This week I’ve been using my head to smash through some myths about compliance professionals and the jobs they do. I’m a bit bloodied by the exercise, but encouraged by so many generous comments from readers. So let’s do it one more time.
In prior posts here and here, I talked about five outdated and dangerous myths from the old days of Compliance 1.0 — compensating compliance officers, their workloads, their importance and effectiveness, non-lawyers as compliance officers, and the Federal Sentencing Guidelines.
Let’s finish this part of the discussion with a few more compliance myths that always make me mad:
Myth Number Seven: Board oversight isn’t effective. Never-ending temptations of big profits cause lapses in integrity even at good companies. The pressures in the C-Suite are enormous and we should never forget it can be a cauldron of misconduct. If the chief compliance officer is reporting to a C-Suiter, compliance issues may fall into obscurity (at least for a while). But when the compliance chief has a direct-line report to the directors, perhaps through the audit committee, there shouldn’t be any failures to escalate.
And what will happen at the board level? Plenty. Directors of public companies are generally taking a zero-tolerance approach to potential bribe-related offenses. Investigations are the rule, and sweeping questionable payments and practices under the rug is now viewed as all risk and no gain. Board oversight is a hallmark of Compliance 2.0.
Myth Number Eight: Ethics and compliance are two different topics. It’s true that ethics doesn’t create systems for detecting, investigating, and reporting bribery, and taking corrective action. All that comes from the nuts and bolts of a compliance program. But without ethics — the knowledge of right from wrong, good from bad, and lawful from awful — there’s no hope for compliance.
Ethics is where tone from the top comes from. Not some phony tone-like mutterings from a plastic CEO. But real words from a leader with a strong moral compass.
A compliance professional should never go to work at a company that has a compliance program but lacks ethics. It was during the Compliance 1.0 era when ethics-less companies used compliance officers as windrow dressing and scapegoats.
In our Compliance 2.0 world, ethics and compliance can’t be separated.
Myth Number Nine: Compliance officers have to be Americans. In the early years of the FCPA, anti-bribery compliance was an American discipline. It was the FCPA, in late 1977, that introduced the new idea of anti-corruption compliance. The FCPA stood alone, so only American lawyers needed to deal with it. That was how things were during the Compliance 1.0 era.
But a lot happened to change that. More than ten years ago, the OECD pushed member states to adopt and enforce anti-bribery laws. The need for compliance officers started to spread.
Five years ago, the U.S. took aim at foreign companies. It started with the mega-enforcement action against Siemens. Still today, eight of the ten biggest FCPA cases involve non-U.S. companies.
A couple of years ago, the UK Bribery Act became news. Suddenly enforcement was more international, and compliance more complicated. Now global enforcement is the big story. Germany, the UK, China, the Netherlands, Canada — all made enforcement news last year.
Americans had a head start. But the rest of the world now has plenty of incentive to produce compliance officers.
No wonder the International Anti-Corruption Academy (IACA) in Vienna now has 62 member parties, and students who come from around the globe. No wonder the SCCE is now running its well-known Basic Compliance & Ethics Academies around the U.S. and also in London, Brussels, Sydney, Singapore, Sao Paulo, and Dubai. No wonder nearly half of the FCPA Blog’s readers are now outside the United States.
As the FCPA Blog has said, enforcement is breaking out all over. And so is the new class of professionals who are preparing the ground for the coming golden age of Compliance 2.0.
Michael Scher is a senior editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney for international transactions. He can be contacted here.