Jeff Kaplan's Archive

As noted in the first of this series on C&E program assessments, in addition to reviewing program elements (such as training and auditing) an assessment should address key program “attributes” -  important characteristics of programs that cut across multiple program elements.   They are: program authority, reach, resources and independence; management’s knowledge and support of the program; ethics, as well as compliance; and organizational culture.

The list is based not only on government C&E program expectations and good practices but also on what might considered the known history of program failures. In this and subsequent postings I will provide an overview of these attributes.

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Under one of pending revisions to the Corporate Sentencing Guidelines,  i) the employee  with operational responsibility for a company’s C&E program should directly report to the board of directors (or committee thereof) ; and ii) such “direct reporting obligations” should entail the individual having “express authority to communicate personally to the [board] (A) promptly on any matter involving criminal conduct or potential criminal conduct, and (B) no less than annually on the implementation and effectiveness of the C&E program.”   The mention of “express authority” presumably means that the authority in question should be documented.  But what kind of documentation works best for these and other C&E program purposes?

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Leona Helmsley was reputed to have said that “taxes are for the little people,” and much the same attitude characterizes how some senior business leaders view compliance and ethics (C&E). Although the Sentencing Guidelines provide that “High-level personnel of the organization shall ensure that the organization has an effective compliance and ethics program,” it is not uncommon for such personnel to feel that they have no individual responsibility for the success of their company’s C&E program.

To some extent, this is the fault of those who advise senor managers. A study published in 2007 – Johnson and Ricca, “(Not) Advising Corporate Officers About Fiduciary Duties,” 42 Wake Forest Law Review 663 – found that many corporate lawyers “do not provide full-bodied fiduciary duty advice to officers in their capacity as officers at all,” and it seems doubtful that the situation has improved since then.

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