ORIGINS OF COMPLIANCE
To know where we are going, we need to know where we come from.
Now is the turn of:
Compliance
Compliance is the function that ensures a company complies with ethical standards, its outside regulatory and legal requirements, as well as internal policies and bylaws. This function reports to the Board of Directors of the company, usually via an Audit and Compliance Committee made up of Non – Executives members of the Board of Directors. Any report issued by Compliance is delivered to the Board of Directors via this Committee.
For a company, this involves setting up processes to figure out what rules they need to follow (like laws, contracts, or policies), checking if they're meeting those rules, and then making any changes or improvements needed to stay on track.
The Board of Directors is a group of people chosen to help guide and make big decisions for a company. Think of them like the coaches of a sports team. They don’t handle the day-to-day work (that’s the job of the CEO and managers), but they make sure the company is on the right track and growing. Their main job is to protect the company’s interests and make sure it succeeds. They also represent the shareholders (the people who own a piece of the company), and they help decide things like company goals, big plans, and whether the company is doing well or not.
The Board of Directors has some important legal duties, which means they are required by law to act in certain ways. Here’s a breakdown:
Act in the company’s best interest: They must make decisions that help the company succeed, not for their own personal gain. It’s like always playing for the team, not just for yourself.
Follow the law and rules: They must ensure the company follows all the laws and regulations. If the company breaks the law, they can get into big trouble.
Manage money responsibly: The board must be careful with the company’s finances, making sure money is used wisely and for the right reasons.
Keep things honest: They have to be honest with shareholders and investors about the company’s performance, like if the company is doing well or struggling.
Supervise and guide the company: They need to make sure the managers and executives are doing their jobs properly and that everything is running smoothly.
If they fail in these responsibilities, they can be held legally responsible and might face consequences, like fines or losing their position.
A BIT OF HISTORY
The origins of Compliance go back to factual situations that began in the 20th century, when the criminal corporations living in the North American country began to generate serious concern in the American society. This concern was transferred to the legislators of the North American country. Scandals such as the police and administrative corruption that were infiltrated by the Italian mafia set up in several states, began to give a signal that there was a need to be tough on corrupt systems and criminal corporations.
Although the
Compliance System began in public law (Public Compliance), it was
extended to the private sector and is
currently made up of all the
regulations that companies must use in the use of good business practices, it is made up of the
rules self-imposed by the organisation such as process manuals, codes of ethics and regulatory management systems, but it is
also made up of the
rules of the nation in question, coercively imposed by the State and of the community and global rules such as the European Union rules for the member states, for example.
A Report of the SEC* on Questionable and Illegal Corporate Payments and Practices stated:
"In 1973, as a result of the work of the Office of the [Watergate] Special Prosecutor, several corporations and executive officers were charged with using corporate funds for illegal domestic political contributions. The Commission recognized that these activities involved matters of possible significance to public investors, the nondisclosure of which might entail violations of the federal securities laws."
After more than two years of investigation, deliberation and consideration, what emerged in 1977 was the Foreign Corrupt Practices Act (FCPA). The FCPA was a pioneering statute and the first law in the world governing domestic business conduct with foreign government officials in foreign market.
The FCPA also requires companies whose securities are listed in the United States (whose shares are listed in the stock markets) to meet its accounting provisions(a) make keep books and records that accurately and fairly reflect the transactions of the corporation and (b) devise and maintain an adequate system of internal accounting controls.
The FCPA was designed to prevent corrupt practices, protect investors, and provide a fair playing field for those honest companies trying to win business based on quality and price rather than bribes.
* Please look at Origins of Financial Audit for an explanation on SEC.
In 1991, the U.S. Sentencing Commission created the first federal sentencing guidelines for organizations in response to inconsistent criminal sentencing for non-compliance. These guidelines were the first publications to outline key elements of an effective compliance program and was the basis for the seven principals all organizations must follow today.
In 1999 the Organisation for Economic Co-operation and Development (OECD) issues the Anti-bribery convention, which in its Art 2 says:
“take such measures as may be necessary to establish the liability of legal entities for bribing a foreign public official.”
In
2005, the
United Nations (UN) Convention against Bribery, in its article 26 says:
“Each State Party shall adopt such measures as may be necessary, in accordance with its legal principles, to establish the liability of legal entities for participation in the offences established in accordance with this Convention. The liability of the legal entities may be criminal, civil or administrative.”
Other countries followed suit, like
UK in 2010 with the UK Bribery Act. In
Spain there is
article 31bis of the Criminal Code in 2015. In
France there is
Law Sapin. In Latin America most of the countries have a special legislation or article in their Criminal Code on Compliance.
Compliance legislation (FCPA, UK Bribery Act, Article 31bis of the Spanish Criminal Code and similar others) is about making responsible the companies’ Boards and Directors if employees make any action or activity against rules, legislation, law, and the company did not have a Compliance program to avoid that from happening.
Compliance officers provide an in-house service, mandated by the law, that effectively supports business areas in their duty to comply with relevant laws and regulations and internal procedures. The business areas must comply with relevant laws and regulations and internal procedures and Compliance is overseeing this is happening.
Compliance is required by law. A Compliance Officer fulfills a legal requirement that all companies have to comply with.
The Compliance Officer MUST report the findings and any issues to the Board of Directors. Failure to do so can be considered negligence.
Corporate Integrity Agreement
A Corporate Integrity Agreement (CIA) is a document that outlines the the obligations to which an entity agrees as part of a civil settlement.
My role as
Deputy Compliance Officer related to the execution of a Corporate Integrity Agreement between GlaxoSmithKline (GSK) and the US Department of Health and Human Services, Office of Inspector General (HHS-OIG), approved by the US Courts (DoJ), after GSK pled guilty and paid $3 billion to resolve fraud allegations and failure to report safety data as a result of an investigation involving US Department of Health and Human Services, Office of Inspector General (HHS-OIG), FDA, and other regulatory agents.
Included within this Corporate integrity Agreement was the requirement for a
full and complete compliance program.
MY ROLE AS DEPUTY COMPLIANCE OFFICER
Within this role I managed risk identification within Finance strategy and activities; ensure mitigating plans were implemented and that there was a robust internal control system. Spearheaded Global Support Functions team (HR, IT, Finance, and Procurement Compliance specialists) on implementing a compliance program focused on sanctions and export controls.
Key Achievements
- Improved controls in high-risk areas, closing gaps and ensuring compliance by leading implementation of anti-bribery / corruption programme.
- Ensured robust internal control system by ensuring with senior finance leaders an effective identification and mitigation of risks. Oversaw adherence to IFRS** and Sarbanes-Oxley (SOX)* standards.
*See Origins of Financial Audit for an understanding of Sarbanes-Oxley
**International Financial Reporting Standards (IFRS) are a set of accounting rules for the financial statements of public companies that are intended to make them consistent, transparent, and easily comparable around the world.
