At the Opening Session of Compliance Week 2016, Stephen Cohen associate director of enforcement at the Securities and Exchange Commission, and Andrew Weissmann, chief of the Department of Justice Criminal Division’s Fraud Section spoke about what constitutes an effective compliance program under the Foreign Corrupt Practices Act (FCPA). The majority of the discussion, however, was around the chief compliance officer position, specifically the independence of the position, the authority the CCO has in the organization, and the resources made available to the CCO.
The remarks of both Weissmann and Cohen should certainly warm the heart of any CCO as they both made clear they view CCO independence, resources, and authority of as a key indicia of a best practices compliance program. Moreover, by imbuing the CCO with these key indicators, it could go a long way toward helping a company to escape liability if an FCPA enforcement action is forthcoming for a company.
The pair suggested they would ask such questions on independence and authority as: Is the CCO a part of senior management? Who in a company can fire the CCO? Can a person under scrutiny or internal investigation fire a CCO? Does the CCO have a direct reporting line to the board? Can the CCO’s decisions be overturned and if so by who?
Another key area is CCO compensation and resources. In this area the regulators might inquire along the following lines: What is the compliance budget, and who in an organization sets it and how is it reviewed? They also said they would consider corporate promotions to see if those promoted to senior management rotated through compliance or even had direct compliance experience through special projects.
Lastly, there was a discussion of the new Justice Department Compliance Counsel, Hui Chen. In her role, she is able to act as an advocate for CCOs and help promote the function within corporate America.
All of these factors seem to point toward the continued growth of the CCO position within an organization and the compliance department as a key component for a best practices compliance program going forward.