Reward Good Behaviors while being Firm with Disciplinary Actions Promised and More User Friendly Compliance Support

2 weeks ago, I had to finish 1 Assignment:

You are the Chief Compliance Officer at a major American retailer. Recently, a senior manager at your company violated the FCPA by bribing Chinese officials in exchange for customs and shipping benefits. There are whispers that some of your company’s third party vendors are engaging in corrupt behavior as well, and the U.S. government is investigating. The CEO has asked you how the company should alter its compliance program given these issues.

Write a memo to the CEO in which you:

1)  Describe two policies or practices that the company should have in place to prevent employees from engaging in corrupt behavior.

2)  Describe two policies or practices that the company should have in place to prevent third party vendors from engaging in corrupt behavior. They should be different from those discussed in Part 1.

So, below is my proposal:

Memo 1 on Employees:

1a) Review our compliance training process as well as set up both a theory and practical exams for all our departments with a certificate awarded. I would recommend interactive virtual training so that those who work remotely will too have easy access to training materials and have absolutely no excuses to miss their training. Special attention will be paid to the sales and procurement teams since they are most vulnerable in violating the FCPA through paying and accepting bribes. Also, the Accounts Payable and Accounts Receivable team should receive a monthly training on both compliance as well as accounting and finance training as these 2 teams are the defensive line, to identify suspicious payments on invoices and expenses claims. All employees are to take compliance courses specific to their projects and departments every 6 months. A letter of acknowledgement that they have received the training and pass the tests. Those who pass their courses at 1st trial will be rewarded with incentives like a bonus as well as a certificate. Those who failed will be given a 2nd chance with a warning letter so that they will take the seriousness of FCPA. If they fail again, their employment will be terminated with immediate effect.

1b) Review and update our compliance policies, employees incentives and disciplinary processes which include legal actions to be taken if needed. We need to make sure that the updated policies are well translated in all the languages where our regional offices are and in a way all our employees can understand. The management of each regional office has to acknowledge that the policies are updated as per the headquarter’s request. My team and the internal auditors will visit all the offices to audit and make sure these policies updates and communications are well carried out. We too will work with the human resource team to review the compensation system and contracts of the individuals. We will include clauses that will both encourage ethical behaviour through bonuses like monthly employee recognition and discourage the temptation to misbehave by listing clearly all the disciplinary measures we will take. These will be documented and included as annexes to the employment contracts to be endorsed by the Human Resources, the individual employees and their line managers.

Memo 2 on 3rd Party Vendors

2a) We will work with our external support to relaunch a 3rd party background check for a refreshed due diligence. This will take place annually. More advanced technologies like Artificial Intelligence and Data Management as well as ERP systems to be invested in will be encouraged as this will help greatly to minimize human errors. An updated set of questionnaires will be disseminated to all our 3rd party vendors and they will be given a set of deadlines to respond accordingly. As we reach out to our vendors, we will make it clear that those who do not comply will have us halting businesses with them with immediate effect.

2b) We need to eliminate incentives to pay or receive bribes by reworking on our fees to be paid to them and risk assessment. My team and I will work closely with our external counsel since different regions come with different levels of risks. We too should engage experts to advise us on different cultures in each of these regions we do businesses in. A hotline and a list of FAQs should be in place, especially on our webpage so that our vendors could reach out to us easily in case they have doubts. Even though 3rd party vendors are not internal employees, however, we ought to make ourselves as approachable as possible. I recommend we set up an internal communication group which also allows our 3rd party vendors to join and take part in ethical conversation actively. Also, I would like to propose an ongoing subscription to a credible watch list that tracks company and company executive sanctions, fraud cases etc.

In above cases, I am positive they will all be more engaged in improving overall compliance and regulations management