One of the unanticipated side effects of the intensive focus on President Trump’s personal conflicts issues is increased interest—and in some cases actual application—of a new corporate position of “chief ethics officer.” Yet the wisdom and practicality of creating such a separate hierarchical position within a corporation requires careful and dispassionate board-level review, in consultation with the general counsel.
The ethics of the corporation, and of its officers and directors, are grounded in principles of corporate responsibility and in Sarbanes-era concepts of ethical codes. In most large corporations, the question has usually been less of whether to assign ethics oversight to a particular officer, and more with respect to which officer should the responsibility be assigned. The debate over responsibility for corporate ethics has long been sharp, with compliance officers claiming it as a logical extension of their duties, while the general counsel pointing to the rules of professional responsibility and academic reports that specifically mandate lawyer responsibility for advising clients on ethics matters.
All of this is now coming to the forefront, in connection with the President’s divestiture efforts. For example, The Trump Organization recently hired a prominent attorney to serve as the company’s outside ethics advisor—particularly in connection with the ethics walls intended to separate the President from Trump family business interests. In addition, it reassigned an existing corporate official to serve as compliance officer, with the responsibility for monitoring internal conflicts. At the same time, the White House appointed an internal advisor (serving under the White House Counsel) with responsibility for monitoring ethics concerns of the President and White House advisors.
The attention ascribed to these developments could potentially prompt a new, if subtle, push within companies to create similar ethics positions, especially given the intense public focus on conflicts and ethics during the recent transition process. Yet, the role of a separate ethics officer has the potential for further confusing the distinctions between internal gatekeepers, as it relates to matters of legal compliance, conflicts of interest and operational and financial ethics of the organization.