The role of a compliance program is to prevent, detect, and remediate. This role works for any law or regulation a company is following. Certainly a FCPA compliance program assists a company in complying with the world’s signature anti-corruption law. If a company follows the prescriptions of the Ten Hallmarks of an Effective Compliance program as laid out in the FCPA Guidance and actually maintains compliance, it will have a compliance program that allows it to comply with other countries’ anti-bribery/anti-corruption laws.
The Man From FCPA has long argued that such compliance programs can make companies more efficient, better run, and, at the end of the day, more profitable. The average returns from entities that receive Ethisphere’s annual World’s Most Ethical Award would seem to bear this out. However there is another trend that demonstrates the effect of having compliance programs. It is the interest of institutional investors in environmental, social, and corporate governance issues. In an article in the New York Times, this is monikered E.S.G.
Large institutional investors are beginning to evaluate companies differently by considering different metrics than the type of business a company is in. Further, it is more than simply evaluating whether a company is involved in criminal or civil enforcement actions. Some of the things considered are regulatory warnings, tangential civil lawsuits, and even companies “with aggressive consumer or product safety practices that may be skating too close to the edge.” It is not too far a step to move to evaluate companies on specific high-risk activities to determine if they are adequately managed.
The compliance profession began as largely a business response to the legal requirements which first appeared in the 1992 US Sentencing Guidelines. In the mid-part of the first decade of this century, companies began requiring third-party representatives and key supply chain relationships to have compliance programs. As Ethisphere has documented, companies with robust compliance programs are often more profitable than the S&P average. Now investors have turned their attention to similar concerns. This evolution clearly demonstrates that FCPA compliance has evolved far past a simple legal response. Compliance is now at the heart of U.S. businesses.