Have boards of directors finally begun to wake up to their role in the fight against bribery, corruption and unethical corporate behavior? Name any of the most recent corporate scandals, Wells Fargo, Uber, Equifax, and one of the first questions asked was “Where was the Board of Directors?” From the FCPA perspective, consider the Telia Company FCPA enforcement action, the largest of all time, coming in with a total fine and penalty of $965 million and the same question can be posed.
In light of these and other recent corporate scandals, the National Association of Corporate Directors commissioned a blue-ribbon panel who issued a report entitled “Culture as a Corporate Asset”. The report noted that “Oversight of corporate culture should be among the top governance imperatives for every board.” It goes on to relate that strong culture can be both a competitive business advantage and market differentiator.
The report is broken down into three main sections. The first is Culture as a Unifying Force and it defines culture and explains why culture is a core corporate asset. The second is Rethinking Oversight of Corporate Culture—Priorities for Action and lists seven different calls to action for a Board. The final major section is ten concrete recommendations for each corporate and Board to institute. Some of these include regular assessments of corporate culture, using a combination of factors such as chief executives’ performance reviews, the scope of power held by risk-management officers and considerations of executive pay.
The NACD report is certainly welcome and timely. While the report did not accept The Man From FCPA’s recommendation that every Board have both compliance expertise in the form of a Board of Director with long-time compliance and ethics experience, it goes a long way towards getting Boards to more fully exercise their oversight role in this critical corporate area.