. He also edits an ethics newsletter called Ethikos.

A recent edition included articles on ethics and compliance strategies in Britain, how corporations can better protect human rights in international business dealings (the story quoted German philosopher Immanuel Kant to illustrate a point on the proper handling of staff and customers), and a story unpacking the Hewlett-Packard Co. corporate spying scandal.

Murphy said it was all about big companies not using their enormous power in harmful ways.

"It's not about people being intrinsically nice or good, it is about taking an approach to organizations that is similar to the approach that Americans took toward government," Murphy said. "It is about recognizing the rights of human beings and putting appropriate checks and balances in place."