The FCPA Guidance could not have been clearer; it could not have offered more incentives and carrots to the business community. If you adopt and implement an “effective” compliance program, you will receive significant credit for your program which can reduce a penalty, avoid a corporate monitor, or even secure a declination — a free pass — for FCPA violations.
The message is clear to the business community – spend the money and the time to make sure you comply. DOJ and SEC reiterated that they do not hold a company to a standard of perfection, violations can even occur when a company has a robust compliance program.
Yet, we see that maybe half of all American businesses are not improving their compliance programs. Half are sitting on their hands and praying for compliance.
Those who argue for a compliance defense have never explained in practical terms how such a defense would work. Until they address the issues and fix the obvious problems with the defense, the prpoposal will never gain any ground. See my post here.
Corporate boards, audit/compliance committees, and senior management need to step up to the plate and increase the push for compliance. The investment is well worth it – it is insurance against a possible violation and compliance will reduce, not eliminate, the risk of a violation. A failure to act in these circumstances is nothing less than corporate irresponsibility. Or to put it another way – companies that continue to ignore compliance will reap what they sow.
What prevents companies from paying attention to this issue? This is no longer a matter of education. That is already occurred and everyone with a brain and some senses knows about anti-corruption enforcement and the risks.
Corporate governance is facing a new test. It is clear that aggressive FCPA enforcement will continue for at least the next four years and more likely into a new Administration. Fantasies of Congressional relief were always fantasies. Corporate governance has to act; if it does not, Congress will be forced to pass a new round of corporate governance requirements, imposing compliance for anti-corruption and other risks, akin to Sarbanes-Oxley and Dodd-Frank reforms.
Congressional action would be even more prescriptive than past reform efforts and impose a long-list of specific compliance requirements, all in the interest of preserving shareholder value and the public interest in financial markets.
For most companies, the cost of a compliance program is not prohibitive. It requires companies to dedicate people, resources and time to compliance. Corporate leaders have a responsible path to follow. When they weigh the cost of compliance against the risk of enforcement, the answer is clear.
Corporate intransigence has to give way to proactive leadership. Companies know how to act in advance – they do so all the time when it comes to new business lines, products and services. This same creativity and passion can be applied to compliance with minimal loss to the bottom line.
As I always say, every organization has a basic predisposition to say “no, we cannot do that.” Business leaders use this mantra to avoid risk, keep their heads down and hope for the best. But we all know that the “real” leaders are the ones that say: “We have a problem. What are we doing to fix it? Let’s a find a way to get the job done!”
When it comes to compliance, businesses are standing at this crossroad. Let’s hope they move forward instead of backward.
This article originally appeared on corruptioncrimecompliance