This week I have returned to one my favorite themes for every Chief Compliance Officer (CCO), compliance professional and compliance program: Sherlock Holmes. During this week, I have considering themes from the short stories  found in The Return of Sherlock Holmes to illustrate broader application to components of a best practices compliance program. I have used three primary resources in putting together this series: Maria Konnikova’s Mastermind (Konnikova); the online site shmoop.comand its blog post, The Return of Sherlock Holmes (shmoop); and finally the most seminal print work on the entire Holmes canon, the three-volume The New Annotated Sherlock Holmes (Klinger) edited with notes by Leslie Klinger. Today, I consider the theme of imagination in your compliance program.

Even though as the site Shmoop noted that  “Sherlock Holmes basically gave the world the entire CSI franchise” and that  “Holmes really was on the cutting edge of science in the 1890s.” did not only use scientific methods to solve crimes though. He also embraces science as a behavioral regime which was cool, rational, logical, and efficient. At times he even appears to be a forerunner of Mr. Spock because, “being a scientist and a scientific detective meant favoring the mind over emotion, and crime solving skills over social skills.” An example of this is found in The Adventure of the Empty House, where Holmes says, “All day I turned these facts over in my mind, endeavouring to hit some theory which could reconcile them all, and to find that line of least resistance which my poor friend had declared to be the starting-point of every investigation.” As Watson describes Holmes’s scientific methods here as he tries to follow his friends reasoning to solve the puzzle.”

The story The Adventure of the Empty House may well be one of the most famous in the entire Holmes oeuvre. It was the first story in over ten years, although Doyle set the tale only three years after the meeting of Holmes and Moriarty at Reichenbach Falls. Returned from touring the world, Watson and Holmes have an emotional reunion (at least for Watson) and then begin to tackle a locked room murder. This leads to Holmes being in jeopardy and putting a mannequin in his window to draw an attempted assassination attempt by Colonel Sebastian Moran, a henchman of Dr. Moriarty. Moran uses an air rifle which makes the murder and attempted murder all the more sinister.

In every recent Deferred Prosecution Agreements (DPAs) and Non-Prosecution Agreements (NPAs) issued by the Department of Justice they all include an element along the following strictures, “The Company will conduct periodic reviews and testing of its anti-corruption compliance code, policies, and procedures designed to evaluate and improve their effectiveness in preventing and detecting violations of anti-corruption laws and the Company’s anti-corruption code, policies, and procedures, taking into account relevant developments in the field and evolving international and industry standards.”[Emphasis supplied]. This means that the DOJ expects imagination in your compliance program to keep up with evolving international and industry standards. This requires you imagination in your compliance strategy.

All of this means you should begin with a strategy for your compliance program. The key to success is something that every CCO or compliance practitioner should take to heart; which is, a compliance practitioner must be able to lay out a strategy for compliance that details the efforts will support the overall business strategy. This means creating a for compliance that will create value for customers of compliance, IE., employees, third parties and customer, show how the company will capture that compliance value going forward and finally which types of compliance imagination to pursue.

If you have a good strategy, it can promote alignment among diverse groups in a company, help to clarify objectives and priorities and guide your focus on those objectives. It can also be modified as necessary and with sufficient feedback. There are several questions you need to consider in connecting your strategy to the business. Initially, how will it create value for the customers of compliance; IE., your employees and relevant third parties? Your imagination can make compliance faster, easier, quicker, nimbler and so on. Focus on that creation of value going forward. Next what types of imagination will allow the company to create and capture value, and what resources should each type receive, such as a change in technology and a change in a business process.

Obviously senior management has a key role around imagination in compliance, as imagination can be driven downward or backward if there is not sufficient management support. This means not only must there be sufficient resources allocated but management must also incentivize the business units to proceed with implementing the imaginations. Another area where senior management is critical is with making trade-offs. A supply-push approach comes when your imagination is focused on something that does not yet exist, for example if you are initially implementing a FCPA compliance regime. A demand-pull approach works more closely with your existing customer base to determine what they might need and work to implement imagination around those needs.

Finally, consider what every DOJ or speaker from the Securities and Exchange Commission (SEC) I have ever heard say, when they talk about the basics of any best practices compliance program. It is that both compliance and strategies must evolve. You must recognize that your compliance program will have to be innovative. Start with a strategy which has senior management buy-in and support, then move to implement. Finally use data in a feedback loop to fine tune your imaginations. Imagination in compliance is one of the key differences between those who advocate static compliance standards embodied in a written compliance program and those who advocate an operationalized compliance program is that the latter creates an active, vibrant and effective compliance program. That is the bottom line for imagination in compliance.

I hope you have enjoyed this Sherlock Holmes inspired week as much as I have enjoyed researching it, writing it and bringing it to you. If you would like more Holmes themed compliance, please let me know.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2018

0 comments