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Steven Grubb, compliance transformation director (new business), Diageo, has, since last July, been stationed in Bangalore to steer Diageo-controlled United Spirits Ltd's (USL) compliance and ethics programme and bring it in line with the British beverage multinational's global standards. In a telephonic interview, Grubb, a UK-qualified solicitor and a senior compliance and ethics professional with stints at several multinational companies, including BP, PCCW and Cable & Wireless, shares with Sudipto Dey his key takeaways from his USL experience. Edited excerpts:
When you visit a new market, what is the typical reception you see? Have you ever felt the feeling was 'here is a person who has come to tell us how to do business'?
Surely, we didn't find that at USL. Before the transaction (last year) and after that, Diageo clarified to the USL management what was expected of it. I don't think there were any shocks. Diageo operates on very high compliance and ethics standards. For Diageo, the priority has always been doing business the right way.
Did you factor in non-compliance risks at the time of entering merger and acquisition (M&A) deals, especially in developing markets such as India, where established business practices could be different?
When you carry out an M&A deal in any market, you do legal and financial due diligence so that you enter that market with eyes wide open. Diageo is fully aware whenever it carried out an M&A deal in a developing or emerging market, there is a greater risk of compliance issues. One of the moves, apart from usual financial due diligence, was to ask me to ensure the programme structure and its culture provide necessary levels of protection to operate at very high levels, both locally and internationally.
How did you go about that at USL?
For all companies I go to, the way I approach this is to start at the top so that the senior management knows what is expected of it-what compliance and ethics mean.
For me, it is not about putting approvals and processes in place, but having a corporate culture that is about doing business the right way.
We make sure the message is clear. We have appointed Ashoke Roy, former chief financial officer of Whyte & Mackey, as head of compliance and ethics team (and internal audit). We look to recruit and build a strong (compliance) team, comprising existing USL people in legal, finance and audit, and some good compliance people (from outside). We have had a look at the existing USL code and upgraded them to reflect the changing mood in India and the impacts of the UK Bribery Act and the US Foreign Corrupt Practices Act. Subsequently, we proceeded to train 3,000 white-collar executives so that they understood what was expected of them. We have brought in policies regarding sexual harassment, data privacy, and an independent whistle blower line. Compliance is not an overnight process; it is about changing the culture. It is a journey. We will continue training and keep talking about doing business the right way for the next year or two.
There are 9,000 employees at USL; we will reach out to all of them. It is a change management programme.
I have been at this for 14 years, and the compliance bar is raised higher each year.
Have you set any targets for USL?
In the past 12 months, we focussed on the code of conduct, whistle blower line, initial training and setting expectations for the senior management. Next, we will focus on 6,000-odd employees in distilleries and factories so that every single USL employee touches the code and understands it. Once everybody is trained, we will go for annual certification. We will also do specialist training regarding the risks marketing or sales people face.Currently, we have a compliance team of seven-eight people.
Next year, we will consider having 50-60 people across the organisation-working in sales and marketing- who will compliance ambassadors of sorts, something we have done at Diageo UK. Of their job profiles, 15-20 per cent will pertain to spreading the compliance message so that if anybody needs guidance or help, they will be there.
Have you factored in the risk of losing business due to higher compliance requirements, especially in a market such as India?
We have those risks. But we are very clear-we cannot lower the standards (of compliance). In the short term, (even) if there is risk of losing business, we will continue to do business the right way.
Diageo believes in the long term, the only way to build a sustainable and profitable business is to do it the right way, abiding by the code.
If at times, one had to turn business away, I have no doubt Diageo would do that. Does it make life more difficult or put more pressure on sales people? Yes, it might, but we have to protect our reputation and the brand.
The message we are trying to give fits well with what is happening in India at the moment. From that point of view, it is tremendous window of opportunity, both for USL and India.
