Keys to an Effective Anti-Corruption Ethics and Compliance Program

Marc Tassé

By Marc Tassé 

Published on Tuesday December 3, 2019  

 

Businesses are coming under increased scrutiny, both at home and abroad, to ensure that their domestic and foreign operations comply with anti-corruption and anti-bribery legislation. International trends towards tougher legislation and increased enforcement of anti-corruption laws internationally make non-compliance a real risk that companies must address as a business priority.

There are significant financial, business, and reputational repercussions to not having an anti-corruption policy and effective compliance program in place. These could include criminal charges, hefty fines, and lost revenues.

Corruption has widespread economic effects – such as the development and quality of infrastructure – and social effects – like the erosion of trust and threats to national security.

For international corporate corruption to succeed, a culture of need, rationalization, opportunity and most importantly tolerance must exist.

This culture is dissolving in favor of a more ethically-focused environment, but this is not a fast process.

Beyond the illegal exchange of money, corruption can include the agreement to exchange a bribe, hiding the information through bookkeeping, encouraging employees to seek out unethical agreements or preventing them from going to the authorities.

On a positive note, a shift in the cultural acceptance for corporate corruption is occurring as awareness for the issue spreads globally and corporations embrace a more level playing field on which to do business.

By contrast, the three sides of the fraud triangle are:

  • Pressure
  • Opportunity
  • Rationalization

 

Failure to prevent or detect issues is often not because the programs or controls themselves are lacking, but because rules are ignored. Very often have the following statements   been used by offenders

“I wasn’t doing anything that others weren’t doing.”
“Bribery was tolerated and even rewarded at the highest levels.”

 

Accountabilities and Behaviours – Setting the Tone at the Top

The governing authority should exercise reasonable oversight over the implementation and effectiveness of the compliance and ethics program, and high-level personnel shall ensure that the organization has an effective compliance and ethics program and at least one individual will be assigned overall responsibility.

Day-to-day responsibility for the program should be assigned to specific individuals who will report to the high-level personnel and the governing authority, and the program should be promoted and enforced through appropriate incentives and disciplinary measures.

Due to social media, it is important that communications and actions are consistent, as information regarding inappropriate actions will travel quickly through the masses, whether that be employees or the general public.

It’s essential and crucial to be able to show strong, explicit and visible support and commitment from senior management to the company’s internal controls, ethics and compliance programs or measures for preventing and detecting foreign bribery.

The Chief Compliance Officer (CCO) should also send out regular communications to middle management and employees stating the importance of a strong culture of compliance and reinforcing the values of the company.  

 

How to establish a robust ethics and compliance program

In order to have an effective compliance program some very important questions need to be addressed and documented:

  • Does the CEO have the requisite skills and experience to move the organization forward?
  • Does the CEO possess the character and moral fibre to model and contribute to the development of a values-centered enterprise and strategy?
  • Does the CEO have the chemistry and communication skills necessary to rally others   to successfully and consistently deliver on the organization’s value proposition to all stakeholders?
  • Does the organization support the ethical culture and anti-corruption compliance program through training and communication, which includes allowing employees  to raise ethics and corruption compliance issues without fear of retaliation?
  • What is the process for assessing ethics and corruption compliance risks within the organization?
  • Have they updated their policies, procedures and internal controls to address emerging risks (e.g., cyber risk, anti-corruption)?
  • Does the current ethics and anti-corruption compliance program cover the organization’s global operations, including management, employees, shareholders, customers, subcontractors, business partners and vendors?
  • Does the organization have an ethics and compliance officer?
  • Does a reporting and monitoring process keep the board of directors informed of key ethics and corruption compliance issues, as well as the actions taken to address them?
  • Are ethics and corruption compliance issue a regular item on the board agenda?

 

Ways that a company can establish and reinforce tone at the top

The most challenging aspect of anti-corruption compliance is ensuring that it is integrated into company operations and the overall business strategy. In the same way that security regulations are only effective if they are accepted, understood and implemented by all, anti-corruption procedures require employees to accept and appreciate their effectiveness in order to ensure appropriate implementation.

Although talented people, with the best intentions, design anti-corruption compliance procedures, they are up against audacious individuals who can be very creative at bypassing company rules. That is why it is necessary to question our way of addressing the issue on a regular basis. Compliance must evolve constantly to adapt to the ever-changing methods used by criminals.

Organizations must ask themselves whether or not executives and senior management are demonstrating the organizational objectives expected of employees.

Incorporating targets involving anti-corruption or anti-fraud compliance, for example, will help to balance the pressure that senior management may feel to meet certain performance targets.

“Creating a culture of integrity begins with tone at the top, but it has to include the mood in the middle and the buzz at the bottom… As important and essential as compliance is, in the struggle between culture and compliance, culture always wins.”  

 

This article was inspired by:
Global Compact Network Canada – Designing an Anti-Corruption Compliance Program
A Guide for Canadian Businesses.
 

 

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