10 key points from the DoJ Guidance on effective compliance programmes

10 key points from the DoJ Guidance on effective compliance programmes

The Department of Justice (DoJ) Criminal Division has issued updated guidance on how prosecutors should evaluate Corporate Compliance Programmes when there is the potential for bringing charges against a company or individuals, suspected of violating the Foreign Corrupt Practices Act. This new guidance is important because it provides clear pointers that should help all corporates to develop good programmes that will protect the company and its directors, in the event of any allegations against it. It is also important because it is likely to influence prosecutors working in other jurisdictions where the law requires an anti-corruption compliance programme to be implemented.

It asks the prosecutor to answer three questions:

  • “Is the corporation’s compliance programme well designed?“
  • “Is the programme being applied earnestly and in good faith?“ In other words, is the programme being implemented effectively?
  • “Does the corporation’s compliance programme work“ in practice?

The key ten messages from this guidance are:

  1. Culture and tone from top management matter considerably – Companies able to demonstrate top management commitment and involvement in the programme will be more successful.
  2. The importance of good risk assessment and responding to real risks – Many corporates are still failing to evaluate risk and respond to real risks in their corporate compliance programmes. Big risks are higher up the organisation.
  3. Third party management is key – Good due diligence, active follow up of red flags and avoiding the use of unnecessary vendors and agents wherever possible are essential.
  4. Avoid paper based programmes – These overload and distract attention and do little to combat corruption.
  5. Engaging people through good training and communications is essential.
  6. Incentives matter – There is no point in having a strong programme on paper and then providing large all or nothing commission payments to agents to achieve sales.
  7. People working in ethics and compliance need protecting and support – Gathering evidence that they have been protected and taken seriously is crucial.
  8. Ethics and compliance teams need to be properly resourced.
  9. Independent whistleblowing channels are essential to ensure that issues are detected.
  10. Programmes should be assessed regularly – An assessment shows the prosecutor that the company has measured its compliance programme and can demonstrate that it is effective. Doing it after the company is in trouble is too late.

Posted May 2019