How Do You Determine the Gold Standard For Compliance Programs?

by Thomas Fox

What is the gold standard for scientific minds? You might not do better than Albert Einstein who was born on this date in 1879. While most lay persons remember Einstein for his theory on special relativity, and his attendant mathematical calculation that mass and energy were equivalent and could be calculated with an equation, E=mc²; Einstein actually won his 1921 Nobel Prize for an earlier paper which theorized that light is made up of individual quanta (photons) that demonstrate particle-like properties while collectively behaving like a wave. The theory was an important step in the development of quantum theory.

Many compliance practitioners often wonder about how their Foreign Corrupt Practices Act (FCPA) compliance program might compare with companies which are believed to have gold-standard compliance programs. Yesterday, in an article in the FCPA Blog entitled “Is This The World’s Best Compliance Disclosure?”, Dick Cassin wrote about the recent disclosure by Baker Hughes Incorporated in its 2012 10K filing, relating to FCPA compliance. Once upon a time, way back in 2007, Baker Hughes had the largest FCPA fine in the history of the world ever, that being $44MM. It was also under a three-year Deferred Prosecution Agreement (DPA) and a corporate monitor. Baker Hughes not only made it out from under the DPA and monitor but it is now recognized as having a gold standard compliance program.

Baker Hughes bases its compliance program on three core concepts. The first is its “Core Values of Integrity, Performance, Teamwork and Learning”. The second is the standards contained in the company’s Business Code of Conduct. The third concept is the laws of the countries where it operates. The Baker Hughes compliance program is referred to within the company as “C2” or “Completely Compliant.” The “Completely Compliant” theme is intended to establish the proper Tone-at-the-Top throughout the company. Based upon this, company employees “are consistently reminded that they play a crucial role in ensuring that the Company always conducts its business ethically, legally and safely.”

The 10K went on to list some of the highlights of the Baker Hughes compliance program. They included:

  • Comprehensive internal policies over such areas as facilitating payments; travel, entertainment, gifts and charitable donations connected to non-U.S. government officials; payments to non-U.S. commercial sales representatives; and the use of non-U.S. police or military organizations for security purposes.
  • Comprehensive employee compliance training program covering substantially all employees.
  • Due diligence procedure for commercial sales, processing and professional agents, an enhanced process for classifying distributors and are creating a formal policy to guide business personnel in determining when subcontractors should be subjected to compliance due diligence.
  • A special compliance committee, which is made up of senior officers, that meets no less than once a year to review the oversight reports for all active commercial sales representatives.
  • Continued reduction of the use of commercial sales representatives and processing agents, including the reduction of customs agents.
  • Use of technology to monitor and report on compliance matters.
  • A program designed to encourage reporting of any ethics or compliance matter without fear of retaliation including a worldwide Business Helpline operated by a third party and currently available toll-free in 150 languages to ensure that our helpline is easily accessible to employees in their own language.
  • Expansion in the use and scope of our centralized finance organization including further implementation of our enterprise-wide accounting system and company-wide policies.
  • The corporate audit function has incorporated additional anti-corruption procedures in audits of certain countries.
  • Continued refinement and enhancement of procedures for FCPA risk assessments and legal audit procedures.
  • Ensuring that the company has adequate legal compliance coverage around the world, including the coordination of compliance advice and training across all regions and countries where we do business.
  • Centralization of the company’s human resources function, including creating consistent standards for pre-hire screening of employees, the screening of existing employees prior to promoting them to positions where they may be exposed to corruption-related risks, and creating a uniform policy for new hire training.

There are three areas from the Baker Hughes disclosure which I wish to highlight as components that a small to medium sized company should be able to implement at a relatively low cost. The first is the compliance oversight committee. The oversight committee puts a ‘second set of eyes’ on the compliance issues it reviews, whether it is third parties or additional compliance issues. The second is more involvement from the HR function regarding screening of potential hires and screening of employees for promotion to positions which might expose them to additional corruption related to risks. I would add that you should also use such screening to help make selections for moving employees into senior management positions, where their tone and attitudes towards compliance can grow in importance.

The third area is the company’s embracing of compliance as a key corporate culture. You can call your program “C2” or “Completely Compliant”, like Baker Hughes does, or give another name to the program. However the key is to remind employees of the crucial role that they play ensuring that your entity always conducts its business in an ethical manner. Much like reminding employees that safety is everyone’s responsibility; you can and should remind employees that doing business within the parameters of your Code of Conduct and your compliance program is something they should recognize as their responsibility as well.

If you are a small to medium size company your FCPA risk profile may not warrant the gold standard compliance program that Baker Hughes has put in place. However you should endeavor to put a program in place based upon the risks that you assess as applicable to your company. The Baker Hughes program gives you some guidance as to what the gold standard is and some solid ideas of components that you might implement.

One last thing, the Chief Compliance Officer (CCO) of Baker Hughes is Jay Martin. Jay regularly speaks at compliance conferences across the country. He has been quite generous to give his experiences in going through the compliance process at Baker Hughes. I am sure that he would be willing to speak to you as well.

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.

© Thomas Fox, Compliance Evangelist | Attorney Advertising

Written by:

Thomas Fox

Compliance Evangelist on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.