Cash Cows called EU Competition Law, UK Bribery Act and the US FCPA
SEC and EU fines have skyrocketed in recent years: from 1995 to 1999, cartel fines totaled 271 million euro ($366 million); in the next five years, to 2004, they jumped to 3.2 billion euro ($4.3 billion). And in the last five years ending they tripled over those previous five years to 9.8 billion euro ($13.3 billion). The Securities and Exchange Commission filed a record 735 enforcement actions in 2011 and collected $2.8 billion in settlements. Top 20 SEC settlements for the fiscal year make up $969.2 million of that total.
In previous newsletters, we recommend greater emphasis on the organization or company's ethics and compliance programs, as a feature to help prevent possible fines and highlighting on the quality of the compliance programs as a way to promote good corporate behavior.
Other tools that The Copenhagen Compliance conference will focus on and should be included in your Governance, Risk Management and Compliance tools include:
- Increased insistence on accountability and transparency
- Streamline enforcement procedures and increased emphasis on the right of defense and due process;
- Mechanisms to increase the effective operation, documentation and disclosures
- Ensuring that fines are proportionate to the violation being punished; and
- Defining specific criteria under which parent companies should be made liable for cartel-like behavior by their subsidiaries.
- If you find GRC issues and correct them-even those that create merely the appearance of being Compliant, the company will probably be in a much better shape should the oversight authorities or the Commission actually come knocking at your door.
- One of the suggested tools is an increased reliance on personal liability for corporate leaders who engage in anti-compliant Such a policy if implemented in the EU would closely resemble the increased focus in the United States on personal liability of corporate leaders in FCPA, BA and other prosecutions and enforcement.
- One of the best ways to root out anti-compliant behavior is through a robust compliance program that includes rigorous training.
- A parent company is presumed liable for the infringing acts of just one individual in one subsidiary-even if management had no knowledge or involvement-resulting in the ability of the SEC or Commission to fine up to a maximum of 10 percent of group-wide total annual income
- In designing a compliance policy, companies must have a sense of the "compliance awareness" within the organization. One approach is to conduct a series of mock "unannounced visits" conducted by counsel at your key business locations around the world -not as a mimic, but to get a snapshot of what they would find if they conducted an investigation. The exercise can include a review of documents and e-mails as well as interviews with staff in key departments such as sales and marketing.
There will be more companies joining the massive fish that have already been caught in the corruption trap-the feds have 150 open FCPA cases, and the upcoming corporate targets facing stiff criminal settlements are an open secret.
Source: Bloomberg/Copenhagen Compliance
