The Wisdom of Yogi Berra and Compliance Planning

Sometimes compliance issues are easy – or as I like to say, sometimes I have a profound grasp of the obvious.  This posting is another in the continuing series of obvious points.

Corporate governance and compliance have become cottage industries.  In many cases, the issues are not so difficult to address.  In fact, in some cases, common sense is all that is needed. 

Yogi Berra is my inspiration – he explained, “We made too many wrong mistakes.”  

Corporate governance and compliance requires common sense and avoidance of “wrong mistakes.”

Too many companies avoid a basic preliminary step for corporate governance and compliance – they need to have a plan.  They need to have a program, meaning a carefully thought out set of prospective policies and actions which are needed to prevent violations and to respond to potential issues which can occur. 

In the anti-corruption field, a number of companies are still implementing stand-alone anti-corruption programs.  That is a welcome development.  It is a necessary first step.  As they implement the program, companies need to design and implement policies relating to charitable gifts; hiring of relatives of government officials; gifts, meals, entertainment and travel expenses; due diligence procedures for third parties and joint venture partners; due diligence procedures for training and certifications; internal financial controls; audits and monitoring of compliance; and continuous risk assessments. 

Basic planning means a set of controls designed in advance to prevent or respond to potential events.  In the absence of adopted plans and prospective assessment of occurrences, a company will be caught flat footed when something goes wrong. 

If the worst case scenario occurs and the Justice Department and the SEC initiate an FCPA investigation, companies have to be able to point to existing anti-corruption policies and controls, or they face an emergency requiring extensive remediation.  The Justice Department and the SEC will not be very sympathetic. 

The rule of advance planning applies to every aspect of corporate governance.  Companies which consider and adopt policies and programs are in better shape.  There is a significant benefit to a company by considering in advance possible events and corporate responses.  The more they plan, the better for the company.   

The planning process can be instructive – it reveals weaknesses in corporate governance and structure; it highlights needs for additional resources and planning.  It is more than a check the box procedures, it is an instructive way for the corporate board, senior managers and compliance officials to assess, analyze and review corporate policies and programs for events, some of which may be in the company’s control and some which may require flexible responses.  Whatever happens, a policy is a good start to protect against “wrong mistakes.”

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  1. September 4, 2012

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