From Enron to Madoff: Why Many Corporate Compliance and Ethics Programs are Positioned for Failure (invited RAND whitepaper)

From Enron to Madoff: Why Many Corporate Compliance and Ethics Programs are Positioned for Failure

RAND CONFERENCEimgres (25) March 5, 2009
Washington D.C

Donna Boehme, Compliance Strategists LLC
Presented on March 5, 2009

 

Introduction: “Where Was the Ethics Officer”?

With the wreckage of the first generation of Enron-type corporate scandals in the rear view mirror, and the chaos of Madoff and the subprime meltdown now all around us, commentators are asking “Where were the ethics officers?” and “Are corporate compliance and ethics programs just window dressing?” These are fair questions, given that in the 18 years since the 1991 promulgation of the U.S. Organizational Sentencing Guidelines (which set out the roadmap for companies to detect and prevent
wrongdoing), several studies have indicated that little progress has been made, and recent events in the corporate world suggest that effective mechanisms to prevent corporate misconduct are lacking. This paper sets out a response to these two questions from some leading practitioners in the field of corporate compliance and ethics. This paper also suggests a path forward, moving beyond the sometimes unrealistic assumption of policymakers, boards and management that integrity and compliance can be achieved simply by establishing basic elements such as a formal code of conduct, an “ethics officer,” a training program, monitoring, and/or an employee helpline, and then expecting that good results will necessarily follow. In short, we believe that it is time for companies to get serious about corporate culture, accountability, compliance and ethics, and that the key initial step in achieving this involves the creation of a C-level, empowered compliance and ethics officer: someone with the experience, positioning, mandate and clout to actually make things happen in the organization.

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