As compliance professionals, we would be kidding ourselves not to acknowledge that fear of enforcement — not business ethics — drives many management decisions to do the right thing.
When the violations are serious, weak enforcement is almost as bad as none. It sends the message that crime pays and society’s rules are for the timid or foolish.
So, when senior management of a company learns about serious misconduct but evades enforcement by covering up, the enforcement sanctions should be “extraordinary” to impress on the public and on potential future violators a fundamental principle: Society will defend itself.
The enforcement by the DOJ and the SEC against BP is “extraordinary” in this way.
After the rig blew up, BP knew about the lives lost and knew that it had unleashed an epic catastrophe. Yet despite this, BP senior officers lied and manipulated critical facts about the spill to thwart the investigation by Congress and to minimize enforcement.
Imagine a world where weak or cowed prosecutors fail in enforcement because the corrupted business culture that produces the crimes also produces corrupted officers who are clever and brazen enough to cover it up. In such a world, a compliance program would be a sham.
As compliance practitioners, we can appreciate how enforcement authorities make compliance a reality — and what is at stake by weakening enforcement or not.
This debate about limiting the enforcement powers of the DOJ and SEC was in full swing until the stunning allegations against Wal-Mart for covering up a massive bribery operation in Mexico by many levels of management.
According to the allegations against Wal-Mart, the cover up had succeeded until the lawyer who managed the bribery operation blew the whistle to the media which ran the story.
Wal-Mart is now in the midst of a worldwide internal investigation and a corporate reorganization. It has not been convicted nor agreed to any settlement. Its rights must be respected for due process and to a fair hearing in the enforcement process.
But respect for the enforcement process is also due. The world we wish to live in depends on it.
We cannot rely upon the good fortune of a media story to disclose alleged FCPA violations. The violations must be exposed and corrected, not hidden, by a company through its compliance program.
Fear of “extraordinary” sanctions for covering up deters the next cover up, motivates compliance and vindicates the principle of compliance itself. Getting enforcement “right” in the Wal-Mart case will be a landmark moment in the expansion of compliance and for the goals society achieves through investing in compliance.
Michael Scher is a contributing editor of the FCPA Blog.