Anti-corruption compliance is a challenging but critical issue for boards of directors. A board of directors is ultimately responsible for the effective implementation of a company’s anti-corruption program and, as individuals, may be held liable if they lack knowledge “about the content and operation of the compliance and ethics program.” Outside of legal obligations, it is good corporate strategy for board-level involvement in compliance. 2016 Research from the Ethisphere Institute and Kroll shows that board-level engagement and employee perception of corruption-related risks are correlated. 75 percent of respondents who reported that their board was not engaged in compliance anticipated the company’s corruption risk would increase in the coming year.
Accordingly the board should understand anti-corruption compliance and have an appropriate level of training, not simply on company policies, but also on their responsibilities as board members.
How can boards best guide company compliance efforts and drive a culture of compliance? Of course, they should approve company policies and ensure that the program is properly resourced and headed by a senior-level executive that has appropriate independence and authority. They should also ensure that business strategy and the objectives of the compliance program are aligned. This is the minimum expected.
Digging deeper, they should understand the company culture and how it is supported by an effective compliance program. Requesting that senior management perform a cultural assessment is a good place to start. Then they ask specific questions about the company’s identified risks; how senior management set an appropriate tone, and whether this extends to all levels of management; what training and communications are in place; how are third parties assessed and monitored; how is the program measured, monitored and audited; how are results of reports and investigations published; and how is corrective action taken and tracked. Boards are often drowning in information, so it is no surprise that half of directors report wanting to improve their understanding of their company’s environmental, social and corporate governance (ESG). Still it is essential that board members are regularly briefed on how the compliance program is implemented.