Compliance in the C-Suite


The ongoing debate whether certain executives are “too big to jail” misses the most important trend in corporate governance – namely, that criminal conduct is rising in the C-Suite. Viewed from a broad perspective, since 2000, the trend of C-Suite misconduct is unmistakable, and government prosecutors have paid greater attention while devoting more resources to the prosecution of rogue executives. At the same time, although policymakers, regulators and prosecutors have intensified their focus on internal compliance programs, the potential impact of those programs on C-Suite misconduct and culture seems to have been overlooked.

Since July 2002, the Department of Justice has convicted over 200 Chief Executive Officers and Presidents, over 120 Vice Presidents and 53 Chief Financial Officers. These statistics, by themselves, paint a damning picture of ethics and compliance in the C-Suite. Meanwhile, a 2006 Compliance and Ethics Leadership Council study of major compliance scandals from 1999 to 2005 found that significant compliance violations almost always fell at the feet of a senior manager. According to CELC’s findings, in 46 percent of the incidents studied, senior managers knew about alleged improper conduct, and in another 40 percent of the incidents studied, the senior managers committed alleged improper conduct themselves. Taken together, the CELC findings suggest that more than 4 out of 5 senior managers either knew about or committed the crimes at issue.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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