Driving Transparency in Corporate Compliance:
A Suggested Approach for using Technology to Influence Behavior for the New Decade
Hui Chen, Founder, HuiChenEthics. com
The field of corporate compliance has largely developed in response to the establishment and maturation of various regulatory and criminal enforcement regimes. The 1970’s represented the introduction of some of the legal and regulatory framework, including legislation such as the Bank Secrecy Act, the Controlled Substance Act, and the Foreign Corrupt Practices Act, and the establishment of regulatory agencies such as the Environmental Protection Agency and the Occupational Safety and Health Administration. The 1980’s saw early recognitions by the defense industry to improve self-governance, but few companies recognized the need to establish compliance programs. The turning point came in the 1990’s, when government increased resource investment in enforcement, and created new incentive for companies to comply. In 1991, the United States Sentencing Guidelines were amended with a new chapter on “Sentencing of Organizations” which provided grounds for reduction of penalties if the offender organizations could demonstrate that it had an “effective program to prevent and detect violations of law. ” This incentive led to development in corporate compliance programs generally. The 2000’s saw a decade of escalating enforcement and record-breaking fines: in 2001 TAP Pharmaceuticals paid $875 million for violations of the False Claims Act and Prescription Drug Marketing Act; in 2002 pharmaceutical Schering-Plough paid $500 million for poor manufacturing practices; in 2004 pharmaceutical firm Serono paid $704 million for illegal marketing practices; in 2008 German firm Siemens paid $1. 6 billion for violations of Foreign Corrupt Practices Act. These are but a few examples of the enforcement actions that spurred the growth of corporate compliance.
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