Newsletter | Volume 1

Issue I
Issue II
Issue III
Issue IV
Issue V
Issue VI
Issue VII
Issue VIII
Issue IX
Issue X
Issue XI
Issue XII
Issue XIII
Issue XIV
Issue XV
Issue XVI
Issue XVII
Issue XVIII
Issue XIX
Issue XX
Issue XXI
Issue XXII
Issue XXIII

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Prosecuting Individuals for Accountability and Corporate Wrongdoing

Both in the EU and the USA, oversight authorities have significant issues in accepting that the corporate business community often views penalties from antitrust, competition law or corruption and bribery charges as a cost of doing business. The public needs to have confidence that there is a reasonable system of justice that applies to all, regardless of the crime being committed on a street corner or in a boardroom.

One of the alternatives is to increase the penalties or settlement, which is now also often the case as even the continued soaring corporate penalties are negligible in comparison to companies' bottom lines. To implement more meaningfully measures and discourage incorrect or corrupt behaviour, the oversight authorities in many countries will attempt to curb dangerous or improper corporate behaviour, by punishment based on the actions of one or more individuals.

In spite of the focus on individual corporate liability, the corporate FCPA enforcement actions in 2014 amounted to us$1.6 billion. The two enforcement actions (Alstom - $772 million and Alcoa - $384 million) comprised approximately 72% of the total of us$1.6 billion in 2014.

Trend in prosecuting individuals
The risk of paying a penalty is one aspect; however the option of serving jail or prison time is an entirely different ballgame. Since the possibility of going to jail is a powerful deterrent, oversight and government officials will now try to highlight prosecution of individuals since corporations can only commit crimes through employees, management or lack of policies and procedure for monitoring compliance.

Following are some of the suggestions if the company is involved in a messy oversight pursuit of an individual for corporate wrongdoing.
  • Provide the oversight authorities with all relevant facts relating to the individuals responsible for the misconduct regardless of their position, status or seniority.
  • Review the current decision matrix of if you are facing an investigation and adjust the drawbacks
  • All global oversight authorities place a high premium on self-reporting, along with cooperation and remedial efforts, in determining the appropriate resolution of UKBA/FCPA, AML or antitrust matters
  • Implement local investigation to clarify the misconduct and take actions to decrease the chance of charges against all relevant employees or entities
  • Deep pockets are often the unstated objective of legal action, and one reason corporate bodies make attractive targets.
  • At the end of the investigation, attempt out-of-court settlements such as deferred and non-prosecution agreements.

The global corporate business community must address this formal policy and focus shift with a concrete plan before the prosecution of management or employee. The adjusted focus by oversight and government on individual liability is also a part of the expanding cross-border cooperation and prosecution, and the upcoming enforcement trends are likely to cause some big compliance headaches in 2016.

Internal investigation for government interaction
The recent oversight move to indict individual accountability puts total pressure on corporations when individuals are blamed for wrongdoing. There must be a predefined procedure that goes into a force to avoid that the company is in trouble as well. The procedure components are; requirements for cooperation with the authorities, approach to position the person in question, ethical considerations when conducting internal investigations and reviews as a minimum.

To strengthen your risk management or compliance programs, contact Copenhagen ComplianceŽ The global business advisory for compliance intelligence updates including a comprehensive third-party due diligence solutions. We help organizations to comply with regulatory requirements and align with best practices. On UKBA/FCPA guidance see www.copenhagencharter.com

Source: Sally Quillian Yates, U.S. Dep't of Justice, Individual Accountability for Corporate Wrongdoing See also: http://www.justice.gov/opa/speech/deputy-attorney-general-sallyquillian-yates-delivers-remarks-american-banking-0