Compliance Policies Key to Corporate Crime Prevention

"When a law enforcement officer looks at a company, one of the first questions he or she asks him or herself will be: "Are these people good guys or bad guys?" Much is at stake for the officer. Initial information about the company's activities helps the officer decide not only how to begin the inquiry but, more importantly, how best to protect the safety of the officer and his or her fellow officers when dealing with the company...

At the initial stage of an investigation the single best indicator of whether a company is law abiding is whether the company has an effective compliance program. 'According to available information, only 2 of the 865 corporations sentenced for federal crimes during the last eight years had effective compliance programs. Of the 143 organizations sentenced under Chapter 8 in 2002, not one maintained any type of compliance program whatsoever.' These sentencing statistics must be understood properly. It does not follow from these statistics that a company can avoid possible criminal liability by merely officially adopting a compliance program. What does follow is that there is a strong correlation between crimes committed by corporations and a complete disregard of their compliance responsibilities by the management of those corporations.

In other words, companies whose managers choose not to take their compliance responsibilities seriously are flying blind. They are significantly more likely to commit violations of complex regulatory regimes, such as those governing exports, than companies that maintain reasonably effective compliance programs. They also are much more likely to generate the sort of "smoking gun" memos and email that reveal full well their negligence or their knowing and willing intent to violate laws impeding their short term business plans. An experienced federal investigator knows that when he or she finds a company operating without an effective compliance program, the odds are in favor of discovering evidence of a crime."

From this post on the Corporate Compliance Prof Blog quoting from the introduction by Mark Menefee to the highly recommended article by Tara L. Dunn, "Surviving United States Export Controls Post 9/11: A Model Compliance Program", 33 Denver Journal of International Law and Policy 435 (2005).