Compliance doesn’t sell itself. Corporate officers and directors, at some point in their careers, need to be convinced that compliance is good for them and for their business. How to convince them is always the challenge.
Here’s a strong pitch for compliance from Brent Snyder, the DOJ’s deputy assistant attorney general at the Antitrust Division.
Snyder, left, spoke to a business group last week in New York City. He talked about anti-trust compliance. But what he said works just as well for anti-corruption compliance too.
(The DOJ’s anti-trust unit has a Corporate Leniency Program and the FCPA unit doesn’t. But the DOJ does give (or withhold) cooperation credit when it’s time for an FCPA-related sentencing, and the impact is roughly equivalent to the anti-trust unit’s Corporate Leniency Program.)
Anyone who needs to be sold on why a effective corporate program to comply with any type of criminal law is good for them and their business will have a hard time ignoring Snyder’s words.
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As prosecutors, we are seldom positioned to stop a crime before it starts. We must rely on deterrence. This means we seek large criminal fines for corporations and significant jail time for executives who commit antitrust crimes.
Certainly, compliance programs that prevent antitrust violations are far more preferable.
This leads me to the most basic point I want to make today, which is also the most important one. A truly well-run compliance program should prevent a company from conspiring to fix prices, rig bids, or allocate markets.
Effective compliance programs should prevent that crime from beginning or, at a minimum, detect it and stop it shortly after it starts. Without question the best outcome for a company and its shareholders is to never be a subject of an international cartel investigation. And an effective compliance program has the potential to be a significant contributor to that end.
The risks of participating in a price-fixing cartel should be obvious: high fines for the company; significant jail time for executives; expensive attorneys’ fees; substantial civil damages owed to customers; and exposure to further criminal investigations — not to mention the associated bad publicity and internal distraction from the actual business of the company. All these outcomes can be avoided if companies implement effective compliance programs.
Compliance is especially important because the risk of detection and punishment has never been higher. Today dozens of countries have effective and aggressive cartel enforcement programs. An increasing number of them have followed the U.S.’s lead and criminalized anticompetitive conspiracies.
More and more countries are working together through Interpol to identify individual conspirators as they travel from country to country. And in the last few years, the U.S. has obtained extradition of executives both for conspiring to fix prices and for obstructing our investigations. In short, with each passing year the world gets smaller and there are fewer places to hide from international cartel enforcement.
In an ideal world, every company would have an effective compliance program, and all compliance programs would prevent cartel activity. Unfortunately, this is not an ideal world. But companies can still benefit from their compliance programs, even when those programs fall short of preventing all collusion.
Even where a company’s compliance program does not prevent all collusion, it may allow the company to self-report its conduct to the Division under our Corporate Leniency Program. For those of you who are not familiar with it, the Division’s Leniency Program allows companies to self-report their participation in illegal cartels. In exchange for self-reporting the illegal conduct, and for complete cooperation with the resulting investigation, a corporate leniency applicant will not be prosecuted by the Division.
The Division will take a similar approach to the corporate applicant’s current employees, if they admit their knowledge and participation in the conspiracy and cooperate completely with the investigation.
Leniency may also permit a company to obtain a reduction in treble damages liability in the civil lawsuits that inevitably arise from our investigations. Companies may also apply for leniency abroad. Dozens of countries today have leniency programs modeled after the Division’s, and we frequently see companies apply for leniency in more than one country at a time.
Even a partially effective compliance program can help a company meet many of the requirements of the Division’s leniency program. To earn leniency, among other things a company must be the first to report the illegal conspiracy, must promptly stop its participation in that conspiracy, and must fully disclose its crimes.
A company with at least a partially effective compliance program should be able to discover the cartel early, increasing its chances of seeking leniency before its co-conspirators do, and then promptly stop its participation, disclose its antitrust crimes completely, and fully cooperate with the Division’s investigation.
In sum, compliance programs make good sense – both good common sense and good business sense.
Compliance programs help prevent companies from committing crimes in the first place. Even if they fail to do so, partially successful compliance programs may help companies qualify for leniency.
Either outcome easily warrants your companies’ efforts to adopt and strengthen compliance programs.
In the second half of his talk, Snyder talked about what makes an effective compliance and ethics program. That part is good too.
His full remarks to the International Chamber of Commerce / United States Council of International Business Joint Antitrust Compliance Workshop on September 9, 2014 are here (in pdf).
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.