When a CCO Fails to Speak Up

We often discuss the importance of a “Speak Up” culture.  We encourage employees to report their concerns, we emphasize the important of such reporting to the life of an organization.

Chief Compliance Officers are a key messenger to spread the message of speaking up.  But what happens when the CCO hesitates or even fails to speak up?  After we all take a little truth serum, take a deep breath, and canvass our professional memories, let’s be honest – we all have seen a CCO hesitate. 

However, let’s  not make a mountain out of a molehill.  Of course, a CCO hesitates.  A CCO has to pick and choose his or her battles.  Not every hill is one to die on, but a CCO ha to be careful in choosing when to act and when to stand down.

When it comes to a once-in-a-career situation, when a CCO’s failure to act could result in serious harm to others or is a major integrity issue, CCOs know they have to act, they have to speak up and they have to do so at the peril of their position at the company.  If the CCO speaks up, reports the issue, and the company fails to react, the CCO speaks with his/her feet and leaves the company.  That is an “easy” case.  It rarely occurs.

As with most issues, the devil is in the more difficult kinds of situations.  CCOs who are operating in a culture where no one speaks up, where problems have never been identified and addressed, face a real challenge when they uncover a real concern, such as indicators of sanctions violations or bribery. 

A CCO may feel some pressure not to rock the boat; after all, the company is not expecting a CCO to “create” a huge problem indicating a pattern of sanctions violations or bribery.  This is where a CCO can find him or herself and wondering how far they push the company to “investigate” the issue and then address the issue.  The CCO is operating in a frustrating culture and knowns that addressing the culture is a top priority.  The CCO may hesitate because of fear of “repercussions” from raising the concern and potentially creating a foreign bribery headache (investigation, legal and accounting expenses, and potential government reporting and enforcement action).

A CCO may respond by starting a small “inquiry” to look at some of the potential transactions.  In this case, the CCO is buying time, but is the CCO operating in accordance with his or her responsibilities?

The CCO should not hesitate but the CCO should not cry wolf or create an internal drama.  The CCO should take affirmative steps, explain the reasons for the actions and make sure that all the stakeholders understand.  This is not a case to stand down or fail to act. 

Indeed, a failure to act could result in far worse consequences.  A CCO may have to explain to senior leadership why he or she did not take certain actions in response to real misconduct concerns.  An allegation does not necessarily result in a major investigation – while some allegations turn out to be a tip of an iceberg, others fall into the unsubstantiated bucket.  A CCO has to place each situation in perspective.

A CCO that fails to speak up or act will suffer consequences, including damage to his or her own reputation, integrity and standing within the organization.  A CCO who speaks up when necessary and without hesitation sends an important message to senior management and employees – the organization is committed to trust and integrity.  A CCO who fails to spoeak up does so at his or her own peril, and to the detriment of the organization’s culture.

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