[Editors’s note: This post is Part Six in a series about compliance officers. Part One is here, Part Two is here, Part Three is here, Part Four is here, and Part Five is here.]
Let’s look at two companies, and tales of two Invisible Compliance Officers.
At “Responsible Corp,” the COs work shoulder to shoulder with Management and the Board to get FCPA compliance right. It works. The company never has to announce a bribery scheme detected or prevented. The public therefore learns next to nothing about Responsible Corp’s successful compliance program and the compliance officers dedicated to making it work.
Over at “Irresponsible Inc” the COs are invisible too. But for the wrong reasons. They chase little issues all day and run a compliance program that produces pieces of paper by the millions. But there’s no grand vision or executive commitment. So for big-dollar deals, messy details are hidden from the compliance officers.
End result? We eventually read headlines about graft-tainted deals at Irresponsible Inc. But somehow we learn nothing about management’s cynical use of its compliance program and the COs hired to run it. The silence means we’ve lost another opportunity to learn what went wrong and why.
What’s the fix? I’ll illustrate with a press conference I’d like to see at Irresponsible Inc, where the CEO has just announced a DOJ/SEC investigation:
Q (Reporter)- Sir, the company allegedly paid millions in bribes in China for years through third parties like travel agencies. Can you explain what happened to your compliance program which is supposed to detect and prevent bribery?
A- I’m sorry but I’m here today not to rehash past events but to talk about the bright future of the company. Such as our comprehensive efforts, already ongoing, to enhance our compliance program. Next question.
Q- (yelling over others) Excuse me, Sir. The shareholders and investors are entitled to know if the company’s investment in compliance was wasted or misspent by management. What has been spent on compliance? Is the program under staffed? How did the violations go undetected by your COs and the whole compliance machinery?
A- Sometimes in business, the risk factors align in a loss configuration, despite best efforts. Last question.
Q- (Reporters shouting) Can you tell us if any COs knew about the alleged bribery scheme and reported it to anyone in management? Was there an investigation? Did the Board know? Did the Law Department give advice to anyone that the behavior was legal? Were compliance officers disciplined for incompetence? Were any forced out or did they resign under protest? Will you let us interview them . . .?
From the start, the press should aim for the whole story, always reporting what happened to the COs. Most reporters, however, don’t understand what COs do and cannot dig that deep into stories. So it’s up to the CO professional associations, international anti-corruption organizations, academics, and blogs like this one to help them out. They can brief reporters about how compliance programs are supposed to work, why programs fail, and what questions should be asked about the compliance officers and their work.
Compliance professionals, too, should consider supporting journalists and the free press to achieve FCPA policies and goals. That’s tricky because of duties of confidentiality and loyalty owed to employers. But are there times when it would be better for COs to seek media coverage to protect themselves or other COs rather than remain invisible?
Michael Scher is a contributing editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney. His work for major companies in New York and the Middle East includes military procurements, international trade contracting, supervision of national sales forces and training for compliance with related laws, like the FCPA or AML. Miami-based, he assists companies in training and work shops and FCPA-related projects or investigations. In addition to English, he speaks French and Hebrew. Contact him here.
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