Wednesday, 31 August 2011 10:11

Companies must act “whiter than white”

p21Companies need to do more than have a corporate compliance programme they need to demonstrate it exists and that it works in practice, says Tyco Ombudsman María Hernández

Para las empresas, no basta con tener un programa de cumplimiento normativo: hay que saber comunicarlo a los trabajadores, explica María Hernández, Ombudsman en Tyco. Por otro lado, la entrada en vigor de la ley Dodd-Frank puede suponer un nuevo desafío para las empresas en los Estados Unidos, que deberán redefinir sus estructuras de gobierno corporativo.

The anniversary of the enactment in the US of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) and the approval of the final “Whistleblower Rules” under it have again brought into focus the demand for publicly-listed companies to implement and operate practical internal governance programmes, including whistleblower mechanisms, to discourage improper management or corporate misbehaviour.
Dodd-Frank was enacted in response to the financial downturn to encourage greater accountability and transparency of corporate decision-making. It is tremendous in its scope but a key element is the expansion of the whistleblower protection provisions intended to uncover wrongful actions.
The new Rules provide substantial financial incentives for individuals who voluntarily provide original information to the US Securities and Exchange Commission (SEC) regarding possible violations of Federal securities laws. Should a prosecution result, leading to a successful enforcement action in which the SEC obtains more than $1m, the whistleblower will be entitled to receive between 10 percent and 30 percent of any amounts recovered.
The ability of individuals to benefit financially from uncovering corporate wrongdoings will be a powerful investigatory tool, the SEC hopes. The challenge for multinational companies is however ongoing: how to maintain the requisite degree of oversight control, and, where needed, prompt action in commercial, operational and employee activities wherever they do business.
This is a major task and one that requires the fostering of a “compliance” culture that encourages employees or managers to speak up and come forward with legitimate complaints. Responsible companies want employees to come forward with concerns, so they can be addressed promptly. 
Dodd-Frank contains provisions that attempt to encourage this, but may have missed the mark based on the comments submitted by many companies. Notably omitted from the final rules are requirements that were suggested and designed to preserve the effectiveness of corporate internal reporting systems, such as a requirement that a whistleblower report internally before going to the SEC in order to recover an award under the Rules.
The new rules do contain provisions encouraging – but not requiring – employees to raise concerns internally first, and this could be a factor increasing the amount of the potential award the whistleblower will be entitled to receive. It will inevitably take much time for all of the nuances of the Dodd-Frank Act to be assessed. The legislation is clearly important, but it provides only one way of encouraging companies, even more, to manage their own internal and corporate behaviour.
For Tyco, the goal is to have not only robust corporate governance guidelines but also to act within them. We are seeking to encourage compliance at all levels, reinforce codes of conduct and training – including “on time” training as employees enter new business situations – and require employees to report all possible violations.
One of our strengths is the “Tone at the Top” we have in the Company, with executives being compliance advocates and zero tolerance with wrongdoings anywhere in the business. Compliance needs to be a business-driven activity.
Fundamental to this has also been the strengthening of our internal reporting procedures, making them more accessible and easier to use. In part this requires better communication, not only to highlight the dangers of wrongful behaviour, but also to demonstrate in practical terms the positive results internal reporting has produced. We support and recognise employees who show exceptional commitment to compliance, even where this means highlighting possible company violations. 
More and more we see major market players insisting on the highest levels of compliance in the companies they do business with. Compliance in that sense can also be a factor for competitive advantage.
Dodd-Frank, though potentially onerous, may yet set the benchmark for compliance by international companies of all types. After all, the most important point to keep in mind is to establish a culture of compliance throughout the organisation, which is not only a task for the compliance and the legal department but also a commitment that management should take ownership – to be receptive to employee concerns.

María Hernández is the Ombudsman of Tyco International based in Princeton, New Jersey. A Spanish lawyer she was previously General Counsel for Tyco International in Southern Europe and Middle East.

Subscribe now to receive your copy of Iberian Lawyer

The Latin American Lawyer
N.22 • November 2021

IL98 cover SP IL94 cover EN
 

Iberian Lawyer
N.109 • November 2021

IL98 cover SP IL94 cover EN

IBLLabourAwardsPortugal 202112 300x250 Finalists

UIAMadrid 300x100

IL LatamAwards STD 300x100 1

UIAMadrid 300x100

IL LatamAwards STD 300x100 1

IL LatamAwards STD 300x100 1

IpTmtAwardsSpain 2021 300x100 finalists 1

IL LatamAwards STD 300x100 1

IPTMTAwardsPT 2021 300x250 Vincitori

This website uses cookies

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on the IberianLawyer website. However, you can change your cookie settings at any time. Learn more

I agree

What do I need to know about cookies?

A cookie is a small text file that’s stored on your computer or mobile device when you visit a website. We use them to:

  • Remember your preferences
  • Tailor our sites to your interests.

There are different types of cookies

First party cookies

These are set by the website you’re visiting. And only that website can read them.  In addition, a website might use a separate company to analyse how people are using their site. And this separate company will set their own cookie to do this.

Third party cookies

These are set by someone other than the owner of the website you’re visiting. 

Some IberianLawyer web pages may also contain content from other sites like Vimeo or Flickr, which may set their own cookies. Also, if you Share a link to a IberianLawyer page, the service you share it on (e.g. Facebook) may set a cookie on your browser.

The IberianLawyer has no control over third party cookies.

Advertising cookies

Some websites use advertising networks to show you specially targeted adverts when you visit. These networks may also be able to track your browsing across different sites.

IberianLawyer site do use advertising cookies but they won’t track your browsing outside the IberianLawyer.

Session cookies

These are stored while you’re browsing. They get deleted from your device when you close your browser e.g. Internet Explorer or Safari.

Persistent cookies

These are saved on your computer. So they don’t get deleted when you close your browser.

We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.

Other tracking technologies

Some sites use things like web beacons, clear GIFs, page tags and web bugs to understand how people are using them and target advertising at people.

They usually take the form of a small, transparent image, which is embedded in a web page or email. They work with cookies and capture data like your IP address, when you viewed the page or email, what device you were using and where you were.

How does the Iberian Lawyer use cookies?

We use different types of cookies for different things, such as:

  • Analysing how you use the IberianLawyer
  • Giving you a better, more personalised experience
  • Recognising when you’ve signed in

Strictly Necessary cookies

These cookies let you use all the different parts of Iberian Lawyer. Without them services that you have asked for cannot be provided.

Some examples of how we use these cookies are:

  • Signing into the IberianLawyer
  • Remembering previous actions such as text entered into a registration form when navigating back to a page in the same session
  • Remembering security settings which restrict access to certain content.

Performance cookies

These help us understand how people are using the IberianLawyer online, so we can make it better. And they let us try out different ideas.
We sometimes get other companies to analyse how people are using the IberianLawyer online. These companies may set their own performance cookies You can opt out of these cookies here.Some examples of how we use these cookies are:

  • To collect information about which web pages visitors go to most often so we can improve the online experience
  • Error management to make sure that the website is working properly
  • Testing designs to help improve the look and feel of the website.
Cookie nameWhat it's for
Google DoubleClick The IberianLawyer uses Google DoubleClick to measure the effectiveness of its online marketing campaigns.Opt-out of DoubleClick cookies
Google Analytics From time to time some IberianLawyer online services, including mobile apps, use Google Analytics. This is a web analytics service provided by Google, Inc. Google Analytics sets a cookie in order to evaluate use of those services and compile a report for us.Opt-out of Google Analytics cookies