In this Episode 2 of Compliance Man Goes Global podcast of FCPA Compliance Report International Edition, we focus on real priorities of the corporate compliance programming at high-risk markets. In each podcast, we take two typical concepts or probably misconceptions from in-house compliance reality. We check out if these concepts work at emerging jurisdictions. For each podcast, we divide roles with Tim Khasanov-Batirov, a compliance practitioner who focuses on high risk markets for 17 years and myself.
Corporate Concept #1. We have officially deployed compliance program at a high-risk market. All hallmarks are duly identified in it. I do not understand what kind of priorities I have to consider in addition to regulatory hallmarks. When enough is enough?
Tim Khasanov-Batirov: Here are my pros:
Argument #1.
To address regulatory expectations you should have a program that is comprised of 10 Hallmarks. Here are your priorities. This is a very straightforward and in my view a very clear philosophy.
Argument #2.
10 Hallmarks cover both legal aspects along with implementation side. If we want to find priorities for particular organization among already identified regulatory priorities we can simply choose them from 10 Hallmarks.
Argument #3.
Attempt to perplex the framework could harm the execution of the program. I do not see any merits from practical side to distract attention of the team and to spare resources on reinventing the wheel.
Tom: OK, let me give you some examples, which probably allow you to re-think about priorities. Here are cons:
Argument #1.
You definitely want to avoid paper compliance program. Therefore, you probably need to distinguish 10 Hallmarks from practical methods on implementing them. We can call these practical methods priorities.
Argument #2.
The following priorities come to my mind when I think about practical side on implementation of the corporate compliance program in emerging markets. First, clear understanding by compliance personnel of how they could achieve goals prescribed by the hallmarks. Second, obtaining trust from the management by compliance team. It is vital. Third, constant engagement and cooperation with key stakeholders aimed on keeping compliance team’s eye on the ball.
Tim: I believe Compliance man referred to this topic in the first episode of the illustrated series entitled: First Things First.
Corporate Concept #2 “In real world compliance goals and priorities mismatch business needs or even prevent business from growing”. Tim, will you support this philosophy if you look at high-risk markets?
Tim: It is common place to oppose corporate compliance efforts to business growth. Moreover, this statement is a kind of vague. I strongly disagree with it. I believe compliance priorities exist on the radar of business leaders at least due to very pragmatic and even cynical reasons.
Argument #1.
Threat of personal liability and possible negative impact on the company in case of enforcement actions.
Argument #2.
Wish to comply with corporate rules and maintain status of a “good corporate citizen” in the company.
Argument #3.
I also believe in scenario when compliance philosophy gets a high priority status in the in-house reality due to Compliance team’s efforts.
Tom: My concerns are the following:
Argument #1.
As we know the main business goal is earning money. What we call compliance in certain cases is viewed by business leaders as obstacle in money making.
Argument #2.
Sometimes top managers unfortunately are not aware about compliance risks and consequently their own duties to mitigate them. Thus, unintentionally management might ignore even basic compliance rules.
Argument #3.
The worst-case scenario when compliance team was not able to demonstrate the ability to work in the team rather than being just bureaucratic “Dr. No” department.
Tim: As key takeaways from today discussion, I think we can mention the following ones: a compliance practitioner should implement the program based on regulatory requirements in cooperation with business leaders. To achieve this goal he or she should obtain trust from top management and get awareness (and even appreciation) of compliance activity by key stakeholders.
Join Tom Fox and Tim Khasanov-Batirov for the next episode of Compliance Man Go Global episode of FCPA Compliance Report International Edition. Join us again as we bust more corporate compliance myths.