Corporate compliance efforts need to be looked at in the round.  Therefore, for those dealing with anticorruption compliance, it is always useful to consider developments in fields of law other than anticorruption.

One such area is competition law, where compliance risks are rightly taken particularly seriously due to the potential for high regulatory fines on companies and private damages claims, amongst many other nasty consequences of a breach of the law.  Giant German conglomerate ThyssenKrupp (TK) has had problems in this area recently and as a result very publicly upped its compliance efforts.  Its efforts are worthy of consideration by all compliance personnel.

TK has in the past year or so been slapped with two fines totaling nearly EUR200 million by the German competition regulator, the Federal Cartel Office (FCO).  The cases concern cartels in which TK was involved covering train track rails, switches and sleepers.  Recognising that “significant damage has been caused to the company . . . by the rail cartel” and that the group’s “considerable compliance efforts in recent years” had at least partly failed, the TK board “decided to intensify the Group’s compliance efforts still further”.  The group created the role of external “ombudsman” (it’s not clear what he does but he is no doubt expensive), beefed up its internal compliance function to include 60 full-time compliance officers worldwide (expensive!) and announced that it had put in place an amnesty programme. 

This latter development is the really interesting one.  This is not the first time that a company has used an employee amnesty in an attempt to root out wrongdoing, but it is unusual that it has been so public about it (Siemens and MAN are other recent examples).  TK’s rationale is not completely clear, since inevitably the announcement exposed it to further questions, such as the simple “Well, what did you find?” from the press, not to mention legal risk. 

TK may have felt comfortable because it had so publicly failed in its compliance efforts that it had nothing to lose.  Either the regulators had already found out about and punished TK’s various infringements or, for any infringements not already found, TK considered it inevitable that someone would whistleblow or complain.  It is also possible that this was part of some kind of deal with the FCO which helped to reduce TK’s fine. 

In any event, what exactly were the terms of the amnesty and what was found?  First, the terms.  The amnesty ran for two months from 15 April to 15 June 2013.  It apparently covered all compliance matters.  Employees who made a disclosure “voluntarily and fully” were promised that TK would not bring damages claims against them and would not terminate their employment.  

What was found?  Not very much it seems.  According to TK, the programme led to “more than twenty leads” (this is a 150,000 employee company) but “no serious or structural compliance infringements were identified” and almost one-third of the leads led to no findings at all.  These no-finding cases concerned principally anticorruption issues: 

“Among other things they related to questions from employees wanting to make sure that their conduct was in line with the Group policies on combating corruption.  [TK] will take up this subject again and integrate it into the existing compliance training programs because, particularly abroad [i.e. outside Germany], employees need further support on dealing with invitations and gifts.”  

It seems that most actual findings also concerned anticorruption issues, or alternatively competition law issues around that perennial high risk area, trade association attendance.  TK commented: 

“The relevant information received under the amnesty program relates mainly to individual misconduct in dealings with customers and suppliers in Germany and abroad.  This conduct was stopped following internal measures.  In addition the Executive Board has decided to carry out a Groupwide review of its employees’ activities in associations and to give employees extra certainty on how to conduct themselves in dealings with competitors”.

Perhaps not surprisingly, given the huge internal investigation which would already have taken place into this additional possible cartel also being investigated by the FCO,

“no information was brought forward on the ongoing investigation by the [FCO] into possible price fixing in the delivery of certain steel products to the German automotive industry and its suppliers.”

So was the amnesty a success or a waste of time?  On one level it appears to have been a success.  It conveyed a strong message that compliance is important and it identified broad concerns which are likely to be genuine concerns (invitations and gifts issues under anticorruption law and trade association issues under competition law).  It did not (it seems) identify anything egregious and embarrassing for TK.

However, for most companies this type of public declaration of concerns is probably (rightly) a step too far.  It attracts unnecessary attention (and private damages lawyers, not to mention regulatory interest) and of course cannot be guaranteed actually to find anything.  Employees are quite correctly worried about their futures (not to mention lack of protection from regulators and criminal enforcement authorities) even if formally they will not be sacked for revealing something.  It probably also creates internal tensions; “if you don’t ‘fess up’ I will tell on you”.  It is notable that the UK Office of Fair Trading’s competition law compliance guidance for companies (“How your business can achieve compliance with competition law”, June 2011) does not refer to amnesties as a compliance tool.  

The issue is that not many companies are involved in the serious multiple cartel issues which TK found itself embroiled in before the FCO, and its position is therefore relatively unusual.  For most companies the better course would usually be the normal internal competition law and anticorruption (and other) compliance training, at which concerns can be raised informally in a relatively relaxed environment, plus internal audits.  Perhaps (after very careful consideration) an internal non-public amnesty can be used if there is a real concern about something particular which training and audits have not picked up.  This might be appropriate, for example, if there is a hint of a serious competition issue which a competitor is going to blow the whistle on to a regulator (therefore gaining protection from a fine as the first in) and there is no other way to get to the bottom of it.  However, in all cases great care will be needed as to how an amnesty is run, covering not least data protection, employment, document collection and legal privilege issues.

As ever, the best course is not to get into this type of TK-mess in the first place.  Have a proper compliance programme in place, with the correct message from the top, and continually reinforce the message.