slice of pie chart on plate

Follow the Resources

How do you know whether your ethics and compliance program will succeed? One surefire way to gauge its potential efficacy is to see just how well equipped it is to do the job at hand. Does your compliance team have the manpower and budget it needs?

An effective ethics and compliance program depends on the Chief Compliance Officer’s authority, independence and resources.  A company’s commitment to a compliance program requires money and employees – there is no question that words of support, organizational status in the C-Suite and a robust board reporting relationship are all important.  While all those elements are important, in the end, they mean relatively little if the compliance program does not have adequate resources.

It is too easy to tell the CEO and the board that they have to put their money where their mouth is.  Instead, a CCO has a responsibility to demonstrate that he/she is using resources efficiently, coordinating and leveraging those resources with related functions and providing compelling justification for resources.

Compliance surveys consistently show that CCOs are suffering from a lack of resources.  By definition, these compliance programs fail to meet the effectiveness standard and the company is at risk.  A 2017 Deloitte Survey reported that compliance teams “remain relatively lean.”  (Here)

Nearly three-quarters (73 percent of respondents) reported having fewer than 20 full-time resources (or equivalents) to design, implement and maintain the compliance and ethics program.  Half of respondents indicated a compliance team of less than five full-time resources; nearly a quarter had six to 20 full-time employees, and 21 percent manage a team of more than 20 employees.

Consistent with the relatively small compliance teams, the budgets for compliance functions, including people, processes and technology, are also lean.  Approximately 60 percent of the respondents reported a total budget of less than $5 million.  Nearly one-third had budgets of less than $500,000, 11 percent had budgets between $500,000 and $1 million and 16 percent had budgets between $1 million and $5 million.  Almost half expect their budgets to increase.

Corporate boards and CEOs have to commit to their ethics and compliance programs.  to “nickel and dime” a compliance program is the equivalent of death by a million cuts.  Directors and CEOs are acting irresponsibly when they underestimate the importance of ethics and compliance programs.  Many directors and CEOs continue to cling to the narrow view that compliance programs are important solely to keep the company from getting into trouble.

This narrow perspective is reflected in a failure to devote adequate support to the compliance function.  Once established, a compliance program rarely increases significantly in size.  Unfortunately, companies do not focus on ethics and compliance unless and until they are subject to a government investigation and enforcement action.  Under the threat of government enforcement, companies then make the commitment to ethics and compliance with resources and priorities.

It is difficult to understand why corporate leaders continue to ignore ethics and compliance.  In the absence of government mandates, most companies will not devote adequate resources to support their compliance programs.  I am convinced that unless corporate leaders dedicate more attention to ethics and compliance, the government will eventually mandate ethics and compliance program requirements in response to the next set of corporate scandals.

This article was republished with permission from Michael Volkov’s blog, Corruption, Crime & Compliance.


Michael Volkov

Michael Volkov

Michael-Volkov-leclairryanMichael 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 mvolkov@volkovlaw.com.  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.

Representative Engagements

  • Successfully represented three officers of a multinational company in two separate criminal antitrust investigations involving a criminal antitrust investigation in the District of Columbia and the Southern District of New York.
  • Defended pharmaceutical company before the Food and Drug Administration and Senate Finance Committee relating to application for approval of generic drug.
  • Conducted internal investigation which exonerated company against allegations of false statements in submissions to the FDA and against improper conduct alleged by Senate Finance Committee.
  • Represented company before the US State Department on alleged violations of ITAR which lead to voluntary disclosure and imposition of no civil or criminal penalties.
  • Advised several multinational companies on compliance with anti‐corruption laws, and design and implementation of anti‐corruption and anti‐money laundering compliance programs.
  • Advised hospitals, pharmaceutical companies and medical device companies on compliance issues relating to Stark law and Anti‐Kickback law and regulations.
  • Conducted due diligence investigations for large multinational companies for anti‐corruption compliance of: potential third party agents, joint venture partners and acquisition targets in Europe, Africa, Asia and Latin America.
  • Represented individual in white collar fraud case in Alexandria, Virginia and secured dismissal of criminal charges and expungement of criminal record.
  • Represented company before Congress and Executive Branch in effort to modify Justice Department regulations concerning use of federal funds.
  • Advised and assisted World Bank in review of global corruption policies, enforcement programs and corruption investigations and prosecutions.

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