In late 2007, The Conference Board surveyed the members of two major ethics and compliance professional associations - the Ethics and Compliance Officers Association (ECOA) and the Society of Corporate Compliance and Ethics (SCCE). Nearly half of the survey participants stated that they were eager to know whether companies had "received credit" in enforcement proceedings (such as avoiding persecution or reduced sentences) for having a viable ethics/compliance program. Additionally, 95 percent of those surveyed also said that more information about "credit" given to companies by the government in these situations would help them better promote and implement their ethics programs.
When it comes to the enforcement use of E&C programs, one must distinguish between four distinct categories developed by The Conference Board: pre-existing programs; post-offense/pre-investigative; investigation-based (commenced voluntarily and not pursuant to a settlement, but subsequent to the company’s learning of a government investigation); and settlement-based.
The Department of Justice - which cooperated with this study - was not able to identify many of the first two types of cases. "Lack of information about governmental practices for crediting ethics and compliance system effectiveness in specific enforcement decisions has potential impact on program innovation and efficacy," says Ronald E. Berenbeim, principal researcher at The Conference Board and co-author of the report with Jeffrey M. Kaplan. "But from an ethics and compliance incentives perspective, publicly recognizing settlement-based programs - but not pre-existing ones - in enforcement decisions is not optimal, because it sends the message that companies need not be concerned with E&C programs until after a violation—undercutting the important law enforcement policy of deterrence."
Report identifies causes and solution to problem
The Conference Board’s discussions with former and current government officials and private attorneys suggest that:
- Enforcement personnel may not want to provide specifics of their E&C-based charging decisions for fear that this will create precedent that can be used "against" the government.
- Examining an E&C program as it existed at the time of the offense may be practically difficult.
- Enforcement personnel may not feel that they have sufficient expertise to assess the efficacy of a program.
However, the report notes, the government does frequently provide very public examples of how it rewards those who act as "good corporate citizens" by self reporting violations, presumably with the hope that this will encourage other companies to act accordingly. Taking the same approach with E&C programs could lead to similar benefits and would be no more limiting to the government.
Also, if the government would signal that E&C reports compiled annually by some companies are helpful, this practice would likely become more widespread and could provide a firmer foundation for pre-existing program government assessments than often exist now.
Additionally, the private sector can take steps to further enhance governmental understanding of ethics and compliance program value. Through groups such as the ECOA, SCCE, the Ethics Resource Center, and the Association of Corporate Counsel, it can develop programmatic ways of capturing and communicating information about E&C cases for dissemination to both the public and private sector.
Finally, among the various attorneys in enforcement agencies, there should be a sufficient collective experience for such assessments, assuming an effort is made to marshal that experience.
"Prosecutors should develop institutional processes to gather and disseminate E&C case information to the public," says Kaplan. "Ultimately, state and federal agencies’ pooling of E&C knowledge and resources to support enforcement attorneys for program evaluations will provide a greater foundation of internal expertise that can counteract any institutional resistance to crediting E&C programs."
