Compliance Fatigue: You’re Kidding, Right?

by Michael Volkov
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fatigue4You have to admire some people for their chutzpah. In a recent Global Fraud Survey conducted by Ernst & Young (available Here), survey results suggested that anti-corruption compliance may be “running out of steam.”

If accurate, the results are surprising. Anti-corruption enforcement is a growing risk, not just in the United States but across the globe. We are witnessing a global movement that will increase the number of countries actively involved in anti-corruption enforcement.

The idealist in me sees that as a good thing, while the cynic in me suggests that governments are attracted to the collection of huge fines and penalties to fill government coffers. If both are true, there is nothing wrong with that since reductions in corruption can only have a beneficial impact on the world economy and care of the poor and economically disadvantaged.

The E&Y Survey includes some interesting results. Ten percent of C-Suite officials reported being asked to pay a bribe. One-in-five CEOs had been asked to pay a bribe in their careers.

Interestingly, over 30 percent of those surveyed admitted they were willing to engage in corrupt behavior (giving a gift to win a contract; offering entertainment to win business; or making a cash payment to win business).fatigue2

The survey also showed that many companies (80 percent of respondents) have adopted anti-corruption compliance programs and codes of conduct. This is a much more welcome development than other surveys showing a lower figure.

CEOs and C-Suite members, however, have poor attendance at training. Just over 60 percent of CEOs have not attended anti-corruption training.

The E&Y survey presents an interesting picture – a large majority of companies have adopted policies and procedures and implemented training programs. However, the commitment to these programs, once adopted and rolled out, appears to be lackluster.

The risk in this phenomenon is substantial – a new version of a “paper” compliance program is emerging. It is an initial commitment, followed by diminished resources and dedication to anti-corruption compliance.

To add insult to injury, the survey also underscores the absence of a real C-Suite commitment to anti-corruption compliance. C-Suite executives face serious anti-corruption risks. They have significant interactions with foreign officials involving millions of dollars. If anyone has to be monitored and prepared for such interactions, it is the C-Suite.

Companies that do not identify or include the C-Suite in its risk assessment are begging for an enforcement action. Unfortunately, C-Suite misconduct, whether bribery or other fatigue3violations, can have disastrous consequences for a company since it typically results in huge fines and penalties.

Compliance professionals need to take stock of this issue. The C-Suite has to be subject to a full risk assessment, and they have to participate in the company’s compliance program.   C-Suite executives have to be trained, they have to certify compliance, and they have to be monitored. The stakes are way too high and the impact of an even a single bad actor in the C-Suite can be overwhelming.

There is no such thing as compliance fatigue. To the extent that companies complain of fatigue, that only means that compliance professionals are doing their job, emphasizing the importance of ethics and compliance and making sure that the message is heard loud and clear. With time, compliance fatigue will be transformed into a positive and sustainable ethics and compliance message for every level of a company.

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.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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