Before the Siemens case and the birth of the modern era of FCPA enforcement, there were the ten elements of an effective compliance program. They came from the U.S. federal sentencing guidelines applicable to corporate defendants.
The ten elements were helpful but now there’s something better: The Hallmarks of Effective Compliance Programs.
They’re found in a chapter of the DOJ-SEC Guidance. The Hallmarks, also ten in number, go to the heart of the matter — how best to prevent corrupt payments to foreign officials.
First comes commitment by senior management:
Within a business organization, compliance begins with the board of directors and senior executives setting the proper tone for the rest of the company. Managers and employees take their cues from these corporate leaders.
Next comes the ‘hard science’ of compliance — oversight, training, due diligence, communications, risk assessment, feedback, integration, and more.
They’re all important. But without a ‘strong ethical culture’ at the top, the rest are window dressing.
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From the DOJ-SEC Guidance starting at page 57, here are the Hallmarks of Effective Compliance Programs:
- Commitment from senior management and a clearly articulated policy against corruption
- Code of conduct and compliance policies and procedures
- Oversight, autonomy, and resources
- Risk assessment
- Training and continuing advice
- Incentives and disciplinary measures
- Third-party due diligence and payments
- Confidential reporting and internal investigations apparatus
- Continuous improvement: periodic testing and review, and
- Mergers and acquisitions: pre-acquisition due diligence and post-acquisition integration.
The DOJ-SEC Guidance is available here.