CEP Magazine (March 2024)
There’s good and bad news out there for compliance departments, and it’s also the same news: Governments now very much appreciate strong compliance programs.
On the one hand, that is very good (if not great!) news. Prosecutors expect organizations to have strong, well-resourced, and effective compliance efforts. Companies that don’t will have lots of explaining to do, and likely much higher penalties.
In the U.S., proof can be found in the U.S. Department of Justice’s (DOJ) Evaluation of Corporate Compliance Programs, as well as the November 2023 General Compliance Program Guidance issued by the U.S. Department of Health and Human Services Office of Inspector General. Both texts demonstrate that the government understands what makes for an effective program.
Notable, too, both call for programs with adequate resources and direct access to leadership. Compliance most definitely needs to be a program that stands on its own alongside other organizational control functions.
Outside the U.S., as more and more countries enact laws against foreign bribery, they also provide strong incentives for companies to build robust compliance efforts. Public–private partnerships are also emerging to stem corruption and, with them, a greater emphasis on compliance efforts.
That’s the good news, but also the bad news because prosecutors are clearly expecting more from our compliance efforts. With their greater expertise, enforcement authorities can better assess how well-thought-out and resourced the program is.
Unfortunately for many, this is coming at a time when some companies are devaluing compliance efforts. With the never-ending prospect of a recession, many businesses are looking to cut costs, and compliance budgets are under pressure. Some organizations are going against best practices and rather strong governmental warnings and looking to put compliance under legal or another department. In Brazil, as Operação Lava Jato (Operation Car Wash) and other corruption scandals there move further into the past, the word “overcompliance” is now sometimes heard in business.
In addition, even the best compliance programs still struggle in some areas. DOJ, for example, wants to see data on the program that doesn’t just document effort but also results. That’s difficult for many organizations to produce.
So, as we embrace the good news, we need to take this as a moment to embrace the bad news: We still have a long way to go.
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