|In February 2017, the U.S. Department of Justice (DOJ) Fraud Section published its latest guidance on corporate compliance programs with the release of the very useful document titled “Evaluation of Corporate Compliance Programs.”
While many legal and compliance scholars have rightly stated that this latest publication isn’t anything radically different than prior authoritative guidance issued by the DOJ and other organizations, what jumps out is the reframing of the well-worn expression, “tone at the top,” with the potentially more insightful, and arguably much scarier, “conduct at the top.” In a just-released Flash Report, we put forth questions and insights that illustrate the degree to which the DOJ is examining senior management and the board of directors while evaluating a corporate compliance program.
If it’s true you can’t legislate morality – and all evidence, including but certainly not limited to corporate malfeasance such as the Enron and Worldcom scandals or the questionable corporate behavior of reckless risk-taking to maximize short-term profits and compensation (under “heads I win, tails you lose” compensation structures that left shareholders with the short stick) that contributed to the financial crisis, supports this hypothesis – why do companies bother with ethics policies?
I know Section 406 of Sarbanes-Oxley requires publicly traded companies to disclose whether they have ethics policies and whether their executives are bound by them. But Enron had a beautiful 64-page ethics policy, suitable for framing – for all the good it did them. So what’s the big deal?