Compliance &Ethics - Society of Corporate Compliance and Ethics

contractors are ethical. Establishing standardsfor corporate self-governance and creating anethical culture through comprehensive ethicsand compliance programs, and holding contractorsaccountable for maintaining thesestandards, is a more logical way to reduce riskand improve accountability to the taxpayer.In 2008, Acting Deputy Attorney GeneralCraig S. Morford issued a memorandum toU.S. Attorneys outlining the best practiceprinciples for using and choosing independentmonitors. The memorandum waswritten in response to the frequent appointmentof former senior government officials(including former Attorney General Ashcroft)to serve as monitors, leaving in doubt theindependence and integrity of the monitoringprocess used in such agreements. TheMorford memo reiterated the inherent valueof independent monitoring, stating that“the corporation benefits from expertise inthe area of corporate compliance from anindependent third party. The corporation,its shareholders, employees, and the publicat large benefit from reduced recidivism ofcorporate crime and the protection of theintegrity of the marketplace.” 3Ideally, an independent corporate monitoris a person or entity who has in-depthknowledge and experience with regulatoryschemes and oversees businesses that havebeen sanctioned for the violation of one ormore regulations or laws. In some cases, theindependent monitor is engaged proactivelyin response to investigations and the threat orpotential for sanctions. The corporation paysfor the monitor, and, in exchange for agreeingto ongoing oversight, typically avoidsmore severe sanctions (such as suspension,debarment, or prosecution). Describing themonitor’s role, Morford said that, once anagreement is reached on how to preventfuture misconduct, “[a] monitor’s primaryresponsibility is to assess and monitor acorporation’s compliance with the terms of theagreement specifically designed to addressand reduce the risk of recurrence of the corporation’smisconduct, and not to furtherpunitive goals.” More specifically, the memoindicates the monitor should “oversee a company’scommitment to overhaul deficientcontrols, procedures, and culture.”In practical terms, the most effective independentmonitor, consistent with the Morfordview described above, would take any numberof the following steps to “mentor” the company,resulting in a strengthening of thecompany’s ability to function as a responsiblegovernment contractor:··Assess the company’s corporate ethicalculture;··Evaluate internal controls over corporatefinancial, purchasing, contracting, humanresources, property management, or otherkey business processes;··Assess key risks and vulnerabilities, particularlyin the areas of fraud and duediligence over subcontractors and suppliers;··Evaluate the adequacy of the company’sbusiness ethics and conduct programs; and··Make recommendations for improvement.Convergence of the FAR and independentmonitoringGovernment agencies, regulators, contractingofficers, and SDOs are looking for animportant characteristic in governmentcontractors: transparency. In many ways, themandatory disclosure requirements and theethics and business conduct provisions ofthe FAR provide tacit recognition that mistakesin government contracting will occur;that some employees might make bad, evenunethical decisions; and that the differencebetween an ethical and an unethical companyis often the manner in which the companydeals with the problem after it occurs. In fact,SDOs are increasingly focusing on the stateCompliance & Ethics Professional May/June 2012+1 952 933 4977 or 888 277 4977 | www.corporatecompliance.org 75