all hands together, unity in multiethnic team

Why Your E&C Program Should Be Operationalized

An ethics and compliance program is in trouble from the start if it meets with staunch opposition from any element within in the organization. Michael Volkov explains why the best programs are operationalized, with buy-in and cooperation from every function.

The beauty of an effective ethics and compliance program is captured in the well-known phrase – it is worth much more than the sum of its parts.

I am reminded of the Beatles refrain, “All Together Now,” which is an apt reminder of the importance of operationalizing an ethics and compliance program. Frankly, the life of an ethics and compliance program depends on the extent to which it is operationalized.

A compliance program lives or dies depending on the cooperation and coordination of every element of a corporation, starting with the C-Suite and stretching from the business to human resources, finance, security, internal audit, procurement and on and on. Together, each of these disparate functions has a contribution to make and an important role to play in the overall operation of the compliance program.

When one player fails to participate or resists cooperation, the compliance program is unlikely to succeed, since each function houses important aspects of a compliance program. I am reminded of a chief compliance officer who had to cut a meeting off because he/she had to meet with HR in an attempt to persuade HR to cooperate with the company’s compliance program. Unfortunately, these days I hear such candid comments often from a CCO about the lack of cooperation from key functions in a compliance program.

Perhaps the most important cooperator in this process is the business itself. I often hear about how business leaders continue to view compliance as a “pain” or something that has to be done, but only as a way to progress to the next step in a business process. Business managers have to be educated and enlisted to adopt compliance procedures as a “way of doing business.” Compliance is critical to business success and is fast becoming an important aspect of every business relationship, between the business and customers, business and vendors/suppliers and business and key stakeholders. Forward-thinking or enlightened business managers understand this critical link. Luddites do not.

The same can be said for corporate financial executives. As keepers of the cash and managers of money, financial executives are one of the last bastions of resistance to the need to cooperate and coordinate their operations with the support and assistance of CCOs. They can resist now, but they will ultimately have to lower their defenses and begin to cooperate and coordinate.

As a first step, financial and compliance controls overlap figuratively and literally. As a pure technical matter, financial controls, if properly crafted, include various compliance functions (e.g., gifts, meals, entertainment). More broadly, financial controls operate in an environment in which a compliance program operates – a company’s culture.

If the company’s culture is one of cutting corners and evading requirements to focus exclusively on profits, you can bet that the company will have difficulty in enforcing its accounting controls. This is just common sense, but for some reason, CFOs and other financial professionals somehow believe they are members of an exclusive club that does not need to embrace the compliance function. In this narrow-minded approach, financial executives are doing a disservice to the overall corporate mission.

Eventually, a CEO and his/her senior management team can break down this wall between finance and compliance by mandating cooperation and coordination. But, of course, that depends on whether the CEO and the senior management team understand the importance of ethics and compliance and the need for everyone to contribute and cooperate to the program’s success. 

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 [email protected].  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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