Hempel put all cards on the table in bribery case

When Hempel was hit by a bribery case last summer, the company opted to take the matter to the press of its own accord. A tough decision which subsequently turned out to be the right one, explains the CEO in the latest article in ShippingWatch's series on communication.

Photo: Hempel

Three hours after the police showed up at Hempel's German headquarters with a search warrant in August 2016, the company had made its first plan for how to handle the case in the media.

During the first hectic days, the main task was to answer questions from German reporters wanting to know more about the scope of the bribery charges filed by German police.

Hempel also set out a task force consisting of executives, lawyers, and accountants to try to find heads and tails in the scandal which had suddenly enveloped the storied marine coating supplier.

It quickly became clear that the only way forward was to put all cards on the table.

At first, the arrow pointed to four employees at the German subsidiary. When this had been established, Hempel took the matter to the press, to inform about the case which concerned several instances of bribery.

"When we got the internal report, it wasn't hard to see that it went against all our internal guidelines. We could then have kept our mouth shut and hoped that no one would find out," CEO Henrik Andersen tells ShippingWatch.

"But when one's values are challenged by employees who should know better, one needs to make a case of it. And our conclusion was that you can't use big words in the cafeteria and then shut the matter down externally. Because if we don't make it public, there'll be a time when someone lets it slip," explains the CEO close to one year after he was presented with the issue.

Did not want to be caught with their pants down

Group Communication Director Malte Vermehren Eggers was responsible for setting out a communications strategy together with the executive management team. This was done at headquarters in Danish city Lyngby, from where he oversaw the course of events from day one and during the months to come, which often consisted of long work days.

We did not want to be caught with our pants down, so we made things public as soon as we learned of it"

Malte V. Eggers, Communications Director, Hempel
"It was a very comprehensive task, though still fairly simple. We said it as it was, and as we learned of the facts. We did not want to be caught with our pants down, so we made things public as soon as we learned of it," he tells ShippingWatch.

This was also the case when the size of the bribery turned out to be bigger than initially assumed.

Following the first announcement in October 2016, the internal investigation showed that there were also problems in the Asian part of the business. So when Hempel presented its annual report in April, the company was at the same time able to inform that it had now fired a total of seven employees in Germany as well as three senior employees in Asia.

The company also had to earmark DKK 300 million (USD 47.3 million) to pay for external consultants, potential fines, and additional taxes, while the case was also reported to the Danish Attorney General's Office for fraud and financial crimes, colloquially known as the Fraud Squad (SØIK), which will look into whether to indict individuals in Denmark.

Traveled around to see customers

While the media was informed continuously throughout the past year, communication to Hempel's around 6,000 employees has at all times been a top priority, explains Communication Director Eggers.

"We always made sure that employees were kept informed, so that they wouldn't have to read about the case in the media," he says.

If you don't inform your customers about a case like this, and they learn through different channels, you could potentially lose that customer forever"

Henrik Andersen, CEO, Hempel
Meanwhile, it was also necessary for the company to explain itself to its customers, which include numerous carriers and oil companies.

The customers who felt most impacted by the case, CEO Andersen visited in person. And salesmen and other employees were equipped to answer questions which would inevitably come up in their daily contact with customers.

"If you don't inform your customers about a case like this, and they learn through different channels, you could potentially lose that customer forever. Whereas if you inform them about the matter openly and honestly, it could actually strengthen the relations," says Andersen, though he adds that it also sends an important message to the sector when a company of Hempel's size openly addresses its bad cases.

"It shows that one cannot have issues of this nature without going public with them," he says.

Take charge

Even though the case is currently with the Danish Attorney General's office and thus remains open, Hempel is pleased with the communication in a case which everyone in the company would rather have been without.

The decision to play with open cards from the get-go was right, says Communications Director Eggers as well as CEO Andersen.

"It might be tempting to stick your head in the ground and hope that the storm passes. But for us it's been better to put everything out there, though it can of course be a difficult decision. We had this discussion briefly, but we quickly moved on from that," says Eggers.

One advantage of the openness has been that Hempel is on the forefront of how the case develops, rather than letting the media dictate when information was made public, explains Andersen.

"It's also our experience that this approach has meant that things were reported correctly in the parts of the media. So we've been able to refer our customers to articles in the media which are factually correct," he tells ShippingWatch.

This article is part of ShippingWatch's series about how maritime companies handle their communication during a time where the public is watching businesses and their way of handling things more than ever. Read the other articles in the series here:

Port of Gothenburg labor conflict required constant communication

Communications chief ended vacation when DSV landed UTi

DFDS uses communication to encapsulate crises

English Edit: Daniel Logan Berg-Munch

A new coat of paint is rocking the global shipping industry

Hempel sets aside USD 40 million in bribery case

Hempel's talents get intensive training in cultural sensitivity

Hempel dismisses four employees connected with alleged bribery

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