On Navigating Global Legal Tensions

One big challenge for compliance officers is how to manage your program at a global level, when so often that means juggling multiple legal jurisdictions with conflicting standards for corporate behavior. So when I had the chance recently to moderate a webinar on that very subject, I took lots of notes. I pass them along to you now.

First let’s outline the struggle here. You, chief compliance officer of a company that operates globally, are perched there in corporate headquarters trying to achieve compliance in all the markets where your business operates. But local executives in those markets (and local regulators too, for that matter) don’t necessarily care about your global program; they only care about your company’s behavior in their local country. 

That leads to all manner of headaches at the practical level. For example… 

• You want to interview an executive as part of an investigation, but local law might allow him to bring counsel, while U.S. law doesn’t. Respecting that local requirement complicates your investigation, but ignoring it certainly makes things worse too.
• You decide that some sensitive misconduct allegation requires immediate remediation steps (say, implementing additional reviews of contract awards), but local executives don’t want to do that. Ideally you want to persuade them to fall in line, rather than forcing the issue.
• You incorrectly scope an investigation at the start, which means you need to re-interview employees later on, which makes you look like a dolt when you’re trying to have overseas executives take compliance seriously.

Success on any of these issues (and many more we discussed on the webinar) is really about building the right alliances, strong regulatory change management capabilities, and investigation knowhow. So let’s talk about how compliance officers can cultivate their abilities on all three points.

Build the Right Alliances Globally

One important theme was the relationship between the chief compliance officer and local business counsel. Without local lawyers who understand local law and regulatory enforcement risk, you’ll struggle to convince local managers why compliance concerns that are important to you should also be important to them. Likewise, you on the receiving end might not appreciate the full significance of some new regulatory issue in an overseas market. 

So think carefully about who you want that local business counsel to be: a dedicated regional or in-country compliance officer, someone on the local operating unit’s legal team, or even just a local law firm you keep on retainer. Then be sure to support that regional person as much as necessary, so he or she can help you navigate those overseas issues. 

We’ve previously written in this blog about “compliance ambassadors” for global companies, who can serve as advocates for your program in far-flung operations. Could they serve this role? If the ambassador has the right expertise, sure — but that’s an important consideration. You’d want your local business counsel or regional compliance officer to know the local law and regulatory environment, and perhaps to perform risk assessments to determine how local law might affect your business. Not every compliance ambassador has the right experience for such tasks. 

Another theme was the chief compliance officer’s relationship with local management teams, and how to get that right. That’s a delicate balancing act; you do need them to understand the importance of following policies and other dictates from the global compliance team, but you don’t want to come across as the out-of-touch boss from HQ who can be ignored there in the overseas subsidiary. Some suggestions from webinar attendees… 

If the update is informational in nature, we’re sure to stress that: no process changes are needed, but be aware of the regulation. If there is an action (such as updating a policy) we in compliance follow up to see if local management understands the importance of the change and timely implementation. We are always happy to set-up time to discuss further from a collaboration standpoint. AI is coming in handy on summarizing these regulations these days!

Instead of focusing on what you think local management needs to know or what you want to say, try to determine what information they need to get to where you are on the subject.

A solid change story helps: why the change is important, what will change, what we need from the local sponsor or decision-maker, what will not change, and what are the benefits of the change.

All good advice, and reminders of why successful compliance is as much about understanding people and interpersonal relationships as it is about understanding law and data management.

How to Finesse Global Investigations

Investigations came up throughout the whole hour. Advice in no particular order… 

Develop a user-friendly investigation process. That means you respect local laws for union or legal representation, and you conduct the interview in the employee’s local language even if that employee can speak English. As one webinar attendee said, “Our local compliance counsel was clear that if an American conducted the interview, that would be viewed as accusatory and culturally inappropriate. So we followed that advice because why not? It was easy to do and we wanted to avoid problems.”

Have an investigations policy. All investigations in any country (or across multiple countries) should be conducted in the same way as much as possible. An investigations policy will guide everyone to follow the same procedures for interviews, documentation, evidence collection, and the like; which is invaluable during a regulatory review, audit, or civil litigation. That means you should have a written investigations policy to guide your team, corporate legal teams, regional compliance counsel, and the like. 

One great comment from a listener to unify the two above points: “You have to be consistent at a corporate level, but need the local feel. The local business can’t be left feeling that HQ came in and upended things in a culturally insensitive way. They need to feel the business was improved because of the investigation.” Excellent point.

Scope investigations and interviews thoughtfully, because you only have one chance to do them well. For example, a poorly scoped investigation might force you to interview the same witnesses multiple times — and by then, the horse has left the barn. People know what you’re looking for, and offenders might already be busy destroying evidence or coordinating their stories. Just as bad, revisiting an investigation can make local business unit leaders wonder whether you know what you’re doing, and undermine your credibility.

Scoping investigations wisely is worth a whole post unto itself some other day. Suffice to say, it means that you must do extensive research into the original allegation; and some preliminary root-cause analysis to game out what might have allowed the violation to happen; and lots of consulting with legal counsel about potential consequences. You also need to consider what might happen if you spend too much time scoping, and somebody else (say, a local audit firm auditing your overseas subsidiary) plunges forward SEKOLAHTOTO.