After a tumultuous year in which Beazer Homes USA faced not only trying market conditions but federal and internal investigations into allegations of fraud in the company's mortgage business, the company has set in place a Global Compliance Program designed to keep it from ever happening again.
"I feel very comfortable that we've got a good program there," CEO Ian McCarthy said at the Wachovia Homebuilding and Building Products Conference on Feb. 29. "And that any of the actions that may have happened in the past, that we certainly have to correct, should not happen in the future."
On Monday March 3, nearly a year after the Charlotte Observer newspaper reported high rates of mortgage foreclosures in some of Beazer's communities in the area sparking federal investigations, the company filed its revised Code of Business Conduct and Ethics.
Last June, after launching its own independent internal investigation, Beazer fired its chief accounting officer Michael T. Rand for attempting to destroy documents.
In October, the investigators found evidence that the company's mortgage company employees violated regulations governing down-payment-assistance programs for FHA loans.
While the company did not release its former code of ethics for comparison, it says the new code makes clearer employees' obligations to report non-compliant activities, adds additional obligations for document retention, discrimination, anti-trust competition, the protection of confidential information and customer privacy, and spells out the company policy for electronic communications and computer systems.
The section of the code requiring employees to blow the whistle on wrong-doers is especially beefy. It spells out a requirement to report, gives a list of people the violations could be reported to and even sets up a telephone hot line and an Internet address where employees can report what they see as wrong-doing anonymously.
"To protect the rights of each Employee, no attempt to discipline or retaliate against any Employee for reporting in good faith known or suspected violations of the Code, law or Company policies will be permitted or tolerated," the code says.
As part of the company's global compliance code, Beazer has also appointed a senior attorney within the company to be its compliance officer, hired an outside law firm to help with compliance.
"Every action we take is really directed around being fully compliant," McCarthy said during the investors' conference. "We have always tried to maintain that attitude, but I will tell you to day we have taken it to a higher level."