In this article, I’m going to focus on some general strategies for companies dealing with law enforcement investigations into corporate fraud. Compliance programs require both foresight and diligence from leadership to dictate the right “tone at the top” if the middle and bottom are to be expected to follow. All regulatory schemes at the state and federal level for anticorruption compliance recognize this key hypothesis. Prosecutors routinely look to management for evidence of their attitude on compliance in fashioning settlement proposals and deferred prosecution agreements. Their basis, of course, is that all employees look to the top of the company to see what is important to that company.
The U.S Sentencing Guidelines, which serve as a roadmap to sentencing for judges in federal courts, reads:
High-level personnel and substantial authority personnel of the organization shall be knowledgeable about the content and operation of the compliance and ethics program … and shall promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.
The corporate world is mired in cases where the abject failure of any ethical tone from the top has resulted in enforcement actions and ultimately large monetary payouts from the companies. The federal government has specifically highlighted in some recent high-profile corporate prosecutions that targeted companies had a culture of tolerance for ignoring fraud.
Companies understandably struggle with a hard and fast metric that upper management can adopt to communicate its compliance values. Here are some suggestions that C-level officers might adopt to set a tone from the top. Putting these into practice could likely be valuable evidence in a future investigation to demonstrate the strength of your company’s compliance program.
Vicky Janowski - Jul 2, 2020
Christina Haley O'Neal - Jul 2, 2020
Cece Nunn - Jul 3, 2020
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