This week I am running a special five-part sponsored podcast series with Vincent DiCianni, founder and President of Affiliated Monitors, Inc. (AMI) and Eric Feldman, Senior Vice President of AMI. We are considering the global view of ethics, compliance and monitoring in non-US companies, outside the US; in both their home countries and in other countries where they may do business. AMI does independent integrity monitoring in multiple countries outside the US and for many non-US organizations and so is well placed to both observe and participate in developments. I was interested in how US based monitors can help develop an international model of independent integrity monitoring to help non-US companies make more effective their compliance regimes.
Monitoring in the international arena is not as prevalent as it is in the domestic US context. This ties somewhat to the maturity of international anti-corruption enforcement. This is something we have certainly seen an increase in over the past couple of years beginning under the Obama Administration and continuing under the Trump Administration. This will most probably portend to an increase in monitors and monitoring outside the US. Certainly, such a concept is not foreign to countries outside the US, as there was a monitor involved with Siemens AG around its 2008 Foreign Corrupt Practices Act (FCPA) resolution.
DiCianni admitted that he has been described as a missionary around independent integrity monitoring. (As the Compliance Evangelist, I get that.) However, DiCianni evangelizes “about independent monitoring and how it could be an effective resource for government agencies just as it has been in the US.” He did admit that while foreign jurisdictions are understanding the benefits of an independent integrity monitor from a conceptual basis, “it is a mindset and it’s a change that I don’t know that they’re quite ready for yet.” Interestingly, one reason is the difference in judicial approach, particularly from countries which are code based as opposed to common law based. In the code-based countries there is a mindset to hold a company criminally liable and not to work a settlement resolution to remedy the underlying factors which led to the legal violation.
One of the reasons I find independent integrity monitoring so powerful is that it brings a sense of both institutional justice and fairness into the workplace and with the now increased scrutiny around corporate culture and whether a company is basically fair to its employees. I asked DiCianni if that that is a message that resonates outside of the United States in Europe? He believes it is “getting there”.
One impediment can be that sometimes the problem is both “deeper and it is cultural.” As an independent integrity monitor, you are “coming in and helping sort of assess the culture and strengthen the culture, assess the strength of a compliance and ethics program and controls”. But the role can also be as a mentor, and DiCianni is seeing “a real interest, to move in that direction. At the end of the day we are looking at whether or not the program is strong and whether or not the culture was strong. I think that some government agencies outside the US, think is their role and they are not ready and willing to outsource that role.”
One of the things that I am always sensitive to outside the US is the ugly American syndrome and/or does it simply look like American imperialism to say only Americans can be independent integrity monitors. DiCianni replied that while one should always be sensitive to that issue, many compliance practitioners rightly look to the US for leadership in this profession. Through both the enforcement regimes of the Department of Justice (DOJ) around the FCPA and the maturity of the compliance profession in the US, American leadership is well-known and appreciated in this area. Another key component is to use established professionals from the country to help any US based independent integrity monitor.
We turned to a discussion of trends in ethics and compliance programs in the country of Spain. DiCianni noted that corruption has been a long-standing problem for the country. However the government has moved to address this problem. This has led to a great interest in compliance programs, leading to more robust ethics and compliance in organizations. This is in the face of no real government enforcement efforts. It seems that organizations are looking to implement a compliance program literally for themselves. Further, they are doing so to help themselves move to a proactive level of compliance rather than simply reactive.
Two areas that interest me about working with and traveling to countries outside the US are the local compliance practitioners. The first is that compliance professionals outside the US are very enthusiastic about the compliance practice and the compliance profession. Moreover, they really believe in compliance and ethics and that they can make a difference inside of a corporation to help change an entire country’s culture. The second observation is that I see a lot of people directly out of college in their mid-twenties with this enthusiasm for compliance going into the compliance field.
DiCianni certainly agreed with the first observation. He said, “compliance officers, once they take on that role and they understand the importance of it and they understand how compliance is being used by other companies. I saw that firsthand in almost everyone that was in the Madrid and Bilboa AMI roundtables I led. It is very palpable to see how much they really like the compliance function. People never want to go back to their old roles. They really liked the compliance role and helping the company.” He disagreed with my observation on the youth. He found that most of the compliance professionals he met, came from other corporate disciplines such as the legal department. This was certainly the path I took and the path for many in the compliance profession here in the US.
From the corporate perspective, one of the things DiCianni has observed is multi-national companies bringing compliance into Spanish corporate culture. From there they are driving compliance through their supply chain and other third-party relationships. DiCianni observed another interesting driver for compliance in Spain is that both law and accounting firms are pushing their clients to invest in compliance programs.
DiCianni concluded by noting that while compliance is a concept that many practitioners and corporations are comfortable with, the values-based ethics portion that has taken hold in other countries is not as prevalent in Spain. Things like a whistleblower hotline, how it is supposed to work and how it is supposed to be effective is really not considered. In their area of training, there is a plethora of computer-based training but not the type of training which makes it more topical for people. He observed that when “you talk to people about ethics, it’s really a new concept for them. They understand compliance and complying with the rules, but ethics is something different.” Even most compliance professionals have not received any instruction about ethics. He concluded that in many ways “it’s sort of a new concept for them.”
The challenges for non-US companies are usually different from the mature compliance programs of American companies. Both the leadership and culture of non-US companies can lead to challenges that many US companies faced 10-20 years ago. However, just as anti-corruption investigation and enforcement has increased internationally, the importance and prevalence of compliance has done so as well. Many compliance practitioners outside the US are very passionate about compliance because they see it as a way for them to directly impact the global scourge of bribery and corruption. As leaders in much of the effort, American compliance professionals have a very large role to play going forward.
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© Thomas R. Fox, 2018