Change is difficult. I understand that. Business leaders know the importance of change, adaptation and innovation. However, when it comes to compliance and ethics, senior managers slowly embrace change.
With all the recent press on spiraling anti-corruption investigations and risks, you would think that business leaders would redouble their efforts to improve their anti-corruption programs. Survey after survey confirms that business leaders recognize corruption risks as one of the top three risks they face each day.
The C-Suite suffers from a narrow perspective, one which is focused on short-term financial benefits to the detriment of longer-term benefits and improvements. The C-Suite has become addicted to short-term quarterly reports and bonuses which guide their decision-making and resource-allocation decisions.
When it comes to “support” functions, which do not directly contribute to the bottom line by increasing revenues or reducing costs, compliance and ethics is unfairly brushed aside and ignored. In fact, forward-thinking business leaders recognize the importance of compliance and ethics as a positive contribution to revenues. A company with a strong compliance and ethics culture is more likely to succeed financially in the long run.
As more companies get tripped up by aggressive enforcement actions, business leaders need to take a deep breath and begin to reassess where they are on the scale of risk management, compliance/ethics and improving the culture of compliance within their companies. It is an insurance policy which comes at a low price. The benefits far exceed the costs, yet we continue to read about how companies have failed to implement adequate compliance programs.
The cost of a robust compliance and ethics program is far below the cost of insurance against an enforcement action or the cost of an enforcement action. The opportunity cost of an enforcement action can be devastating to a company – everything in a company is put on hold during the time that the company devotes resources and attention to fending off a dangerous enforcement action.
Given the relatively low cost involved in designing and implementing a robust compliance program, there is no excuse for ignoring the needs of a compliance and ethics program. The list of corporate excuses goes on and on – starting with financial bottom lines and devotion to quarterly financial reports and skewed incentives for bonuses.
It is hard to push aside projects that appear to be more important and critical to senior management. It is also hard to justify compliance and ethics program spending based on fear of an enforcement action and the collateral consequences of such an action. However, if you look at some of the more innovative companies dedicated to a culture of compliance and ethics, there is a frequent correlation with financial success – one goes with the other.
Michael Volkov is the CEO of The Volkov Law Group LLC, where he provides compliance, internal investigation and white collar defense services. He can be reached at firstname.lastname@example.org. His practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters. He is a former federal prosecutor with almost 30 years of experience in a variety of government positions and private practice.
Michael maintains a well-known blog: Corruption Crime & Compliance which is frequently cited by anti-corruption professionals and professionals in the compliance industry.Michael has extensive experience representing clients on matters involving the Foreign Corrupt Practices Act, the UK Bribery Act, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and regulatory enforcement issues.
Michael has assisted clients with design and implementation of compliance programs to reduce risk and respond to global and US enforcement programs.
Michael has built a strong reputation for his practical and comprehensive compliance strategies.Michael served for more than 17 years as a federal prosecutor in the U.S. Attorney’s Office in the District of Columbia; for 5 years as the Chief Crime and Terrorism Counsel for the Senate Judiciary Committee, and Chief Crime, Terrorism and Homeland Security Counsel for the Senate and House Judiciary Committees; and as a Trial Attorney in the Antitrust Division of the U.S. Department of Justice.
Michael also has extensive trial experience and has been lead attorney in more than 75 jury trials, including some lasting more than six months. His clients have included corporations, officers, directors and professionals in, internal investigations and criminal and civil trials. He has handled a number of high-profile criminal cases involving a wide‐range of issues, including the FCPA and compliance matters, environmental crimes, and antitrust cartel investigations in countries all around the world.