By Blandine CORDIER-PALASSE, Le Monde du Droit
Blandine Cordier-Palasse explains why she believes that the fight against corruption is a major challenge for companies.
Far from being a minor issue, the fight against corruption and litigious practices is becoming increasingly crucial for companies. Otherwise, they face major risks. These may be financial (as the scale of the penalties incurred regularly highlights) or reputational. Recent events in this area concern BNP Paribas and Alstom. It is a powerful reminder to French companies of the imperative need to have a solid compliance programme in place.
In fact, the United States is becoming familiar with record penalties for companies caught in the act. It is highly likely that this trend will be emulated, particularly in Europe.
Previously relatively abstract, the risks are now quantifiable, and they are proving to be very significant. In recent years, Total and Technip have had to pay fines in excess of 300 million dollars. Fines can now exceed the billion euro mark, or even more, as the BNP Paribas case shows. In addition to this financial risk, there is also a risk to image and reputation. The time it takes for a company to restore its reputation can be measured in months or even years. The latter is marked by suspicion or the opprobrium of a conviction for corruption or contentious practices.
Over and above the media hype surrounding the size of the proposed fine, this is what the BNP Paribas affair reveals. It is also about the obligation for companies to deliver results. Caught at fault, the French bank has just dismissed its head of regulatory compliance for the bank's operations. In addition to this manager, a number of other employees have been implicated in the offences. And let's not forget the early retirement of one of the bank's senior managers. Similarly, at the same time as the announcement of a possible merger between Alstom and General Electric, executives of the French group were arrested in the United States as part of a corruption investigation. However, a compliance programme did exist in both groups.
Having the appearance of respectability no longer removes the obligation to put in place a genuine compliance programme. This is no longer just a matter of words, but also of deeds. Compliance can no longer be 'cosm'ethical'.
To mark Integrity Week, launched by the OECD, the speakers at the conference organised by the Cercle de la Compliance reminded us just how active the fight against corruption is. The example of Panalpina World Transport gives an idea of the resources deployed to carry out investigations in the United States. Several hundred FBI agents raided the Swiss group's American headquarters. They were looking for evidence of corruption. They noted the direct and indirect costs incurred by the group. Added to this were the resources that the group had to implement to turn itself around. It also had to turn the very solid Compliance programme that had finally been implemented into a real asset in terms of image, reputation and competitiveness.
It's all the easier to deal with cases of corruption, illegal cartels and human rights abuses, as governments are able to score points in the face of global economic competition. All this in a world that is organising itself to deal with the phenomenon, as in the United States, where the judicial authorities can rely on whistleblowers, who are protected from prosecution. This measure is conducive to whistle-blowing. It is all the more effective because employees are increasingly being targeted for prosecution.
Integrating compliance into the corporate culture, as decided by the highest levels of the company, and applying this new paradigm to the behaviour of the company's stakeholders are fundamental elements of an effective compliance programme.
The purpose of compliance is to ensure that the company's activities are in line with civil and criminal laws and regulations. It must also be easy to understand and assimilated by all management and employees, with applicable rules and prevention and control procedures backed up by monitoring and audits tailored to the company. Compliance is therefore a genuine behavioural approach and not simply a self-monitoring programme.
Compliance is not only ethically essential, it is also economically useful. It has been widely demonstrated that active corruption is often counterproductive in the medium to long term. A company that resorts to bribes generally invests less in its R&D; its products logically fall behind those of other companies in its market. The very survival of the group is threatened. If not through the revelation of acts of corruption, then through its competitiveness later on.
Compliance is therefore a decisive asset for companies, and a development issue that it would be dangerous to neglect.
Le Monde du Droit - Le Magazine des Professions Juridiques - 06/2014
Blandine Cordier-Palasse, Managing Partner, BCP Executive Search, Vice-President of the Cercle de la Compliance
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