Breaking Down the Walls Between the Business and Compliance Areas – Preparing for What Lies Ahead
Last month, at the American Conference Institute’s Mexico Summit on Anti-Corruption & Compliance Programs in Mexico City, Vinson & Elkins partner Palmina M. Fava, Co-Head of the firm’s Government Investigations & White Collar Criminal Defense practice group, moderated a panel with three distinguished compliance officers. These in-house professionals, bringing perspectives from different industries and countries, included Daniel Sibille, Regional Senior Compliance Director and Deputy Compliance Officer of Oracle based in Brazil, Andres Gomez Chico S., Ethics and Compliance Officer of AES México, and Ignacio Gabriel Stepancic, Compliance Director of Grupo Bimbo.
During the panel, Fava engaged in thoughtful dialogue around the intersection of an organization’s culture, business, and ethics. With the panelists, Fava explored the ins and outs of Mexico’s compliance community and how it has adapted in a changing political and economic environment. In today’s environment, the panelists shared, companies are expected to “know what to do.” Mexican regulators are not “hand-holding,” even when imparting new requirements and obligations. The panelists agreed that companies are expected to be good corporate citizens in an era of unforeseen risks, increasing regulations, and swelling expectations, with limited guidance. They further agreed that the best path forward is to ensure ethical standards are owned and practiced by all employees within the organization. Although the compliance team may be accountable as an oversight function and advisor, the responsibility for compliance does not, and will not, rest solely with them. “A Compliance Officer is not meant to write mere policy, but is intended to be a true officer out in the field,” said Gomez Chico.
Companies need to look for ways to mitigate the problems that exist, while remaining flexible for what is to come. The idea is to ensure the compliance department is a “dynamic and nimble function that works together with the other business functions,” says Fava. “Compliance should not be seen as an internal process that comes before or after another process. Instead, it is one that works in parallel, building an ethical business while achieving corporate strategic goals.” The idea is for an organization to come together to make decisions that influence a shared, common space.
Compliance departments must work in tandem with the business functions to ensure the business is profitable and sustainable, while remaining reputable. A strong compliance culture only adds to the business, and vice-versa. “Legal security creates business security,” explained Gomez Chico. The panelists agreed that compliance can be the key to many doors and helps bring business, and above all, high morale to an organization. Selling the importance of ethics and integrity when selling a product or service goes hand-in-hand with getting praised as a “compliant business,” Stepancic noted.
As such, a company should focus its efforts on prevention. As Sibille indicated, “a business is not meant to be a bureaucracy. A business is meant to be a place of collaboration, innovation, and growth,” a message that rang loud and clear throughout Fava’s Q&A with the panelists.
The onus today is on the compliance function to focus on how to best support the business, while also building a stronger, better, broader ethical culture. Fava stated, “Compliance moves alongside the business in its decision-making, and it is by moving together, one step at a time, that real change can happen.” To that end, the business must see compliance as a partner; and compliance needs to be flexible, adaptive, and willing to move with the risks the business faces.
Additionally, emphasis was made on giving attention to where companies operate and the impact the company is having on the world in the context of Environmental, Social, and Governance (“ESG”) criteria. Increasingly, personnel and regulators are mindful of ESG issues and failing to consider these aspects of the company’s structure and operations may affect adversely the company’s business.
Compliance is so critical that it is becoming part of the “branding of the company.” Looking ahead, the panelists agreed that it is not the successful short-term decisions that will have the greatest impact for an organization, but the well-thought-out decisions made with the business in mind that will break barriers.
The panelists cautioned that when compliance is part of the Legal Department, disciplinary actions that result from compliance investigations may have a chilling effect. With that, the panelists shared some food for thought: “How do you ensure you are overseeing and monitoring compliance, while at the same time encouraging more people to come forward?”
In summary, Fava states, “When the business and the compliance function collaborate towards a common objective, organizations can achieve sustainable compliance, alongside reputable, profitable growth.” People want to feel heard and want to know they have a voice and a hand in making a difference.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.