Compliance &Ethics - Society of Corporate Compliance and Ethics

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Feature The last wordby Joe Murphy, CCEP“Papa don’t preach”: Advicefrom Madonna for your CEOCompliance & Ethics Professional May/June 2012MurphyWe all know the CEO needs to setthe right tone at the top, but whatdoes that mean? Here is one areawhere maybe Madonna has the right idea:“Papa don’t preach.” Tone at the top is not“talk at the top;” it should mean action at thetop to support your program.What often passes for tone at the top issome policy statement, perhaps written infulminating style, swearing a mightyoath to support the law. From myexperience in antitrust compliance, Iwould say this is the rule rather thanthe exception. The general counsel orantitrust lawyer writes it and the CEOsigns it (with or without reading it).Of course, employees (who are fairlysmart on these types of things) know that thisis from the lawyers, not the CEO.Interestingly, guidance written by the UK’sOffice of Fair Trading (OFT) on how to do acompetition law compliance program seems tocatch this point. 1 For example, the OFT’s guidancestresses the need for commitment fromsenior management and the board. But unlikesome of the other standards around, the OFTindicates that this means action, not just talk.The guidance makes a very good point aboutsenior management showing what they havedone to help the company comply, such asattending the compliance training themselves.It tells management that “They need todemonstrate this commitment through theiractions clearly and unambiguously.”Another suggestion from the OFT is “theremainder of the board of directors (or seniormanagement team if the business is not acompany) challenge the effectiveness of compliancemeasures that have been undertaken,for example by asking questions about whatis being done to identify, assess, mitigate andreview competition law risk.”Tone at the top is not“talk at the top;” it shouldmean action at the top tosupport your program.In an article I wrote for ethikos magazine 2 afew years ago, I offered a list of 11 steps a CEOcould do to make a difference, without eversaying the words “ethics” or “compliance.”Something as simple as having an obviouslyused copy of the company code of conduct onhis or her desk could send a subtle but importantmessage. Going around the table at anexecutive staff meeting, asking each VP whathe or she had done to promote the programwould be another, more dramatic step. TheCEO could call the helpline with a question(I once heard a CEO say he had done this—tothe apparent surprise of his ethics officer), orpublicly turn down a business trip because ofthe appearance of a conflict of interest.The CEO and other executives can setthe tone at the top in many ways, but start bypromising not to preach. ✵1. UK Office of Fair Trading: Quick Guide to Competition LawCompliance. www.oft.gov.uk/shared_oft/ca-and-cartels/competitionawareness-compliance/quick-guide.pdf2. Joe Murphy: “How the CEO Can Make the Difference in Complianceand Ethics,” ethikos , vol. 20, no. 6; (May/June 2007)Joe Murphy is Of Counsel to Compliance Systems Legal Group andEditor-in-Chief of Compliance & Ethics Professional Magazine. He may becontacted at jemurphy@voicenet.com.78 www.corporatecompliance.org +1 952 933 4977 or 888 277 4977
sTakeawaysMay/June 2012Compliance & EthicsProfessionalTear out this page and keep for reference, or share with a colleague. Visit www.corporatecompliance.org for more information.Understanding the proposed EUdata protection regulationby Robert Bond (page 24)»»The EU is in the process of revising its dataprivacy regime to harmonise data protectionacross its member states.»»The propsed Data Protection Frameworkwill implement greater enforcement powersthat apply to both data controllers and dataprocessors.»»The Framework will focus on consent,breaches, data transfers, accountability, andliability.»»Individuals will have greater control of theirpersonal data, and special protections for thedata of children are included.»»Foreign businesses that target EU citizens willincur significant compliance obligations.Buyers on the takeby Peter J. Crosa (page 30)»»Embezzlement or misappropriation isn’t limitedto line employees. The E&C purview netshould be cast from the lowest level employeeto the executive board, and from stockroom toboardroom.»»Staff is more likely to be influenced by unscrupulousvendors while away from the office.»»No vendor should be considered incapableof inappropriate influence, from janitors tolawyers.»»Investigators frequently uncover an employeeperpetrator who has a tragic character flawthat is germane to misappropriation.»»Cash kickbacks, entertainment, and otheruntraceable gifts are often subject tomisappropriation.It’s time to change theSEC’s cultureby Marlowe Doman (page 34)»»Individuals may get financial rewards if theyprovide the SEC with information that leads tosuccessful enforcement actions against WallStreet wrongdoers.»»If the action is successful, whistleblowers canbe granted between 10% and 30% of any fineover $1 million collected by the SEC.»»For the laws to achieve their goals of exposingand halting Wall Street corruption, the SECmust confront its own culture and dark pasttoward whistleblowers.»»Over the past decade, the SEC allegedlymistreated its employees who attempted tocorrect wrongdoing within the Commission,as well as outsiders who reported securitiesviolations.»»The Dodd-Frank whistleblower provisionsprovide the SEC with an opportunity for a freshstart in its treatment of whistleblowers.Ethical decision-makingmodels: Decisions, decisionsby Roz Bliss (page 40)»»Ethical decision-making models help employeesmake the good choices.»»Employees know when something just doesn’tseem right.»»Encourage employees to examine and identifypossible alternatives.»»What would a reasonable person think aboutthis decision?»»It takes courage to do the right thing.Powerful witness preparation:The pure and simple truthby Dan Small and Robert F. Roach(page 44)»»The need to tell the truth does not lessen theneed to prepare the witness to testify.»»If you make a mistake, stop and fix it. The jurywill understand.»»Deal with the bad stuff up front. Being defensiveor trying to cover it up will only makethings worse.»»Witnesses should include positive aspectsabout themselves as part of telling the truth.»»Witnesses should concentrate on what theysaw, heard, or did and avoid speculation.The economy, compliance, andethicsby Adam Turteltaub (page 48)»»The percentage of compliance programs withincreasing budgets is on the rise.»»Although budgets are on the rise, staffinglevels for the Compliance department are notfollowing suit.»»Stress levels among compliance professionalsare rising as they do more work with fewerstaff.»»Compliance is more likely to be seen as apositive asset, rather than a hindrance todoing business.»»Many respondents thought that economic conditionsmay lead to more compliance failures.Corporate codes of conduct inthe United Statesby Gilbert Geis, PhD & Henry N. Pontell,PhD (page 54)»»A code of conduct informs employees aboutacceptable behaviors the company expectsand the conduct that will not be tolerated.»»Codes have proliferated as courts have heldemployers responsible for monitoring theactions of their employees.»»If codes are not enforced, employees willsee them as window dressing, and ignoringthe rules will become part of the corporateculture.»»The content of codes has changes as pricefixing, foreign bribes, sexual harassment, andinsider trading scandals have come to light.»»The effectiveness of a code of conduct is not amitigating factor in the Dodd-Frank legislation.Social media evidence:A new accountabilityby Dawn Lomer (page 66)»»Courts are seeing an explosion of evidencefrom social media sites.»»Case law regarding social media evidence isstill developing.»»Attorneys and investigators should stayabreast of new rulings as they happen.»»Ethics and common sense rule when it comesto gaining access to personal social mediainformation.»»Rules of preservation apply to social media,just as they do elsewhere.Building transparency,accountability, and ethicsin government contractingby Eric R. Feldman (page 70)»»The Federal Acquisition Regulations (FAR)require contractors to self-report credibleevidence of violations of federal criminal lawand significant overpayments.»»The federal government now requires morerobust corporate ethics and business conductprograms as a component of “present responsibility”determinations when consideringOverzealous I-9 compliancesuspension and debarment actions.can result in a discrimination »»A record number of suspensions and debarmentslawsuitof unethical contractors were made in 2011.by Justin Estep (page 50)»»Agency suspension and debarment officials»»The United States government has drastically have placed greater emphasis on deficienciesincreased Form I-9 audits.in corporate ethical culture than on specific»»FAR violations during recent suspension andMany Human Resources representatives aredebarment actions.misinformed about Form I-9 specifics.»»»»Contractors can decrease their risk by takingThe United States government is also investigatingForm I-9 discrimination.proactive steps designed to improve both thecorporate ethical culture and the effectiveness»»Companies are forced to pay heavy Form I-9 of the business ethics and compliance program.discrimination fines.»»Consistent Form I-9 policy is the bestdeterrence to fines.+1 952 933 4977 or 888 277 4977 | www.corporatecompliance.org 79Compliance & Ethics Professional May/June 2012
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