Redflex enforces commitment to ethics

Redflex has introduced stringent ethical and procedural requirements following an investigation into corruption in Chicago.

Like the Phoenix, which also happens to be the name of the company’s home city, 112 Redflex Traffic Systems has been reborn. Following a headline-making public relations debacle late last year, Redflex has reinvented itself, establishing a series of stringent policies and procedures to ensure ethical business conduct, while continuing to deliver the traffic safety technology and services the company is known for throughout North America.

The Chicago contract

The company has been developing and supplying safety products, including speed cameras, red light cameras, school bus stop arm cameras and other photo enforcement solutions for more than 25 years. To understand the gravity of the changes Redflex has gone through in the past several months, it is necessary to go back to where the problem started: Chicago.

Redflex held contracts with the City of Chicago since 2003 to provide automated traffic enforcement products. Under the current contracts, entered into in 2008, Redflex installed and managed 384 automated enforcement systems for Chicago until January 2013.

During an internal investigation, Redflex discovered that one of its employees paid US$910 for a hotel room for a City of Chicago employee, the City Program Manager. Redflex disclosed this incident to the Chicago Board of Ethics in October 2012, and cooperated with the resulting investigation by the City of Chicago Inspector General’s Office.

Redflex CEO Robert DeVincenzi was quoted by the Chicago Tribune saying, “We learned that some Redflex employees did not meet our own code of conduct and the standards that the people of the City of Chicago deserve. We are sharing information with law enforcement authorities, will take corrective action and I will do everything in my power to regain the trust of the Chicago community.”

In February, Redflex received notification from the City of Chicago’s Department of Procurement Services that it will “not be considered a responsible vendor for the new RFP for red light cameras that the City intends to issue in the near future.”

Meanwhile, that same month, Redflex received a six-month extension to its existing Red Light Photo Enforcement contracts with the City of Chicago, now expiring on July 31, 2013.

A four-month long independent internal investigation into Redflex’s Chicago contract, conducted under the direction of the Audit Committee of the Board of Directors of Redflex Holdings, by the law firm Sidley Austin LLP, concluded that an arrangement between the Chicago City Program Manager, a consultant and Redflex will likely be considered bribery by the authorities; Redflex provided vacation-related expenses and other items of value to the City Program Manager in violation of the City of Chicago’s Governmental Ethics Ordinance; and certain Redflex officials violated company policies and code of conduct.
A reorganisation in March saw the company initiate a concerted effort to restore its public image. This resulted in several executives leaving the company, under either resignation or termination while Robert DeVincenzi, CEO of Redflex Holdings, assumed the position of President and CEO of Redflex Traffic Systems.

Building trust

“We implemented a comprehensive compliance and training program to ensure we conduct business in a way that meets the highest ethical standards,” DeVincenzi tells ITS International. “This includes a structured training program to educate all employees about compliance policies; implementing a new process on the approval of gifts, hospitality and expense procedures. There is also a 24-hour hotline and dedicated email address to report suspicious activities, revised contract provisions, and membership of TRACE International, an association that provides compliance solutions and software.”

In the spirit of transparency, the company’s policies on gifts and hospitality, political donations and whistleblower procedures are all available on its website. The website also  states: ‘Redflex Traffic Systems is committed to the highest standards of ethical and professional conduct. We want to lead the industry in how business is conducted and operate at the highest levels of public trust.’

Furthermore, the company created a Director of Compliance position, reporting straight to Redflex Holdings’ Audit Committee which is comprised of independent directors.

Making a commitment

Also on the website is a ‘Compliance Pledge’ stating: ‘Redflex employees may not give, offer, promise, directly or indirectly, anything of value to a representative of a customer, of a potential customer, or of a financial institution in connection with any transaction or business that the company may have with that customer, potential customer or financial institution.’

Redflex currently asks customers and company representatives to sign the document, as a way of building trust and demonstrating the company’s commitment to ethics and compliance. Beyond the ‘Compliance Pledge’ the company also intends to include specific new contract clauses in relation to compliance. Sales consulting, master subcontractor and professional services agreements are expected to include strong anti-bribery and anti-corruption provisions.

The company also asks government and law enforcement agencies to do their part as well, and act as a watchdog to prevent unethical business behaviour while its website carries a list of questions municipalities should consider when selecting a vendor.

These include: Does the vendor have a Code of Conduct Policy that includes prohibitions on giving (or receiving) gifts, hospitalities, or anything of value in connection with the award or management of a contract? Does the prospective vendor have a whistleblower policy in place? Has the vendor ever lost a contract or been debarred because of its unethical conduct?
In the end, this goes beyond business development and sales processes because Redflex provides photo enforcement technology, which is already a hot button issue for some Americans. As such the company must make extra efforts to assure government officials, law enforcement agencies and the general public that the services it provides are ethical and compliant.

To that end the company has posted a list of commitments on its website that include rigorous analysis, compliance with code, integrity of data and processes, and accurate, transparent review processes. The latter states: ‘Redflex works with city officials to develop a transparent, impartial and multi-tiered review system so that every set of evidence is reviewed by several verification specialists before it’s ultimately reviewed by city officials, who issue citations or dismiss the violation.’

Moving forward

“It is important to point out that these investigations have not impacted the quality or performance of our products and services, nor have they diminished our commitment to our clients,” DeVincenzi asserts. “In light of recent changes to leadership, systems and processes, Redflex should be treated as a low-risk, highly ethical vendor.

“As a publicly traded company Redflex holds itself to a higher standard than our non-public competitors, as we are required to release information to our shareholders and the public,” he continues. “These disclosures include commentary on our business model, financial health, debts and the forward strategy for our business. We are prepared to address any elected official or client who has questions.”

“We have emerged as a new company – in leadership, in operations, in culture,” DeVincenzi asserts. “We are a stronger enterprise because of the disclosures we’ve made, and the corrective actions and improvements we have instituted.”

The company says it maintains a strong customer base.

“We continue to renew, extend and sign new contracts on a regular basis,” DeVincenzi continues. He says the company has executed, renewed or extended more than 35 contracts in the US since the announcement of the organisational changes two months ago. “We are grateful for our clients’ ongoing support,” he adds.

“Redflex leads the industry in how transparent public-private partnerships should be conducted. An honest self-evaluation is critical for growth. We are proud of the steps we’ve taken to strengthen our business. We have set the highest ethical standards in our industry, and we challenge our competitors to review their own internal processes and conduct a similar self-evaluation,” concludes DeVincenzi.