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Win Swenson: Because it appears that senior executives were involved in the apparent misconduct, the decision whether or not to disclose it is one squarely for the board itself. In a few circumstances (for example in the health and safety areas), disclosure of misconduct can be legally required but in most cases disclosure to authorities is a business decision.

Here, however, the wiser decision to is to disclose quickly, because failing to disclose is extremely risky.

To understand why, it is important to understand the enforcement landscape for anti-competitive behaviour. Even if no UK or other nation’s criminal laws have been broken, if US authorities discover the activity, they would go after Globetech and its executives very aggressively – and they would get help from their UK and EU counterparts along the way.

US authorities take the position that even where “cartel” activity occurs outside the US and is legal where the agreements were made, if the agreements have an impact on US commerce, a US crime has been committed.

US authorities have actively pursued price fixing conspiracies in both Asia and Europe, and under new bilateral agreements, the enforcement authorities of other nations and jurisdictions have stood ready to help. Ian Norris, former chief executive of Morgan Crucible, the British-based engineering company, was arrested and the subject of US extradition efforts in a price-fixing case that caused a major stir in Britain in 2005.

Just as with Globetech, the alleged cartel activity in the Morgan Crucible case occurred prior to 2003 when such activity was criminalised in the UK.

But the most compelling reason the board should consider disclosure is a “carrot” that is provided to a company in a price-fixing conspiracy that is the first to disclose the cartel activity to authorities. Under US policy, and now other jurisdictions such as the EU, a company that is “first in” to disclose cartel activity is given amnesty from prosecution and criminal fines, whereas a company that was part of the cartel but not first in would face staggering penalties.

A good example of how this can work is the conspiracy between Sotheby’s and Christie’s auction houses. Christie’s went to US authorities and was not prosecuted in the US nor required to pay fines by the EU. Sotheby’s was criminally charged by US authorities and assessed substantial fines in the US and EU.

All of this has two implications for boards. First, enforcement is increasingly global – and the board’s response to alleged misconduct must therefore not be parochial either. Second, because the board’s first obligation is to protect shareholders – not executives – the board must at least consider voluntary disclosure of offences whenever serious misconduct has taken place.

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