Geert Vermeulen : “What about the story that the US government had purchased respiratory equipment from an entity owned by Rostec, a sanctioned entity ?”

04 May 2020
Knowledge Base

The Dutch Compliance Officers Association, abbreviated VCO, asked Geert Vermeulen to answer a number of questions about the COVID-19 crisis. Geert Vermeulen is a well-known Compliance Officer in the Netherlands, he also gives lectures and he teaches. Last year, he was the winner of the National Compliance Award 2019 (see photo). This prize is awarded annually with the aim of stimulating developments in the field of compliance, professionalising the compliance function and improving integrity within organisations. Geert was asked only three questions, but he answered them very thoroughly and extensively. 

VCO : Which Covid 19-related, specific integrity risks do you see that compliance officers should not lose sight of ?

Geert Vermeulen : “As with any crisis, this is a very interesting time from the point of view of ethics and compliance. At the macro level, we see that governments have to weigh the various human rights against each other. What weighs more heavily? The right to live? And how much should that cost? How many sacrifices are we prepared to make in terms of economic prosperity? Bearing in mind that more poverty also leads to less longevity. Even in a country like the Netherlands, the difference on average between rich and poor people is 14 healthy life years. At the same time, we can suddenly expect extra healthy life years due to improved air quality.

To what extent are we prepared to give up a number of freedoms, such as the right to go and stand wherever we want, the right to gather and the right to privacy, for the lives of a limited number of people? Apparently, we are prepared to sacrifice a lot for that. Especially if the possible consequences are clearly visible and noticeable in our immediate environment. And fate can also hit ourselves or our (grand)parents. The fact that the diesel scandal has also cost society around a hundred thousand of healthy life years is a lot less visible and has caused a lot less commotion. But in this case you didn’t see overcrowded hospitals and health workers barely hanging in there because of the huge number of victims arriving at the hospital. Organizations also have to make difficult choices. How important do we think it is that we survive as a company? How many sacrifices are we prepared to make? Do we still act in accordance with our values?

In crisis situations like this, it quickly becomes clear which values really matter to the organization. And has the organization adopted the shareholder model or the stakeholder model? Does the company still have some ‘fat’ on its bones or has it been stuffed with debt by private equity in order to increase the return on capital as much as possible? Companies in the latter category are now struggling. But there are also companies that have been hit hard by the crisis, but will be able to cope with it for a reasonable amount of time without too many problems. If your company is in that situation: Are you still going to lay off employees? Will you force them to come to work? What measures do you take to protect them? Does the management really care about its employees and do they feel responsible for their well-being? Many multinationals have been trying for years to pay as little tax as possible, in order to make the highest possible return on capital for the shareholders. But now they are looking to the government to help them in these times of crisis and they are using the government’s emergency aid. This is completely consistent with the shareholder model but not necessarily with the stakeholder model. In many situations there is an element of hypocrisy here, which is now very visible and where companies are also being called to account for.

Last year, a large number of CEOs of US companies signed a statement in which they promised that they would no longer strive for shareholder value only, as they noticed that they were losing the credit and trust of society. Glenn Fogel, the CEO of, is a member of this US Business Round Table, but he did not sign this statement. Now is applying for a subsidy from the Dutch government, to which they are entitled according to the rules, even though they made a profit of billions last year. But at least they act consistently; one could even label this as acting with integrity. But is it also ethically acceptable? It has definitely generated a lot of bad publicity. Jeff Bezos, the owner and CEO of Amazon, is the richest man in the world with an estimated wealth of USD 114 billion. He did sign the statement of the Business Round Table. Recently Amazon dismissed a number of employees who publicly criticized the working circumstances in the distribution centers, as the 1.5 meter distance norm is often not respected. Amazon has been criticized for its working conditions before. This doesn’t seem very consistent. And certainly not ethically acceptable. It generates a lot of bad publicity for Amazon, but for the time being I don’t see a buyers’ strike.

How an organization deals with these issues can have a major impact on its reputation. Does the organization take ethical decisions? Does it adhere to the company’s written values? Can solutions to urgent problems be sought together with competitors, in order to save lives, even though competition law prohibits this? Can a hospital take a look into an Electronic Patient File, despite the fact that the person has not given his or her consent for that? Which patient is given priority in the intensive care unit? Can health workers, who seem to have a mild cold, but who cannot be tested, still provide the necessary care to the elderly at the risk of infecting them with the virus? Or should they then stop providing care, and accept the possible consequences of that?
I hope that ethics & compliance officers will be present at times when these difficult decisions are made and are able to advise management timely or at least help them make these difficult decisions.

Another interesting point of view is to look at the crisis from the perspective of the fraud triangle. It is clear that many people and organizations are currently under pressure. At the same time, the usual controls are sometimes surpassed or reduced. This generates a lot of opportunities for fraud. It is also not difficult to rationalize a fraud, if it would be necessary to survive as an individual or as a company. The risk of fraud, corruption and other unethical behavior is skyrocketing at the moment. For example, how much pressure do you experience to still come to work? Is the prime goal of your company to treat its customers fairly or just to survive? Is your supply chain still working properly? Are people under pressure to cut corners? Perhaps some money is paid under the table to ensure that essential raw materials are obtained? Do you lower your standards for suppliers in respect of working conditions or human rights?

I recently stumbled across the story that the US government had purchased respiratory equipment from an entity owned by Rostec, a sanctioned entity. In doing so, the US government contravened its own policy and conducted business with a Russian state-owned company, active in the military industry, that was put on the sanctions list after the Russian invasion of Ukraine. By the way, Rostec is also the company that produced the BUK rocket that – as we may now safely assume – brought down the MH-17 passenger airplane, killing hundreds of innocent people. Did the end, saving American lives, justify the means in this case? One may argue that the government could easily have made an exception to its own policy, by granting a license to conduct this business . But does that mean that companies from other countries are now also allowed to supply dual-use goods with American components to sanctioned countries without an export license in order to save lives?

In order to keep the Dutch economy afloat, the Dutch government makes large amounts of money available to companies and individuals without putting a lot of controls in place. And it has called upon the banks to do the same. Just like during the financial crisis and in the money laundering debate, this raises the question to me to what extent the banks fulfill a public role. But apart from that, in the current circumstances, there seem to be plenty of opportunities for dishonest practices. It strikes me that the Dutch government is primarily making a moral appeal to society in this respect. They not only call upon people and organizations not to apply for subsidies if you don’t necessarily need it, but also to stay at home, to not come together in groups and to observe 1.5 metres distance between each other. And for the time being this seems to work reasonably well. This stands in sharp contrast to the recent child care allowance affair, where parents were wrongfully labeled as fraudsters and were ordered to repay allowances, sometimes running up to tens of thousands of euros. At this moment the government is giving everybody the benefit of the doubt and it calls upon others, especially the banks, to do the same. I am curious to see how this will work out. Hopefully the trust will not be betrayed. And I hope that we as Ethics & Compliance Officers can fulfill a positive role in this.

Lastly I would like to mention that I sometimes refer to corruption as the root of all evil. The virus outbreak was probably caused by the transfer of the virus from an animal to a human at a wet market in Wuhan in China. This wet market was approved, or at least not stopped, by local inspectors. From what we currently know, it is highly doubtful whether this decision was correct. Perhaps these inspectors were offered a bribe? I guess that we will never know.”

VCO : Given your own expertise, what creative advice do you have for compliance officers in times of crisis ?

Geert Vermeulen : “Actually, the usual advice: make sure you are close to the decision-making process so that you can advise management timely about ethics and compliance risks. At the same time, some modesty also suits us at the moment. Unlike healthcare workers, teachers, child care workers, policemen, garbage collectors, public transport employees, truck drivers and farmers, we do not practice a profession of vital importance.”

VCO : Compliance officers now work literally at a distance from the organization. Maybe you as well. What does this mean for you and what do you recommend to your colleagues ?

Geert Vermeulen : “As a self-employed person it is partly ‘business as usual’ for me: I have been working mainly from home for the last 4.5 years. What’s new is that the rest of my family is now also at home all day. With my wife, two big adolescents and myself, the house feels pretty full at the moment. Luckily, we are still allowed to go outside for individual sports activities in the Netherlands and I make frequent use of that. I have also been lucky to have worked in international environments for many years. Because of that I was already quite used to conference calls, video conferencing and providing webinar training. I notice that a lot of other people are now forced to do the same and often notice that this is not as bad as they thought. Of course, nothing beats real face-to-face contact with people but with the current technical tools we are getting closer and closer to this experience. After all my training and speaking opportunities got cancelled in the first weeks of the crisis, last week I conducted two entire morning training sessions remotely. I believe that worked out quite well. So good, in fact, that I expect people to be more open to this in the future.

In fact, I suddenly have online networking meetings several times a week with groups such as the House of Ethics from Jordan, Trust Across America from the US and Your Public Value from Germany, where we haven’t had the opportunity to meet before, but where all kinds of interesting discussions are taking place. It is also instructive to hear how people from abroad look at the situation in the Netherlands and the attitude of the Dutch government.

So my advice is mainly: Pay attention. Many people and companies are under pressure. Normal control measures are being pushed aside, large sums of money are coming in from unexpected sources and strange things can happen as a result. Companies and individuals are faced with difficult ethical dilemmas. Make sure you are close to the decision-making process, so that you can provide timely advice. Stay in touch with each other, if necessary digitally. Also tap into new contacts. Perhaps that will provide you with creative insights ?”

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