This chapter’s title is a little provocative. The role of the Chief Compliance Officer is not to increase profit but to ensure that business is conducted in complete respect of relevant laws.
I understand that the relationship between the CCO and Top Management can be challenging. Too often the CCO is perceived as the one who inhibits the business’ growth. Yet, I am convinced that the quality of the relationship between the CEO and the CCO has a direct impact on the sustained growth of the company and the solidity of its profits.
Let’s explore the conditions that allow for the exchanges between a CEO and a CCO to evolve into a profit-making relationship.
For the CEO, the necessity to carry out business legally goes without saying! But it needs to go further….
When I meet chief executives, I am struck by two things:
The first is their ability to get to the heart of the matter and make decisions quickly, even in complex situations. The second is that, for CEOs, conducting business legally is a given, which implies as a prerequisite that every employee conducts himself in an ethical manner. Thus, for a CEO, the importance of the CCO’s role is not necessarily self-evident. (This issue has been addressed previously in a chapter: “Five bad ‘good reasons’ CEOs give to avoid addressing corruption prevention”).
It is not easy for a CEO to understand that it is one thing to believe that respect for the law is fundamental, yet it is another to ensure that all laws are respected. When the law states what needs to be done, it is easy to follow instructions but when the law states what must not be done, things become more complicated.
Let’s look at corruption: it is forbidden to confer, directly or indirectly, anything of value to obtain an undue advantage. What is “anything of value”? What is “indirectly”? What is “an undue advantage”? It is the Compliance Officer’s role to clarify these questions and to implement procedures which will ensure that everyone comprehends the stakes and respects the ban on corrupt activities.
Thus, the CEO should consider the Compliance Officer as the one whose expertise will ensure that his desire to conduct business with integrity is understood, respected and executed throughout the company regardless of the activity or of the organization’s geographic location.
For the CCO, the risk of corruption is omnipresent! But it needs to go further…
Compliance officers are made aware of new cases of jurisprudence on an almost daily basis. They see the sanctions, the prison sentences and, most importantly, they see the growing complexity of both the mechanisms used to corrupt and of the harsh judgements on practices that had been, up until recently, treated as insignificant: internships to the children of public officials linked to the attribution of a contract, trips for prospective clients, etc.…
In addition, compliance officers see just how many grey areas there are in every commercial operation, as well as how these grey areas are perceived by different staff members depending on their history and experience.
It is tempting to implement a very strict policy and to avoid situations considered as presenting a high risk altogether. To paraphrase a proverb, just as it is easy to have clean hands if you have no hands, it is easy to avoid corruption risk if there is no sales activity.
The first responsibility of the Compliance Officer is to identify corruption risks as precisely and with as much detail as possible. The second responsibility goes further: what needs to be implemented to control these risks in an appropriate manner?
It is the role of the Compliance Officer to support operations’ staff by providing them with the tools necessary for the conduct of business with integrity, even in challenging environments. The CCO should endeavor to hone the ability of operations’ staff to evaluate risks autonomously and to determine, when risks are too high to control reasonably, whether they should withdraw from the project.
In this sense, the CCO facilitates the CEO’s objective of company growth even under difficult conditions. If you consider the impressive evolution of emerging markets, where risks are higher, it is obvious that compliance plays an essential function in the healthy development and expansion of any business.
CEO – CCO: building a relationship that generates profit for the company
The CEO and the CCO have a common objective: the company’s sustainable growth. The CEO’s success will be as great as his CCO’s ability to manage risks, as it will enable the company to operate in riskier areas where profits are potentially much higher.
Besides mastering business risks, the Compliance Officer provides the CEO with a particular asset which is often overlooked: the Compliance Officer encourages innovation. Traditionally, the higher the risks are perceived to be, the more restrictive compliance procedures tend to become. However, most people are drawn to simplicity and a company will be more comfortable working on development and innovation than it will be on bureaucratic management. For this reason, I have seen many companies simplify their sales procedures by reducing the number of sales agents to a smaller, yet highly effective group. I have seen companies leave certain sectors known to be risky, for less risky areas in which they can encourage such innovation and product superiority, that the company will not be open to potential acts of corruption.
Over the past 15 years there have been multinationals which, having been convicted of an act of corruption, paid the fine, underwent the monitoring then invested significantly in compliance and have since come out as some of the best in class. What is the secret? These companies always include compliance in their strategic planning and encourage the CEO and CCO to work together. These companies demonstrate that compliance is first and foremost a strategic, not a legal consideration! They confirm the thesis developed in the first chapter of this book: “Anti-corruption compliance: why is it a Board issue?