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Corruption and Bribery Compliance: Part 2 | Canadian Insurance

Corruption and Bribery Compliance: Part 2

Advice from D&O, professional liability and crime insurance specialist Greg Shields.

The US Department of Justice (DOJ) provides extraordinary information on its anti-corruptions initiatives. This is a key priority for US companies, and there are many examples of loss control initiatives coming out of US companies and their third party service providers. Thomas Fox and Howard Sklar team up in a production called This Week in FCPA, and in one of their recent sessions concentrated on Tone at the Top. They suggest this is a key issue in FCPA defense and settlement negotiations.

Here are eight ideas for corporate compliance officers:

1) Have CEO author a letter and attach it to the Code of Conduct and send to every employee in every country and region stating that breaching this Code of Conduct will not be tolerated.

2) Have CEO record a video message to be played at every compliance training session, stating that breaching the Code of Conduct will not be tolerated.

3) Have CEO send a quarterly email to every direct report reminding them of the Code of Conduct and that she/he will hold them to that Code and she/he expects them to disseminate this same message to each of their direct reports.

4) Put compliance metrics in employee score cards, including the sales team.

5) Train CEO to use the six most powerful words in compliance, “What does compliance think about that?” Whenever she/he hears of a new market, new idea, new product, new effort, new program–every time, (and document this action).

6) Everyone in the organization needs training but the workforce has to be grouped by risk category and the highest priority groups should get “in-person” training specific to their function and to the company’s Codes, Policies and Procedures that are in-force in that organization; and the underlying law (and document this action).

7) Every person in the organization needs to know their internal alternative reporting options for conduct that breaches the codes and policies and procedures.

8) Incorporate Audit Rights, (click here for more information on Audit Rights) into every contract; the DOJ demands that audit rights exist in every high-risk (anyone who is spending your money) third party contracts, (but there must be evidence of these rights being exercised).

This is very simple, but almost every good loss control technique is simple. I recognize this is much easier to say than do. CEO’s might not be the easiest people to train, but they will be the one in the spotlight of the RCMP/SFO/DOJ, and there are many examples (including the Canadian one) of the ultimate punishment being directly related to the value of policies, procedures and related actions of the company and its executives at the time the corruption and/or investigation became known to the executive team.

The above comments will add to the “measurable metric” list and improve the overall compliance evaluation and ultimately reduce the fine or penalty and other loss from an FCPA / CFPOA / UK Bribery Enforcement Action. However, a message is not enough, there must be Evidence of Action. Compliance has to be an integrated business force, not an outside nuisance.

Click here for Part 1 of this article.

More details on these points and connections to D&O insurance are available on the Mitchell Sandham blog at To read more of Greg’s columns for, click here.

Greg Shields is a D&O, Professional Liability and Crime insurance specialist and a Partner at the University and Dundas (Toronto) branch of Mitchell Sandham Insurance Services. He can be reached at, 416 862-5626, or Skype at risk.first.

CAUTION: This article does not constitute a legal opinion or insurance advice and must not be construed as such. It is important to always consult a registered and truly independent insurance broker and a lawyer who is a member of the Bar or Law Society of the relevant jurisdiction with regard to this material before making any insurance or legal decisions.