Recently, Korea’s government has been racked by a corruption scandal that has resulted in the resignation of Prime Minister Lee Wan-Koo. The scandal threatens to engulf Park Geun Hye’s administration and may result in an early application of Korea’s new anti-graft law resulting in prison sentences for some government officials. No one wants to be implicated in scandals involving graft or corruption of government officials including corporations. Well, what should corporations or organizations do to protect themselves from corruption charges? Is there a magic bullet? The closest thing to a magic bullet in today’s world is compliance.
A well thought out and effective compliance program can provide the basis for a government’s decision not to enforce action against a corporate entity in the event of improper conduct such as violation of the FCPA or violation of other anti-bribery laws and regulations. But what is an effective compliance program? According to the US Department of Justice, an effective compliance program is one that meets the criteria set forth in the US Sentencing Commission’s Guidelines Manual. Such criteria includes:
Training is of course one of the most important aspects of a compliance program. Local training can be given by HR, Legal, Compliance, etc. The goal of any compliance program should be to equip employees to handle compliance issues, to identify potential wrongdoing and to understand their role in the overall compliance scheme. They should know what to report and how to report compliance violations.
Remember, a company needs to implement a compliance program , especially for the following reasons : (i) For preventing problems; (ii) For detecting problems; (iii) For responding and remedying compliance issues; and (iv) For creating a culture of compliance.
But, what most companies miss however is that the key to implementation is senior management buy-in. Is management committed to compliance or does it keep a blind eye to internal problems? Only when management gets involved can compliance really work.
Corruption is indeed a very serious matter that can destroy companies and topple governments. The only way to really protect oneself from corruption charges is to implement a robust compliance program that not only creates checks and balances to prevent or uncover improper payments and also trains employees on proper conduct. This can only happen if senior management backs the Compliance Program and is willing to allocate the resources necessary to establish and promote an effective compliance program that established a culture of compliance.
Remember, to combat corruption and graft, a company needs to implement a compliance program. A company that fails to implement a compliance program may suffer negative consequences such as : (i) Indictment of executives and other managers; (ii) Loss of resources; (iii) Loss of market cap; (iv) Loss of reputation; and (v) Negative impact on the corporate brand. Of course it may also serioulsy harm stakeholders too. Stakeholders include people and organizations as (i) Creditors; (ii) Employees; (iii) Shareholders; (iv) Vendors; (v) Customers; and (vi) the Community.
Therefore, corruption can be very serious and very often results in negatively impacting not only the organization itself but those it does business with. To combat corruption, a well thought out and robustly implemented compliance program is the best answer. So, when faced with corruption and graft, try compliance.