DOJ’s ‘Evaluation of Corporate Compliance Programs’

DOJ’s ‘Evaluation of Corporate Compliance Programs’

Two months ago, and in response to the corporate sector’s continued request for greater guidance of what the government wants to see in corporate ethics and compliance management, the US Department of Justice (DOJ) released its “Evaluation of Corporate Compliance Programs”. While this guidance is certainly more detailed and informative than the US Sentencing Guidelines, some companies may find it to not be what they intended. It certainly is not a definitive checklist that a company can implement for comprehensive protection. Nor is it a ‘get out of prosecution’-free card that allows a company to implement a simple plan to avoid regulatory intrusion.  But for well-meaning companies interested in actively managing their way to sound ethics and compliance practices, the DOJ’s guidance will serve to be very instructive.

The DOJ makes clear that its new guidance is based on the Department’s experience in reviewing corporate ethics and compliance programs as part of investigations and plea and settlement agreements. To this end, it reminds companies that the criteria that it uses to review such programs are based on fact-specific circumstances, which change from situation to situation. Nonetheless, the DOJ offers its guidance as just that--guide to what companies should consider in ethics and compliance management, not a final set of criteria.

The DOJ also articulates that an understanding of effective ethics and compliance management is progressive. This publication reflects and is influenced by prior guidance offered by the Department, the Securities and Exchange Commission (SEC), the Organisation for Economic Co-operation and Development (OECD), as well as the DOJ’s experience in many corporate investigations and plea and settlement agreements. Thus, the guidance is not intended to be comprehensive, and criteria can vary based on each case’s specific facts. So, it is not a checklist or a formula—which will be disconcerting to those companies that want such a tool and don’t want to invest in carefully considering appropriate management actions.

Still, the evaluation criteria that comprises this guidance is fairly comprehensive, much more detailed than simply the US Sentencing Guidelines’ recommendations and positioned in a way that should keep corporate leaders and ethics and compliance officer officers very busy for some time to come.


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Some important observations about this new guidance include the following:

  • Risk-based--Keeping with The Department and the SEC’s 2012 Resource Guide to the U.S. Foreign Corrupt Practices Act, this new guidance expects companies to prioritize their efforts based on an organization’s principal risks.
  • Process-based--The DOJ wants companies to build ethics and compliance processes, not just implement steps for one point in time. By definition, a process involves ongoing activities that adjust with changing circumstances. In this vein, the ethics and compliance program’s activities are expected to adjust to the organization’s changing circumstances. 
  • Thoughtful Decisions - The DOJ wants organizations to carefully consider their situations and choices and not simply seek to ‘check the box’ or follow behind other organizations.
  • Ethical Culture - The DOJ wants companies to infuse the ethics and compliance program into the organization’s culture and, at the same time, use the culture to reinforce the program’s activities and success.
  • Integration - The DOJ wants companies to integrate ethics and compliance objectives and activities into other business activities so that employees see ethics and compliance as ‘part and parcel’ with how the organization operates. 
  • Outcomes-Based -- Finally, the Department wants companies to build programs that produce valuable outcomes and to think through the ethics and compliance program’s design in this light. This expectation aligns with what we have been hearing in recent years from regulatory agreements and corporate monitorships: the key question we hear asked is, ‘How do you know that your program is successful?’

On the very important issue of training and communication, the guidance reinforces that formal education be risk-based and effective. It also expects leadership to communicate its actions regarding identified misconduct and the availability of guidance to help employees understand and apply policies.

The DOJ’s evaluation criteria also address other important considerations, such as how an organization uses and works with third parties and factors in mergers and acquisitions. This latter issue ratchets up the risk of ‘buying risk’, or taking on the risk of an acquired company.

One final issue that these evaluation criteria raise is ‘How does the company monitor its senior leadership’s behavior?” This is insightful in that it separates the senior leadership from overall compliance mechanisms, seemingly also placing accountability with the Board of Directors and ethics and compliance program management. Given recent high-level ethics failures, this makes sense that for any company, the buck does not stop simply with its senior management; others also have important responsibilities. As part of a regulatory inquiry or investigation, these individuals also may be called on the carpet. 


Would you like an objective review of your current training program from a trusted outside source?  Do you have questions about your current compliance training program? Contact us and we can work with you to make recommendations to augment and/or improve your current offering.

Syntrio is a leader in both the ethics and compliance field, as well as human resources and employment law, and is prepared to help your company implement a compliance program aimed at reducing the potential impact of compliance violations within the organization. Syntrio takes an innovative philosophy towards compliance program design and strives to engineer engaging, entertaining, and thought-provoking content. Contact www.syntrio.com for more information about our ethics and code of conduct online courses and remember to follow us on Facebook, TwitterGoogle Plus and LinkedIn for daily updates on employment law and compliance that impact your company!

 

Written by Jason Lunday, Vice President of Product Development, Syntrio, Inc.

Posted in Code of Conduct, Compliance Training, Diversity and Respect, Ethics, Managing Within the Law, Sexual Harassment and tagged , , , , , , , , , , , , , .