The Trump administration and compliance:
Challenging times lie ahead for compliance, clearly.
It was already in Trump’s electoral campaign speech. There are too many rules that have created an administrative burden to companies. It is true that there are too many rules. This does not necessarily mean risks have been much reduced or controls are now stronger. If the right rules and controls are not the ones in place, then, risks and weaknesses are still high. Add in the additional administrative burden.
I find positive that the Trump administration uses a carrot way to enforce FCPA compliance programs. Positive motivation is more compelling and more efficient than threats and punishment.
After the financial crisis, we have seen a myriad of compliance activities developing. Consultancy firms, special trainings, Big4 projects, on top of the additional rules and regulations….but we still have corporate scandals.
it seems to me that we are seeing the pendulum swinging back. This is part of any pendulum effect though. It goes back and forth until it, eventually, reaches a middle point. Where will this middle point be? I do not think there is an answer yet.
We have to bear in mind where this burden of rules comes from. A financial crisis due to high risks consciously overlooked and significant known control weaknesses. The aim is still to reduce high risks and strengthen controls. So the middle point will achieve this goal in the most efficient manner. We are not yet there.
For those who think compliance rules will become looser and non enforceable, I point out to Matt Kelly’s article (link above). He concludes rightly that investors and shareholders will have a say on that. This is what we have already seen in the Volkswagen test emissions scandal. Shareholders sued the company and senior management for wrongdoing. Recently in January 2017 the FBI arrested a Compliance Officer for conspiracy to defraud the United States, amongst other claims.
It is in the benefit of shareholders and investors to have a strong and robust FCPA Compliance program. This could be a way to enforce it.