Chasing a Competitive Advantage
It had been a long week and Bill was ready to finish up and get home. He wished he hadn’t agreed to meet his brother-in-law’s friend, but family harmony pretty much required him to agree. Bill didn’t even know why they wanted his opinion. He worked in accounts receivables, not the IT department. He didn’t know a router from a rooter. What was Jack thinking anyway? Bill worked for a pharmaceutical company, not some technology start-up. “It’s another one of Jack’s pipe dreams,” thought Bill.
When Bill walked into the living room, he saw six people instead of Jack and the one friend he had expected. “Hey,” said Jack, “Here’s our secret weapon!” Bill froze. Secret weapon? What secret weapon?
Jack started in right away, peppering Bill with questions. What kind of IT services was the company still buying? How about some of those new FDA regs — wasn’t the company going to get some new technology to deal with them? When Rayburn did that last big layoff, weren’t there some IT people cut? Was the company sending that work outside? Who were Rayburn’s suppliers — maybe they needed some IT support? What should they pitch to Rayburn, what were the “hot button” terms they should use, when could Bill get them in front of the right people?”
“What’s going on here?” Bill asked.
“The guys want to start a new business. IT services. They were cut loose and Rayburn would be a good gig for them,” said Jack. “I told them anything I heard at your house, like those new Medicare things coming out, but I figured you could give them the inside scoop. Really give them a leg up.”
Bill stammered, “I can’t give you the inside scoop. I don’t even have that much I could tell you. Besides, that’s the kind of thing that can get me fired.”
“Look, we don’t expect you to help us for free,” said Jack’s friend Eric. “We’ll make it worth your while on any work you get us.”
“Ohhh,” groaned Bill. “That’s even worse. That could put me in jail.”
“Aw, c’mon Bill,” cajoled Jack. “It’s not like we’re asking you to spill state secrets. We just want a little help getting into the door.”
“We? Who’s we?” asked Bill.
“Well, actually, I’m kind of putting some money in with these guys,” said Jack. “Susan said she’d put a few thousand in so I figured you were onboard. It’s a good investment. These guys are really smart. We just need a little pull from the inside,” explained Jack.
“My wife put some of our money into this thing? I have money in this scheme of yours?”
“Calm down, Bill,” Jack said. “These guys are really smart. They know their stuff. It’s a good investment for us, but we need a little help.”
Bill’s head was spinning. These characters wanted to know about Rayburn’s procurement practices. They wanted to know how their vendors and customers worked. And now he was an investor. He could already hear Susan say, “But he’s my brother. This is about family and helping each other out.”
“Look, I have to get home,” said Bill. “Jack, we can talk about this later.”
On the drive home, Bill thought about what he should do. Susan had to get that money back. Or, maybe they could list someone else as an investor. Maybe this time, one of Jack’s hair-brained ideas might work out. These days, you had to look out for your own future. He could lose his job tomorrow in the next round of layoffs and then how was he going to support Susan and the baby? Maybe he could give these guys a few tips now and then.
What does Bill mean when he explains to Jack’s friends that he could get fired for giving “scoops?”
Jack and his friends are asking for inside information – information that is not publicly available. Our company has clear policies about any disclosure of information about the company’s internal practices, suppliers, procurement methods or contracts. In some cases, disclosure of such information can result in termination.
Why is Bill concerned when he works for a pharmaceutical company, not an IT company?
All companies, including pharmaceutical manufacturers, rely on IT systems for many different business functions including regulatory compliance, accounting, business management and training. Our company’s business practices, which include our IT systems and applications, contribute to our competitiveness in the marketplace and are privileged information. Providing that information to a company would give that firm an “unfair advantage” and compromise our procurement process. Information about our business cannot be disclosed without prior authorization from a supervisor.
When one of the friends offers to pay Bill for his help, Bill says, “That’s even worse.” What does he mean when he says he could go to jail?
Receiving payment for providing help as a way of obtaining or retaining business is illegal. It is a kickback, which is a criminal violation of federal law. It also represents a violation of our conflicts of interest policies, which specifically prohibit employees from offering or accepting payment or gifts from current or potential subcontractors, vendors or competitors.
Why is Bill so upset when he learns that his wife has invested some of their money in Jack’s new plan?
Our employees are prohibited from having a financial interest in companies or organizations that may pose a conflict of interest. An investment — even if it is made by Bill’s wife or other family member — is a conflict of interest because it involves a company that may seek or have business relationships with his employer. It is explicitly prohibited by our Code of Ethics.
What should Bill do now?
Bill was unintentionally drawn into situations that created conflicts of interest for him. He has done nothing wrong, but he must disclose the conflicts of interest created by his relationship with Jack, the business plan of Jack and his friends, and the investment made by Susan in Jack’s business plans. Bill will be advised of any required actions, such as divesting in Jack’s proposed business, but there will be no recriminations against Jack for disclosing the potential conflicts. If you are unsure about whether a situation constitutes a conflict, check with the Compliance Department.