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DOJ: Why Effective Compliance Programs Make Good Business Sense

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Compliance officers already know that effective compliance programs make good business sense. Anyone needing more assurances should pay close attention to US Department of Justice (DOJ) Deputy Attorney Brent Snyder’s remarks: Compliance is a Culture, Not Just a Policy.

Snyder’s remarks to the International Chamber of Commerce and the US Council for International Business, speak to anti-trust compliance, but equally apply to anti-corruption compliance. Like anti-trust enforcement, prosecutors rely on large criminal fines for companies and jail time for executives to deter corruption offences. These direct costs, together with indirect damage to the company’s reputation and lost business opportunities, make compliance the more attractive alternative to lengthy investigations and possible criminal prosecution. An effective compliance program has the potential to eliminate those risks.

Ideally, an effective compliance program would prevent all corruption offences. But even if a compliance program does not prevent all offences, it should allow the offence to be quickly detected. Early detection allows a company to take remedial action, self-report, and cooperate completely with a possible investigation. This can allow a company to potentially avoid prosecution altogether and reduce possible criminal fines and civil damages. So even with a less than effective compliance program, a company and its management can still benefit.

Effective compliance programs to prevent corruption offences make good business sense and are far more preferable than large prison sentences and costly fines. An effective compliance program should prevent a crime from beginning, and at the very least, detect it and stop the crime from developing. The best outcome for a company is to never be the subject of an investigation, and an effective compliance program has the potential to stop that.

What makes an effective compliance and ethics program?

  • A company’s senior management must fully support and engage the company’s compliance efforts: if the bosses don’t take compliance seriously, neither will the employees.
  • It ensures the entire organization is committed to its compliance efforts: educate senior management, most employees, and, where appropriate, provide training for subsidiaries, distributors, agents, and contractors. This can include anonymous reporting and guidance about prohibited conduct without fear of retaliation.
  • It provides, in addition to training, a forum for feedback, regular monitoring and assessment of risk activities, and regular evaluation of the compliance program.
  • It encourages employees to adhere to the compliance program, and be willing to discipline those that don’t and reward those that do.
  • And it take steps necessary to prevent future offences if criminal conduct is discovered. This likely means making changes to the compliance program which failed to prevent the criminal conduct, and accept responsibility for that conduct.

The purpose of having an effective compliance system is not so that the DOJ will cut you or your company some slack if it commits an offence. The purpose is to be a good and responsible corporate citizen. That means to avoid being the subject of a criminal investigation, the prospect of early detection and leniency. It also means avoiding damage to your company brand, not missing business opportunities through blacklisting or a damaged reputation, and avoiding the costs of lengthy criminal investigations and prosecutions. In short, an effective compliance system is good common sense and business sense.

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