Update Autumn 2015

Is compliance keeping you up at night?

Breaching regulations is an expensive business as Volkswagen has discovered. Within hours of the revelation going public, the company had lost a fifth of its market value, its managers faced criminal charges and several billion dollars had been removed from the bottom line to pay for the recall and inevitable fines. Described by some as the Libor of the car industry, the emissions scandal shows how quickly and deeply companies can be damaged.

VW is not alone in paying a hefty price; prosecution authorities have become much more active. So far this year, the Financial Conduct Authority in the UK has fined companies in excess of £800m and businesses are also vulnerable to fines from the Serious Fraud Office of up to 400 per cent of any illicit profits from bribery, fraud or money laundering.

Not surprisingly compliance teams are taking a long hard look at how to avoid such scenarios. We are increasingly working with clients to test and strengthen their compliance function and can see an ethics-based approach clearly emerging as best practice.

Companies are realising that compliance efforts are more likely to fail if they are not underpinned by a strong ethical culture. If the ethical values of the code of conduct are properly embedded then compliance is more likely to be assured across the many aspects of a business governed by regulation and legislation. 

The latest goodblog looks at the steps needed to put robust compliance in place and ensure a good night’s sleep. GoodCorporation client Tullow Oil summarises their approach below. We also include reports from our business ethics debates, our appearances on the conference circuit and other news.

If you would like to talk to us about testing or strengthening your compliance programme, please get in touch.

DOJ to focus on individuals in corporate crime cases

In September the Department of Justice (DOJ) issued a memorandum from the Deputy Attorney General announcing the Department’s intention to pursue aggressively any individuals involved in corporate crimes.

According to the memorandum, the DOJ believes that seeking to hold individuals to account for perpetrating illegal misconduct is one of the most effective ways of combating white-collar crimes. Such accountability, the Department believes, will deter future illegal activity, incentivise change in corporate behaviour, ensure that the proper parties are held responsible and promote public trust in the justice system.

The memorandum, known as the Yates Memo, has identified six ‘key steps’ that will enable DOJ attorneys to do this.

See the goodblog for details of the six steps and what this might mean for international businesses.

Building an ethical compliance function

Tullow OIl has long recognised that compliance and high ethical standards are critical to good corporate governance. The company’s Code of Business Conduct is widely promoted to all staff and business partners, and its anti-bribery and corruption programme has twice been independently reviewed by GoodCorporation. In 2014, it was ranked in the top quartile of GoodCorporation’s benchmark of anti-corruption adequate procedures reviews.

Building on this commitment, Tullow invited GoodCorporation to provide expertise on how to strengthen its compliance function still further by underpinning the rules with a greater emphasis on the company’s ethical values.

This has involved:

• An organisational risk assessment to identify which business function is responsible for which area of ethical risk and how these risks are governed by the Code of Business Conduct.
• Allocation of responsibility for compliance with the Code within each department
• Identification of the structure and resources necessary to deliver compliance by department
• Advice on a measurement system identifying relevant KPIs to enable an assessment of effective compliance
• Definition of a reporting and assurance framework to identify what should be reported and how an assurance of ethical conduct could be undertaken and delivered to the Board.

GoodCorporation leads debate at Compliance Week Europe event

As the multimillion dollar fines show, the failure to prevent bribery is a costly affair. So how can a business decide when its anti-corruption procedures are adequate?

GoodCorporation will be posing this question in the closing session of the first day of Compliance Week Europe in Brussels, October 26-7.

Leo Martin will moderate what promises to be a vigorous debate between conference attendees and fellow panelists Christopher David, Counsel at Wilmer Hale and Danone SA Chief Compliance Officer Alexander Jungling.