by Brian Mahany
Can Your Business Afford a Compliance Program? The Better Question is Can You Afford Not Having One?
Compliance problems cost U.S. businesses billions of dollars. That’s right, billions. A compliance problem can result in crippling fines, loss of reputation, huge legal fees and often the loss of senior management. The existence of an effective compliance program is an important consideration for prosecutors when deciding whether to charge a company criminally and is important for judges to consider when sentencing businesses already convicted.
In recent years, the Department of Justice has ramped up its prosecution of corporations as well as their employees. Not a week goes by without another story of an American business charged with violations of the Foreign Corrupt Practices Act.
While no company can 100% guarantee that none of its employees will break the law, corporations and their executive teams can protect themselves. Having an effective corporate compliance program is a vital first step. New guidelines from the Department of Justice require government prosecutors to consider “the existence and effectiveness of [a] corporation’s pre-existing compliance program” (United States Attorney’s Manual sec. 9-28.300).
Prosecutors are also required to look at management’s complicity in the wrongdoing and the company’s remedial actions. All of these factors depend on a good compliance program. Such a program is often the difference between criminal prosecution and no further action.
It’s not just the Department of Justice that looks at compliance efforts. The Securities and Exchange Commission also considers compliance efforts. For American companies doing business abroad, the Foreign Corrupt Practices Act and the soon to be implemented, tough U.K. Bribery Act look favorably upon businesses with effective compliance efforts.
Have American businesses heeded the warning? Apparently not. According to a study quoted in Corporate Counsel, only 3 of the 1,349 businesses convicted between 1996 and 2009 had effective compliance programs. The others had no or ineffective programs. Remember, even if a business with an effective compliance program is prosecuted, judges can still use evidence of the program’s effectiveness as grounds for a downward departure from sentencing guidelines.
Mahany & Ertl is a boutique law firm located in Milwaukee, Wisconsin that defends businesses and individuals charged with white-collar crimes. If you or your company is under investigation, contact us immediately. Decisions you make now can have an important impact on whether or not charges are brought. We can help you establish a viable compliance program and assist without outside monitoring if necessary.
Brian Mahany is a former tax prosecutor, white-collar criminal investigator and the former revenue commissioner for the State of Maine. He and his team of white-collar criminal defense attorneys have defended people across the United States. Brian can be reached direct at (414) 704-6731.
(c) Mahany & Ertl, LLC Milwaukee, Wisconsin – Whistleblower, Asset Recovery, Fraud Recovery, and Boutique Civil Litigation