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Designing and Implementing Ethics and complaince Culture 13th Nov2013

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Board Secretary Conference (12-13 th Nov’ 2013, Dubai) -Vijay Ojha
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Page 1: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

-Vijay Ojha

Page 2: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

1. Introduction

2. Elements of an effective ethics and compliance culture

3. Five phase approach for value addition

4. Evaluating the organisational culture

5. The board’s oversight responsibilities

Contents

Vijay Ojha

Page 3: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Some Recent Headlines:

Vijay Ojha

1. JP Morgan Chase : agreed to pay $ 13 billion for settlement with SEC

2. HSBC: $ 1.9 billion penalty under anti money laundering law

3. Standard Chartered Bank: paid $327 million for violation of Iran Sanction

4. GlaxoSmithKline (GSK): Penalty of $3 billion under drug safety data violation

5. Total S.A. : penalty of $398 million for bribes to get oil and gas field

6. Eli Lilly and company: charged for improper payment and fined $29 million

7. Tyco International: paid $26 million to settle the SEC's charges under FCPA

8. Oracle: charged for violation of FCPA

9. Pfizer: charged for bribing by its subsidiaries penalised $45 million

10. Infosys: fined $34 Million for non compliance of I-9 forms by DOJ, USA

Page 4: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Vijay Ojha

Top Corporate Priorities for 2013

Source- LRN Survey Ethics & Compliance-2013

Page 5: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Why Ethics and Compliance Culture:

Vijay Ojha

• Safeguard the financials loss, reputation loss and stakeholders interests

• Protection from the legal hassles and hefty penalties

• Healthy returns through employee and customer loyalty

• Public respect for their brand and values and increase in shareholders returns

• Provide foundation for an effective internal control environment

• Employees who observe the law may avoid stiff personal penalties, both monetary and potential imprisonment

Page 6: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

What is Ethics and Compliance Culture?

For normal understanding:

ETHICS are a system of moral principles and a branch of

philosophy which defines what is good for individuals

and society

COMPLIANCE is to fulfill the statutory, regulatory, legal and

local requirements as per the applicable rules,

regulations and common practices

CULTURE is a way how people live, act and behave in the

society or group or organisation. It depends upon

geographical, social and economical conditions as well.

Vijay Ojha

Page 7: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Elements of Effective Ethics & Compliance Culture:

Vijay Ojha

1. Leadership

Leaders’ set the tone for the organisation. The organisations

are known through its leadership. Imbibing ethics and

compliance in the leadership Motivates the followers.

2. Written Standards, Policies and Procedures

Written standards, policies and procedure will provide the

requisite guidance for the associated persons to act in

accordance with the given circumstances.

Page 8: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Elements of Effective Ethics & Compliance Culture...

Vijay Ojha

3. Risk Assessments

Identification of the ethics and compliance risks

from the activities of the organisation and take

appropriate and timely remedial action to

mitigate the related risk

4. Effective Communication

It is the root of success for any ethics and

compliance program. Clear understanding of

policies, procedures and means to communicate

at every level.

Page 9: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Elements of Effective Ethics & Compliance Culture….

Vijay Ojha

5. Accountability

Understanding of accountability at each level i.e. from

the policy maker to the executor that what to do what

not to do and how to do

6. Training and Education

Must for employees, exiting or new, associated parties,

customers, vendors about the ethics and compliance

culture of the organisation and continuous review

Page 10: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Elements of Effective Ethics & Compliance Culture…..

Vijay Ojha

7. Monitoring and Assessment

Designated person for the monitoring and assessment

of the ethics and compliance program like CECO. Time

to time audit and assessment of effectiveness of the

various compliance activities

8. Timely Remedial Action

Timely remedial action on any breach of compliance or

violation of any ethical code of conduct will ensure the

compliance culture.

Page 11: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Five Phase Approach of Value Addition:

Ethics & Culture assessment

Gap analysis and program design

Communication, Training & Education

Implementation & Monitoring

Review & Improvement

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Page 12: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Ethics and Culture Assessment:

Vijay Ojha

• Employees Survey, Interview

• Review of existing Practices, CSR activities

• Policies and procedure if any

• Identify gap with the prescribed standards and actual practice

• Understanding of ethics and compliance culture at various level

Page 13: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Gap Analysis & Program Design:

Vijay Ojha

• Analysis of the existing status with benchmark standard

• Major areas of concern

• SWOT analysis in relation to ethics and compliance

• Designing of ethics and compliance culture program and formulation of ethics and compliance policies, procedures and guidelines

• Define accountability for leadership, middle management and execution level for their activities

Page 14: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Communication, Training & Education:

Vijay Ojha

• Clear communication to each level about the objective and intention of the organisation for Ethics and Compliance culture

• Display on notice board and at relevant places for easy access to all employees.

• All policies, procedures and guidelines to be readily available and accessible to all employees

• Training and education to all employees including existing and new and regular review for their understanding

Page 15: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Implementation & Monitoring:

Vijay Ojha

• Appointment of compliance officer / constitution of committee as per size of business to be the point of contact

• Take reasonable steps to ensure that individuals with substantial authority

have not engaged in illegal activities

• Establishment of communication channel – HOTLINE for quick reporting

• Creation of fearless working environment for whistleblower

• Regular monitoring through employees feedback, suggestion schemes,

Page 16: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Review & Improvement:

Vijay Ojha

• Periodic ethics and compliance audit

• Highlight the major concern to the Board of Directors

• Timely remedial action on any breach of policy

• Improvement in the area of concern and modification in policies if require to address any concern which is not covered.

• Periodic review resolves the issues raised through changes in the

regulatory and business environment and identify any necessary improvements

Page 17: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Evaluating the Ethics and Compliance Culture:

Vijay Ojha

1. Status of the organisations CSR activities

2. Cost of non compliance, penalty etc. status of the regulatory, statutory and legal compliances.

3. Awareness of organisational ethics and compliance policies, values and guidelines

4. Knowledge of workplace rules and regulations and ethical issue may arise at work place

5. Willingness to report management about problems, legal violations without fear

6. Perception of fair treatment within the organisation and commitment to the organisation

7. Perceive that ethical behavior is rewarded and unethical behavior punished at all levels. Reward and recognition for whistleblower

Page 18: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Vijay Ojha

Source: Deloitte: Compliance Trends Survey 2013

Metrics Used to Measure Ethics & Compliance Effectiveness:

Page 19: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Vijay Ojha

Obstacles to Building a Strong Ethical Culture

Source-LRN Survey report 2013

Page 20: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Vijay Ojha

• New regulations require the Board to be more actively engaged in the ethics and compliance reporting process

• Overall responsibility for the conduct of the business

• Setting the tone to conduct business in an ethical manner

• WALK THE TALK – to play a visible role in overseeing ethics and compliance

• Appoint Compliance Officer and review the ethics and compliance report on

regular basis

• Create fearless environment for whistleblowers or other employee who voices concerns about company or individual actions

• Ensure timely actions taken by the concern on any issue related with ethics and compliance

Board’s Oversight Responsibilities:

Page 21: Designing and Implementing Ethics and complaince Culture 13th Nov2013

Board Secretary Conference (12-13th Nov’ 2013, Dubai)

Its never too late to start!

Vijay Ojha

contact: [email protected]


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