Compliance Becomes Personal

From The Practice July/August 2016
Highlighting key stories about the profession you may have missed

While great power is said to bring great responsibility, we know that the opposite does not always ring true. This is especially the case for compliance officers, who are frequently tasked with the monumental job of ensuring overall corporate compliance and ethics programs, while lacking the resources and power to do so. For many compliance officers, this problem has taken on even more urgency in light of the Department of Justice’s September 2015 memo on individual accountability for corporate wrongdoing (the so-called Yates Memo, named after Deputy Attorney General Sally Quillian Yates), which directed prosecutors to focus on individual accountability in prosecuting corporate wrongdoing, as well as a slew of indictments against compliance officers for failing to implement programs. As a result, there has been a growing concern among the compliance community that they could be held responsible for failures they view as beyond their control. With increased pressure from Washington and continued resistance from the C-suite, compliance officers can find themselves right between a rock and a hard place.

A recent article in the National Law Journal examines this gap between responsibility and power for compliance officers. Drawing from DLA Piper’s 2016 Compliance and Risk Report, the article reviews the very real concerns of compliance officers who face culpability despite lacking the full capacity to do their jobs. According to the survey, only 30 percent of respondents agreed “to a great extent” that they had sufficient resources, clout, and board access to perform their jobs. In addition:

Up to 14 percent of respondents working at public companies indicated that their resources were not sufficient, and 57 percent indicated resistance from their C-suite on budget increases. Twenty-eight percent of total respondents indicated that they lack a sufficient budget, and 27 percent do not even know whether or not their budget meets their needs.

Given these numbers, which reflect the limited power of compliance officers, many compliance officers might be alarmed at the prospect of increased scrutiny by government prosecutors. But rather than being fatalistic, the article encourages compliance officers to use this moment as a chance to push their company leadership to grant them the resources needed to be effective:

This is the moment for compliance professionals to benefit from Washington’s expectations and translate their needs to their C-suites and boards. Many companies only become motivated to build best-in-class compliance programs after a major crisis. Compliance officers need to take the initiative and articulate their resource needs, and inform executives or board members of the need for cyberinsurance, more audits on the ground, or a third-party due diligence platform. Additionally, they should consider making use of fines levied against peers who paid for failing to implement these types of activities; communicate their needs to CEOs, chief financial officers, general counsel, and board members; and compare the costs of those needs with past government fines. The differential will sell itself—in short, turn the Washington confusion into a lever for improvement. Your board and senior leadership will thank you later.