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Examing Risks of Corporate Compliance Programs (Ethikos) Examing Risks of Corporate Compliance Programs (Ethikos) January/February 2000 - by Joseph E. Murphy. Examining The Legal And Business Risks Of Compliance ProgramsThere can be little question that compliance programs are a requirement for prudent management in any organization today. The risks that drive this decision are enormous—criminal enforcement, regulatory enforcement, civil claims and punitive damages. Organizations face enforcement initiatives at multiple levels—federal, state and local—and on a multinational basis if they operate overseas. If a violation occurs, there is likely to be not only an investigating agency, but also skeptical employees, questioning customers, and intense media and public scrutiny. The risks are extraordinary, making compliance programs a corporate necessity.But the story of risk does not end there. The very act of instituting and managing a compliance program can itself create risks that must be addressed.Dealing with these risks calls for careful work. This article will inventory a variety of these risks, and suggest some ways to address them. But this is only a summary. Ultimately, those responsible for compliance programs will find it essential to obtain sound legal advice in their work.Adverse use in litigation. One of the most disturbing risks in compliance programs is the potential for adversaries to exploit program material in litigation. Audits, investigations, hotline logs and similar materials may become litigation roadmaps. Adversaries may try to use them as a substitute for doing their own case work in litigation. In the Lucky Stores case, an adversary even used notes taken in a compliance seminar as a basis for claiming punitive damages. Indeed, a compliance office can become a lightning rod for litigation and discovery. An adversary may find that the program has arranged all of the company’s embarrassing materials in one place, and designated one officer, the compliance officer, who knows everything bad that has happened.In addition to providing such a tactical advantage for adversaries in litigation, the documentation generated by audits, investigations and other internal assessments may also contain negative statements that can be taken as admissions against interest. Full Article: http://www.singerpubs.com/ethikos/html/examiningrisks.html |
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2006 Ethics-Governance.com |
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