On Measuring The Effectiveness Of A Compliance Program …
A reader (a compliance professional at a large publicly traded company with operations around the world) asks:
“One of the things I am struggling with is how to measure the effectiveness of a compliance program. I find it easy to measure activity, but the real value is in the avoidance of penalties and pre/post expenses, negative publicity, customer retention, share value reduction, etc. A good compliance program for a global company is a significant and costly investment and one that is always being reviewed and squeezed as business cycles fluctuate. The catch-22 is that the more effective the compliance program, the less issues that are identified, equaling more questions as to why we need such a significant investment. The programs own success can be its biggest challenge. Thoughts on ideas on effective measurements of a compliance program?”
Set forth below are my thoughts on this difficult issue – difficult because of what legal authority (as well enforcement agency guidance) actually say vs. seemingly conflicting actual FCPA enforcement actions and enforcement agency double-speak.
Citigroup Pays $10.5 Million To Resolve Books And Records And Internal Controls Enforcement Actions
This 2014 post highlighted Citigroup’s FCPA scrutiny after it disclosed various business practices in its Mexican Banamex unit. The prior post highlighted how the FCPA’s generic books and records and internal controls provisions can be implicated in the absence of any FCPA anti-bribery issues.
Fast forward to last week as the SEC announced two enforcement actions (see here and here) against Citigroup finding violations of, among other things, the FCPA’s books and records and internal controls provisions.
Issues To Consider From The Credit Suisse Enforcement Action
This post highlighted the recent $77 million Foreign Corrupt Practices Act enforcement action against Credit Suisse concerning its internship and hiring practices involving family members of alleged Chinese “foreign officials.” This post continues the analysis by highlighting additional issues to consider.
Timeline
Credit Suisse’s FCPA scrutiny appears to have begun in late 2013 (see here). Thus from start to finish, its scrutiny lasted approximately 4.5 years.
FCPA Flash Podcast – A Conversation With Philip Rohlik Regarding The Dun & Bradstreet Enforcement Action
The FCPA Flash podcast provides in an audio format the same fresh, candid, and informed commentary about the Foreign Corrupt Practices Act and related topics as readers have come to expect from written posts on FCPA Professor.
This FCPA Flash episode is a conversation with Philip Rohlik (Debevoise & Plimpton) regarding the recent Dun & Bradstreet enforcement action. As highlighted in this previous post, the enforcement action was unremarkable from a settlement amount perspective, yet serves as a microcosm of the many problems with FCPA enforcement and in the podcast Rohlik: questions just what criminal charges the DOJ actually declined and discusses other issues relevant to the so-called declination; discusses the concerning internal controls standard the SEC invoked in the enforcement action; and takes issue with certain commentary regarding the enforcement action.
Issues To Consider From The Legg Mason Enforcement Action
This previous post went in-depth into the DOJ’s recent Foreign Corrupt Practices Act enforcement action against Legg Mason. This post continues the analysis by highlighting additional issues to consider.
SEC Enforcement Action Is Forthcoming
Given Legg Mason’s recent disclosure (see here for the prior post), it was a bit of a surprise that this week’s enforcement action included only a DOJ component. FCPA enforcement actions against issuers that involve a DOJ and SEC component are almost always announced on the same day.