Pick an indicator. Any indicator. They are all pointing the wrong way. Anything you would consider looking at that would indicate whether or not there are going to be more corporate settlements is pointing the wrong way.
↑ Corporate stress The pressure to perform in this economy could cause employees to push closer to the edge of wrongdoing. Some are concerned that people might compromise their principles to increase the chance that they will get some portion of their diminished bonus. Are you kidding me? Bonuses are only one of the issues. People are fighting to save their jobs. People are fighting to save their company. Some are not even in a sound frame of mind because they have lost a great deal of their savings. A recent Society of Corporate Compliance and Ethics survey noted that 85% of those polled thought that the economic stress will cause an increase in fraud. Oh, the humanity! A recent Certified Fraud Examiners survey showed that company leadership thinks the risks of fraud are on the rise because of the pressures imposed on people by the bad economy.
But that is not all.........
↑ The public The general populace is fed up with the corporate wrong doing. The public’s view of corporate America is at an all time low. The public wants to see blood in the streets.
↑ The press The newsmakers need viewers and the viewers want to see the latest fraud. The press is more than eager to oblige. The press is standing on every street corner with a can of gasoline to throw on any corporate fraud fire they can find.
↑ Enforcement dollars The new administration will respond to the recent frauds with more enforcement dollars. The press and the public are crying for more enforcement and this administration came into office with a propensity for putting big business in its place.
↑ Shifting resources This will not be quite so obvious to most looking on, but the FBI, DOJ, OIG, and many other enforcement agencies will be sifting resources to corporate crime. Resources that were assigned to other ills in society will be asked to help fight fraud. This could be equal to or greater than the effect of the increased enforcement dollars.
↑ More regulations This Administration, the press, and the public are calling for increased regulations. Even the Stimulus Bill has regulatory implications. This administration will be cranking out regulations like McDonalds cranks out hamburgers.
↑ The government needs money Last year the government returned billions to their coffers in corporate settlements. The $2 billion extracted from Siemens, KBR, and UBS not only sent a message, it helped offset some of the budget deficit. The government will not lead with this story, but this will certainly be on their mind. In some cases, they are getting several dollars back for every dollar they invest in enforcement. Somebody is doing the math and the math suggests “stay the course.”
↑ The global economy Despite the chaos in the economy, the number of companies doing business with other countries is increasing. Even if it stayed the same, the regulatory and cultural complexity introduced in the last 10 years is staggering. When you do business in other countries, you need to pay attention to their laws. Just ask the Chinese. Who would of thought? Some countries have laws against poisoning children and pets? Not paying attention to the laws of other countries has cost them a fortune. They are paying attention to the laws of other countries now. It’s easy to pick on the Chinese, but they are not the only ones who will be learning this lesson. We all need to pay attention to the laws of other countries and that challenge is staggering.
↓ Compliance budgets Finally an indicator pointing down...... but alas, it’s an indicator we need pointing the other way. This one is somewhat debatable. Some feel compliance budgets will not be decreased. However, what was adequate before is not adequate now, because of all the reasons stated above. Even if your budget stays the same, if the investigations and the occurrence of fraud increase, you are losing ground. Relative to the increasing regulations, enforcement and stress...... a flat budget is an inadequate budget.
↓ Compliance training in college The government is using compliance tools to find fraud. They are auditing, monitoring, investigating, and disciplining. They have a reporting mechanism and, in their own way, they report the compliance issues (settlements) to the Board. They are running a compliance program to find fraud. So you would think we would teach future business leaders about compliance programs and the role of a compliance officer. If you think that, you would be wrong. A handful of schools are actually teaching compliance, but it is sadly inadequate if you look at the academic community as a whole.
↑ Compliance vendors At this point, I will admit I am frustrated. Every time I start thinking about the commitment to compliance in this country (as in the universities) I get mad. Companies providing compliance products and services will do well despite this economy. The colleges won’t teach compliance. Companies won’t adequately support compliance. The government continues to crush us with their effective use of our own compliance tools (reporting, auditing, monitoring, investigating, disciplining, etc.) Therefore, and often in a postmortem effort, we will continue to hire compliance companies to shore up our compliance inadequacies. At least someone comes out ahead in this mess.
We have two choices.
Choice 1:
Get the government, the press, and the public to change their minds, stop working in countries with regulations, and stop the stress created by the difficult economy.
Choice 2:
Implement an effective compliance program.
The funny thing is that the only way to implement choice number 1 is to select choice number two. Good luck with that.