Code Corner:

Having the Courage to Stand Up For What's Right

By Cornett Lewers, Senior Counsel and Director, Corporate Ethics & Compliance Programs

As we look back on 2007, we can all be proud of the progress ITT has made in strengthening our ethics and compliance program.

As a company, we are striving to meet the highest ethical standards every day. We are creating a future where every employee recognizes his or her essential role in creating a positive organizational culture: treating each other with respect, acting with integrity, and taking responsibility for our actions. 

Increasingly, employees and managers are displaying the courage to discuss difficult issues, express concerns and hold each other accountable for their behaviors. This is a true sign of progress.

In 2007, the ombudspersons and other Ethics & Compliance staff were asked to follow up on 99 potential violations of law, regulation or ITT policy. This represents a substantial increase from years past -- 57 reported violations in 2006, 76 in 2005 and 60 in 2004 -- and reflects greater awareness and trust in our program.  In fact, mid-year we began to see an increase in the frequency of reports, especially in the number of employees contacting EthicsPoint, our third-party, 24 hours a day, seven days a week hotline. This coincided with the launch of Code of Conduct training for our ITT Defense Electronics & Services group. We anticipate that these numbers will continue to rise as this program and additional ethics and compliance training and communication reach every employee in all three groups and ITT headquarters.

Despite this performance, we know that there are times when individuals want to report a possible violation -- but do not. Part of the problem may be concern about the ultimate consequences for the reporter and the violator. At ITT, we work extremely hard to ensure no one ever faces retaliation for raising concerns. We are also increasing training for ombudspersons and Ethics & Compliance Review Boards to help ensure that the confidentiality of all reports is protected to the maximum extent possible.

Ethics & Compliance Review Boards at the value centers, groups and ITT headquarters do take action when investigations confirm misconduct. The table below demonstrates this point:

Of the 99 cases that were investigated in 2007, most were simply misunderstandings. However, 26 of the investigations did require action: seven received disciplinary review, a written warning or reprimand; five led to terminations and 13 brought further action such as policy review or management training. All reports are taken seriously, and we respect the confidentiality of everyone involved to the maximum extent possible.  

In addition to these cases, there were a few long-term investigations and compliance issues that led to significant action in 2007. Several site-level general managers, as well as top managers at the value center, group and ITT corporate levels, have been separated from ITT, demoted, or lost a percentage of their compensation due to recent compliance challenges. Our ombudspersons, Ethics & Compliance staff and senior management have received inquiries about these actions. We wanted to let you know that action has been taken, but that we decline to offer more specific information out of respect for the privacy of the individuals involved.

As we all become more confident and aware of the ethics and compliance resources available, we are optimistic that more and more employees will share their concerns. Our progress on this path to addressing all ethical and compliance concerns should be encouraging to every ITT employee. Thanks to you and your participation in our program, we are closer than ever as we strive to "Do the Right Thing – Always".

2007 Ethics & Compliance reports at ITT by month and in comparison to previous years.