By Adam Turteltaub
adam.turteltaub@corporatecompliance.org
I first got into the world of compliance in 2000. Compliance back then was very much an American thing, and remained that way for quite some time. As a result, there was a great deal of pushback from foreign companies and even US ones, about the aggressiveness of US prosecutors and the extraterritorial reach of the US Foreign Corrupt Practices Act.
“The Americans”, often said with rolling eyes, was a favorite expression at international conferences I attended.
You could see the US dominance in the SCCE and its membership, too. In 2008, shortly after I joined the association, we held our first Academy outside the US. All of 16 or 17 people showed up in Zurich, with a large contingent working for US-based companies.
Over the years, though, things changed dramatically. Just shy of 20% of SCCE membership is now based outside the US. In 2017 we will offer five Academies outside the country – Dubai, Amsterdam, Singapore, Sao Paulo and Madrid. All will be full, if not completely sold out. And a large percentage of attendees will come from international companies.
The tipping point in compliance – when it is no longer American driven but a global initiative – may have now been reached.
Malaysia’s 1MDB scandal has seen enforcement authorities act in Switzerland and Singapore. In the past month, the Israeli government had its first anti-corruption plea agreement and placed a billionaire under house arrest for alleged bribery in Guinea.
In addition, Spain and now France have passed new laws in which compliance programs are codified. They join the ranks of a growing number of countries pushed by the OECD to adopt more stringent anti-bribery laws.
And adding icing to the cake are the number of multi-lateral enforcement actions. As a result, a company could find itself being prosecuted in multiple jurisdictions, or at least having prosecutors from several countries working together. The record-setting Odebrecht/Braskem settlement of $3.5 billion with Brazil, Switzerland and the US is expensive proof.
Finally, it’s also easy to lose track of the number of foreign enforcement actions in areas like data privacy and anti-competition law. Recently even Apple earned unwanted headlines over its tax situation in Ireland, which it is still battling.
The bottom line: compliance is no longer an American thing, it’s a local thing and a global one. And that should make the job a bit easier.
It should also be a warning to those who think that a change in Administration in Washington foretells the end of compliance and the prosecution of corporations. The US is not the only sheriff in town.
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Dear Mr. Turteltaub,
As always I enjoyed reading your post. This time however I felt an urge to respond. You are certainly right about the internationalization of compliance if you would disregard the financial services sector and public companies. In The Netherlands – where I live – and in many other European countries Compliance has been around for more than 20 years. The Netherlands Compliance Institute for example was established in 1999 and their mission when they started was to provide education to Dutch Compliance Officers, who were already there for a couple of years! (disclosure: I have been a teacher at the Institute since 2011). Most of these Compliance Officers worked at financial institutions, a few of them at public companies, and in the beginning they would mainly focus on the prevention of insider trading and compliance with financial regulations.
The Dutch Compliance Officer Association was established in 2001. And I coordinated my first compliance project, related to the introduction of a new Data Privacy Law, in 2002.
However, if you refer to Compliance outside of the financial services industry and focus on topics like anti-bribery and corruption, trade restrictions and export controls, you are indeed correct that the US has been setting the pace.
In Europe and in other parts of the world, we certainly learn a lot from how compliance and prosecutions are handled in the US. I recently wrote a post on that at the FCPA blog. However, there are also topics where Europe has been leading. The Dutch Central Bank for example started looking at company culture and trust in 2008 already and have made culture and behavior an integral part of their supervision.
So I think that we can still learn from each other. And while some people in Europe are terribly annoyed about the extra-territorial reach of US law, I tend to respond to these feelings by expressing that I am happy to see that the US has been prosecuting bribery and corruption actively, as this has devastating effects on society. And let’s not forget that the US authorities started the FIFA investigation, while you don’t even like soccer. I am grateful for that!
Kind regards,
Geert Vermeulen
Geert:
Thank you for your comments, and you are, of course, correct about compliance in financial services.
The problem, as I see it, is that financial services operates alone when it comes to compliance. With the exception of the insurance industry, we rarely see a financial services compliance professional at a cross-industry compliance conference.
While I know that there are unique compliance challenges for financial services, there are a host of common issues to all compliance programs: training, helplines, management buy in and tone at the top, to name but a few. It’s a shame that we don’t benefit from the financial services’s industry’s expertise and your colleagues don’t benefit from what other industries have learned.
Adam
Agreed on the need for collaboration between financial services and other industries regarding compliance. The financial services sector has some very interesting compliance practices that have been helpful to see slowly make their way into other industries. Likewise, other industries have something to teach financial services about culture so that it can move beyond the current trend of a “culture of compliance” to a strong ethical culture. The big problems I’ve seen in the sector are not compliance processes but, rather, ethics issue not addressed by specific rules and that cause significant reputational issues for brokers, banks and others.
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