In this podcast series, I visit with Vin DiCianni, founder and President of Affiliated Monitors, Inc. (AMI) and Eric Feldman, Senior Vice President of AMI. We consider the global view of ethics, compliance and corporate culture of non-US companies, outside the US; in both their home countries and in other countries where they do business. AMI does independent integrity monitoring in multiple countries outside the US and for many non-US organizations. This work has given them a unique vantage point to observe developments. In this Part I, I visit with Vin DiCianni on the trends he sees in the global arena around ethics, compliance and monitoring.
DiCianni noted the single biggest difference for non-US companies and countries is the focus on legal compliance as opposed the US focus on values-based ethics and compliance program. This is partly attributable to the maturity of an intersection of several conditions. The first is the nascence of national anti-compliance legislation. Many countries have only passed such laws within the past five years. Next is the relative youth of many anti-corruption enforcement agencies and prosecutorial services. Finally many countries have Code based legal systems rather than Common Law based legal systems. Such legal systems tend to favor more legalistic compliance as opposed to a more general formula such as the Ten Hallmarks of an Effective Compliance Program that was laid out in 2012 FCPA Guidance.
Obviously, some countries are more advanced along this continuum. The United Kingdom had its Bribery Act come into force in 2010. Brazil had the Clean Companies Act come into force the following year. Prosecutors in both of these countries are farther along in their enforcement actions and both of these countries have issued guidance on the types of best practices compliance programs that companies should put in place. However other countries such as Germany, Spain and France are less further along in both their legal frameworks and their corporate compliance programs.
DiCianni made clear that these countries are all moving forward along the compliance continuum much in the way the US did, beginning 10-15 years ago. In the mid-00’s compliance was largely legal based written by lawyers for lawyers. However this decade we have seen a move to a more values-based system of ethics and compliance. Corporate compliance programs have reflected this evolution as well.
One thing DiCianni has observed, literally across the globe is the desire of compliance practitioners to move the ball forward. This comes in the form of enthusiasm for the compliance profession but also an understanding of the true costs of bribery and corruption in everyday society. This also means there is a great thirst for compliance learning and instruction on how to implement best practices compliance programs.
Many countries have other focus such as corporate social responsibility requirements (CSR) of their corporations which impact the compliance function. DiCianni believes that a CSR function can lead to a more ethical culture within an organization. He noted that many non-US companies have taken the lead on modern slavery, conflict minerals and other issues. He believes this leadership will strengthen a values-based culture within a company and it is something that US companies should more strongly consider taking leadership positions on.
One of the interesting contrasts by non-US companies by DiCianni was what he termed, the failure to enforce their own internal codes. This is true whether it be in a Code of Conduct or policies and procedures. This all ties back into a consistent theme from AMI, which is institutional fairness and a values-based culture. DiCianni stated, “sometimes it’s the most important aspect of a compliance program, what do you do when there’s a violation internally. Do you do anything to enforce your policy?” The problem he noted is that “if you don’t then it’s sort of not worth the paper it’s written on. If you’re going to just have a paper program that doesn’t have any real bite, that’s a concern that I’ve seen globally for those companies that have compliance programs.” If you do not enforce your own compliance requirement, for whatever reason, it creates a very negative impact on your employees.
We concluded by considering some of the enforcement regimes and mechanism outside the US. While US prosecutors and regulators have certainly taken the lead in the international enforcement of anti-corruption laws, countries such as the UK and Brazil are quickly taking up their roles as well. In the UK, we have seen the first uses of Deferred Prosecution Agreements (DPAs) by the Serious Fraud Office (SFO). The Brazilian prosecutors seem to be moving in that direction, if in a de facto manner.
In Episode II, we consider international enforcement trends.