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