FCPA Compliance: Protecting Compliance Officials

From the perspective of FCPA compliance, the FCPA Guidance issued by the U.S. Department of Justice (“DoJ”) and Securities and Exchange Commission (“SEC”) explicitly encourages the development of incentives to facilitate and encourage effective compliance within a business organization.  It is an important area of compliance that calls for creative ideas.  By nature, coming up with practical and workable incentives is a terribly challenging and complex process involving offsetting considerations.  Constructive compliance incentives have the prospect of energizing an organization in moving toward truly effective compliance.

One of the more straightforward means of incentivizing compliance is to provide adequate protections for compliance officials. This is particularly so with senior compliance officials that may be required to clash at times with management in carrying out their responsibilities. Steps should be taken so that compliance officials are adequately protected in terms of pay, benefits, and career advancement. The greater the degree to which there are protections, the more likely the officials are prepared to address the toughest of problems.

Obviously, assured advancement within the organization may not be feasible or even realistic within many organizations. However, generous and guaranteed severance packages should certainly be among the considerations. The more that the severance packages can provide a means for long-term career advancement, the more officials are apt to feel protected. Yet a substantial severance package is not likely to mean a lot to a young person if he or she is effectively precluded from advancing his or her career at other organizations.  At the same time, there must be reasonable limits as to what an organization can guarantee.  An organization cannot endorse the advancement of a compliance official that may have engaged in questionable conduct.  More likely, moving up in the hierarchy of an organization may not be practical as relationships may have been altered as part of the compliance process.

It must always be kept in mind that even a senior and well-meaning compliance official is apt to be less aggressive if his or her long-term wellbeing within an organization or even outside the organization may be put in jeopardy.  Even more important, an organization’s ability to hire or retain a capable compliance official of stature is greatly enhanced by the degree to which his or her financial and long-term career interests are adequately protected.  Why would anyone take such a position if he or she were likely to be terminated or “black-balled” within the industry as a result of carrying out his or her responsibilities?  In sum, first-rate compliance officials are not going to accept a position without adequate protections.

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