The FCPA Guidance has about as clear, concise and short a statement about hotlines than any other Tenet of an Effective Compliance Program. It states, “An effective compliance program should include a mechanism for an organization’s employees and others to report suspected or actual misconduct or violations of the company’s policies on a confidential basis and without fear of retaliation.” But more than simply hotlines, companies have to make real efforts to listen to employees. But you must spend time working on this issue. You need to have managers who are trained on how to handle employee concerns; they must be incentivized to take on this compliance responsibility and you must devote communications resources to reinforcing the company’s culture and values to create an environment and expectation that managers will raise employee concerns.

The reason is that its own employees are a company’s best source of information about what is going on in the company. It is certainly a best practice for a company to listen to its own employees, particularly to help improve its processes and procedures. But more than listening to its employees, a company should provide a safe and secure route for employees to escalate their concerns. This is the underlying rationale behind an anonymous reporting system within any organization. Both the US Sentencing Guidelines and the Organization of Economic Cooperation and Development (OECD) Good Practices list as one of their components an anonymous reporting mechanism by which employees can report compliance and ethics violations. Of course, the Dodd-Frank Whistleblower provisions also give heed to the implementation of a hotline.

What are some of the best practices for a hotline? I would suggest that you start with at least the following:

  1. Availability.
  2. Anonymity.
  3. Escalation.
  4. Follow-Up.
  5. Oversight.

In this area is that of internal company investigations, if your employees do not believe that the investigation is fair and impartial, then it is not fair and impartial. Furthermore, those involved must have confidence that any internal investigation is treated seriously and objectively. One of the key reasons that employees will go outside of a company’s internal hotline process is because they do not believe that the process will be fair.

I would emphasize, yet again, that after your investigation is complete, the Fair Process Doctrine demands that any discipline must not only be administered fairly but it must be administered uniformly across the company for a violation of any compliance policy. Failure to administer discipline uniformly will destroy any vestige of credibility that you may have developed.

What is your FCPA Investigation Protocol?

With the advent of the Securities and Exchange (SEC) Whistleblower Program, courtesy of Dodd-Frank, it is imperative that a company quickly and efficiently investigate all hotline reports. This means you need an investigation protocol in place so that the entire compliance function is on the same page and knows what to do. The following is a suggested starting point.

Step 1: Opening and Categorizing the Case.

Step 2: Planning the Investigation.

Step 3: Executing the Investigation Plan.

Step 4: Determining Appropriate Follow-Up.

Step 5: Closing the Case.

Three Key Takeaways

  1. Pre-taliation is becoming a more important SEC enforcement tool.
  2. Test your hotline on a regular basis to make sure it is working.
  3. Utilize social media for both tips and reports and to spot trends.

For more information, check out my book Doing Compliance: Design, Create and Implement an Effective Anti-Corruption Compliance Program, which is available by clicking here.

 

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