The interim report of the Independent Compliance Monitor appointed for a major manufacturing company reflects the challenges associated with resurrecting a previously discredited compliance program and changing corporate culture—and includes a harsh demonstration of individual accountability principles.
The US Department of Justice appointed the Monitor in connection with a 2017 plea agreement relating to, among other matters, claims that the company engaged in a conspiracy to violate the Clean Air Act. The interim report’s purpose was to evaluate the extent of the company’s compliance with the terms of a civil settlement with the United States, and its progress toward becoming a more ethical company.
The Monitor had not yet reached any conclusion as to whether the company had complied with the terms of the settlement. It did, however, note that some long-time members of senior management remained “in denial” of the enormity of the scandal, that the process of implementing internal controls had been delayed, that the whistleblower program had yet to become effective, and that the company had been insufficiently transparent with the Monitor (in part because the company had long enjoyed a prominent corporate status in its home country).
The Monitor was indirectly critical of the company’s decision to support an imprisoned executive, commenting that in its experience, “one of the cornerstones of any effective ethics and compliance effort is the organization’s willingness to hold itself and its executives, especially top executives, accountable for wrongdoing.”
The scrutiny applied by the Monitor may serve as a prompt for companies whose current compliance programs fall short of major indicia of effectiveness.