Technological Fraud in Cycling and the Myth of the Rogue Employee

This article was republished with permission from Tom Fox’s FCPA Compliance and Ethics Blog.

On this day in 1934, Hammerin’ Hank Aaron was born.  For my money, he is the greatest homerun hitter ever. He began his professional baseball career in 1952 in the Negro League, but soon joined the Milwaukee Braves of the National League in 1954, eight years after Jackie Robinson had integrated baseball. He quickly established himself as an important player for the Braves and won the National League batting title in 1956. The following season, he took home the league’s Most Valuable Player (MVP) award and helped the Braves beat Mickey Mantle and the heavily favored New York Yankees in the World Series. The Braves returned to the World Series in 1958, but lost to the Yankees in seven games.

In 1959, Aaron won his second league batting title. He hit .300 or higher for 14 seasons and slugged out at least 40 homers in eight separate seasons. In May 1970, he became the first player in baseball to record 500 homers and 3,000 hits. I will never forget Milo Hamilton’s call of Aaron’s shot to break Babe Ruth’s record of 714 career home runs, on April 8, 1974, against the Los Angeles Dodgers. Aaron retired in 1976 with 755 total homers, 2,297 career runs batted in, 6,856 career total bases and 1,477 career extra base hits; the final three records still standing.

Aaron’s career homerun records stand in stark contrast to the man who broke his record, Barry Bonds, who is believed to have used performance-enhancing drugs to break the record. While Bonds’ cheating may not have been proven, that of Lance Armstrong in cycling is well-known and well-documented. One of the most interesting (or perhaps saddest) things that occurred when Armstrong finally admitted he had doped was that cheating was so widespread in the sport that there was no one left to award the vacated first place awards to after Armstrong was stripped of his.

Yet as bad as cheating in cycling was, it actually may have been taken to a new level with the introduction of what the Wall Street Journal called “technological fraud.” In an article entitled “Cycling’s New Scandal is a Motor,” Jason Gay detailed that the latest scandal to hit international cycling events is the motorization of the bike. He wrote, “I’m talking about an elite-level cyclist getting busted this weekend for a motor in a bicycle. That’s right, a motor inside a leg-powered bicycle. Just when you think you’ve heard it all about illegal performance enhancement in sports, here comes … vroooooooooom … perhaps the goofiest scandal ever.”

The motor appeared in the bike of Femke Van den Driessche in the sport of cyclocross, which combines cycling, some running with the bike on your shoulder and clearing obstacles such as barriers and steps. Gay reported that Union Cycliste Internationale President Brian Cookson confirmed that there was “a concealed motor” at a news conference. You do have to admire cyclist Van den Driessche, who mounted the best “big-dog-ate-my-homework” defense since at least the Pink Panther movies when she denied that it was her bike, adding, “I would never cheat.”

Even Gay admitted the entire episode sounded so preposterous as to be absurd, yet he noted, “It sounds absurd, but such technology exists. Small, battery-powered motors have been made that can fit inside the bottom bracket of a bicycle, near the pedals, which can be turned on and off with the push of a hidden button. It isn’t as if the bike suddenly turns into a Harley-Davidson – instead, the motor gives the rider an artificial push as he or she continues to pedal the bike.”

Sadly, Gay cited Katie Compton, a U.S. cyclocross racer, who was quoted as saying, “I didn’t think that it would actually ever happen.” Even worse she said, “this has probably been happening on the road more than anyone realizes.” Gay also quoted former men’s U.S. cyclocross champion, Tim Johnson, who said he was “ashamed to have this happen in our sport.”

Obviously, this is a problem. But it also speaks to why the myth of the rogue employee is simply that – a myth. How many people do you think it took to develop and sell the motor unit, custom made for cyclocross? Who do you think installed it? Too bad Van den Driessche is not German, as perhaps she could advise Volkswagen going forward on how to claim its 10-year program to defraud emissions testing was the result of “rogue engineers.”

How about the most recent Foreign Corrupt Practices Act enforcement action involving SAP? There have been rumblings that the former head of Latin America Sales, Vicente Garcia, was that pesky lone wolf, the rogue employee, and that he somehow managed to create a slush fund for the payment of bribes all on his own by intentionally deceiving his employer, the worldwide software giant SAP. Does anyone realistically think he did this all on his own?

But perhaps the more important question is the following: if Garcia defrauded an $85 billion company, according to the site NetWorth.com, what does it say about the internal controls of a company that allowed a senior-level employee to do this and, indeed, one who admitted that he believed paying such bribes was necessary to secure both the initial contract and additional Panamanian government contracts?

The tale of the rogue employee is likened to the explanation that it was really just human error. The problem with this is there is no exploration of the compliance system failures that allowed the employee to engage in the bribery and corruption. Even if an employee can evade the controls in a system at one level, there should be another level of oversight. In Garcia’s case, it appears he could set the discount rate for the corrupt distributor through which the bribe was paid in addition to the sales price with no meaningful oversight.

What about cheating by putting a motor on a leg-powered bicycle? Gay said it was probably “a punch line too far,” and quoted cyclocross champion Johnson as saying, “I laugh and you laugh, but it’s really not funny. It sucks.”

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