Growing up as a kid in secondary school, those who played by the rules were regarded as nerds and were so unpopular. It was those who broke the rules that others admired, yet, when the ‘popular’ ones faced disciplinary action in the form of suspension or expulsion, then it felt not so bad being the goody two-shoes student.

Should companies play by the rules? Why should it take an enforcement action through fines, lawsuits or even costly circumstances such as injury or death to change corporate behaviour?  Where are all the corporate compliance culture studies during normal times?  Why are these rules not implemented to affect corporate behaviour, improve efficiency, and mitigate risks? Corporate Compliance violations result in such costly consequences, yet, it is paid lip service. Corporate Compliance and ethics should be at the forefront of company policy and the foundation of corporate governance. Every employee, from top management to the lowest ranking person, should understand why Compliance is a necessary part of their responsibilities. Companies should not wait until under pressure to create or elevate Chief Compliance Officer roles.

Is Compliance necessary? Lessons must be learnt from financial giant, JPMorgan Chase, which, after several regulatory problems, decided to spend billions of dollars hiring a Global Financial Crimes Compliance SWAT team to proactively identify potential risks. HSBC Holdings PLC also placed emphasis on Compliance efforts throughout its global operations when it had to pay $1 billion in settlements over inadequate anti-money laundering controls. Parker Drilling Company was charged, about $11million on a scheme to evade customs tariffs in Nigeria.

It is beneficial to manage a highly ethical and compliance-driven culture. Corporate Compliance is limited not just to the defense against fines and fees, but makes good business sense. A company with effective compliance controls can easily detect when employees are improperly siphoning corporate funds or opting for shorter cuts to quality standards. Company brand image is protected when there is the absence of media reports of corporate scandal. Proposals and bids for new business stand a better chance of winning contracts and edging out competition when a company can be trusted, and there is confidence in its financial state of affairs.

Compliance cuts across industry. Take healthcare for example, an effective compliance system increases confidence in the services the hospital, lab or pharmacy provides, and it also saves lives. What happens when the doctor does not follow rules required as a healthcare practitioner and focuses rather on making money, by prescribing unnecessary drugs which interact negatively with a patient’s medications, or where the inattentive nurse places the wrong records in a patient’s file and does not follow hygienic protocols? The answer is everything would go wrong – people could suffer complications and revenue may be lost fighting lawsuits or paying stiff penalties. Compliance in manufacturing guarantees that inspections, assessments and tests are performed in an unbiased manner to ensure customers receive products which conform to industry safety and quality standards.

So what is Corporate Compliance?  Simply put, it is a system or process that is designed to ensure company policy and practices are in line with government regulations, industry standards, applicable laws and ethics. For any compliance programme to work effectively, there must be collaboration between executive management, the Chief Executive or MD and functional departments– HR, Finance, Legal, Administration, IT, Operations. Branch offices, subsidiaries and external partners such as vendors, suppliers and consultants should also be stakeholders in the process. It is the responsibility of management to control and mitigate risks. Management input and involvement is key to the success of any compliance programme. It creates confidence in the organization.  Simply seeing the Chief Executive proffer his support is sufficient to instill co-operation from all employees.

Due to stringent laws, high fines and expensive litigation, companies in developed countries make Compliance a central focus of their organization. It is in the best interest of developing nations such as Ghana to pay close attention to Compliance, particularly in the areas of enforcement. In the complex business environment, where many local companies partner with foreign investors and companies, there is a high price to pay for violations. The UK Bribery Act of 2010, US Sarbanes-Oxley Act and FCPA, cover the actions of businesses tied in any way to UK and US companies. In Ghana, accounting and auditing practices suffer from institutional weaknesses in regulation, compliance, and enforcement of standards and rules. Laws and regulations are outdated and enforcement is weak. Although listed companies claim compliance, they only are in partial compliance with the Ghana National Standards Board. There is also inadequate adherence in professional ethics and monitoring, and enforcement mechanisms are ineffective.

Setting up an effective Compliance system

A Compliance team headed by a Compliance Officer and consisting of managers across business units should be formed and equipped with some autonomy to perform their duties. A review or audit of existing policies and processes should be conducted and revisions made to align with best business practices, transparency and accountability. Employees will need to be trained and educated on a continuous basis so they are familiar with regulations and company policy, and also informed of any new updates. Employees should be encouraged to report wrongdoing without fear of reprisal. Partners, suppliers and consultants must sign agreements to abide by these policies or have their contracts terminated.

It is encouraging to note that there are signs of progress with conversations and discussions on compliance and ethics on the agenda at conferences. However, much work needs to be done in this area for companies to understand that playing by the rules is really the best way to go.

   By : Doris Agyeman                                              Director                                                                     Bimstinct Solutions Limited                                                                         Management Consulting, Compliance  


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