Having an effective ethics and compliance program can have direct impact on your bottom line by minimizing the risk of fines, penalties, employee wrong doing, and by creating a better corporate reputation among your customers. If you find this information useful, we invite you to visit our blog, and register for our mailing list to receive our articles on the FCPA and other compliance topics. Visit us at www.ethicsresources.org This material is confidential and proprietary to IntegTree LLC and may not be reproduced, published or disclosed to others without the express authorization of IntegTree LLC. IntegTree LLC is not a law firm and is not engaged in providing legal or other similar professional advice or services. In providing our services, IntegTree LLC attempts to provide its clients with “effective practices” in light of then-current laws and/or regulations. IntegTree’s services should not replace advice from your in-house or outside counsel or their opinions concerning company practices.

1. Copyright © IntegTree
(2014)
www.IntegTree.com
Why Invest in Ethics
&
Compliance Programs
Dr. Nitish Singh & Thomas J. Bussen (J.D./MBA)
E-mail: ncsingh@integtree.com

2. Copyright © IntegTree
(2014)
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The Background
• Who - 2004 Amendments to Federal Sentencing
Guidelines for Organizations (FSGO) standardize
sentencing guidelines for compliance breaches
• What – The FSGO set out “7 Pillars of an Effective
Compliance Program”. Sentences are increased or
reduced based on your compliance program
• Why You Care – Organizations face severe fines
and penalties. Enforcement is up. Penalties are up.

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(2014)
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The Seven Pillars to An Effective
Compliance and Ethics Program
1. Communicate to employees the standards and procedures to which they
should adhere
2. Oversight should be placed with a high-level employee
3. Education and training is instrumental to ensuring employees understand
the nature of their obligations
4. Companies must regularly audit and monitor their system
5. A mechanism by which employees can report ethical and regulatory
violations should be in place
6. There must be enforcement of the program and discipline for violations
7. Organizations must respond to violations and seek to prevent recurrences

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Costs of Non Compliance
• DOJ Collected $1 Billion-Plus in 2011 Antitrust Fines (4)
• Biomet, a US medical device firm, fined $23m in 2012
by DOJ for false record keeping and bribery in China
and Latin America (6).
• Maxwell technologies in 2011 paid $8 million in
penalty for FCPA violations.
• Johnson & Johnson ordered to pay $1.1bn in penalties
for misleading patients and doctors about risks
associated with its antipsychotic drug (5)
• EU fined Microsoft $1.35 bn: non-compliance with
2004 antitrust order

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(2014)
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Benefits of Compliance
• Higher revenues: With effective programs
– Employees 60% less likely to feel pressured to break
rules or the law. –What an Effective Corporate Compliance Program Should Look Like, 9JLEP 375,
388 (2013).
– Observed misconduct drops 66 percent. Id.
– Employees 84 percent more likely to report
misconduct;
– Employee engagement increases 44 percent. Id.
– Less employee sick time, disciplinary action, and HR
costs. Id.
• Decreased fines, reduced penalties
• Improved compliance culture, employee loyalty
• Better corporate image and reputation

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Benefits of Compliance:
A Tale of Two Companies
• Siemens was liable for
making over $1.3 billion
in illegal payments to
government officials
• Top level Morgan
Stanley manager
engaged in corruption,
personal enrichment
Morgan Stanley had an effective compliance program. Siemens’ compliance
program was virtually nonexistent. The DOJ are on the record as saying they
are less likely to go after companies with effective compliance programs.
BUT
WHY?

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(2014)
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Think You’re Too Small to Catch the Eye of
Regulators?
• A 5 person firm is not expected to have the same compliance and
ethics program as a global behemoth
• Small organizations may use less formality, simple systems, and rely
on existing resources. -Chapter 8, Sentencing of Organizations, Section 8B2.1
commentary, 2(C)(iii), page 507.
BUT
• FSGO says small organizations shall demonstrate the same degree
of commitment to ethical conduct and compliance with the law as
large organizations -Id.
Small firms account for 3/4 of sentences under the Sentencing
Commission. (Wellner, 2005)

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(2014)
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The Bottom Line!
You Cannot Afford NOT to put in place a
Compliance and Ethics Program
• In the long run, companies failing to implement
programs spend THREE TIMES as much as
those that implement effective programs (Ponemon
Institute, LLC, 2001).
We are here to help you implement an effective
program – one that is right for you and your
organization!
References used in this materials are
available upon request

9. Copyright © IntegTree
(2014)
www.IntegTree.com
About the Authors
• IntegTree President Dr. Nitish Singh Associate Professor at
Saint Louis University’s John Cook School of Business, has
been at the forefront of ethics and compliance management
and developed a University Certification program used by
business executives and lawyers worldwide.
• IntegTree Vice President Thomas J. Bussen holds a J.D., MBA,
and Ethics and Compliance Certification from Saint Louis
University’s John Cook School of Business, where he is adjunct
faculty. A former litigator at an AV rated law firm, Thomas
knows first hand the unforeseen problems that arise with
inadequate risk management.

10. Copyright © IntegTree
(2014)
www.IntegTree.com
Additional Resources
• Join The Ethics & Compliance Professors
complementary subscribers list at
ethicsresources.org .
• IntegTree specializes in the worldwide localization of
ethics and compliance programs, regulatory and
ethical training, and psychometric testing to provide
deep insights to improve existing compliance
programs.

11. Copyright © IntegTree
(2014)
www.IntegTree.com
Disclaimer:
• This material is confidential and proprietary to IntegTree LLC and may not be
reproduced, published or disclosed to others without the express authorization of
IntegTree LLC. IntegTree LLC is not a law firm and is not engaged in providing legal
or other similar professional advice or services. In providing our services,
IntegTree LLC attempts to provide its clients with “effective practices” in light of
then-current laws and/or regulations. IntegTree’s services should not replace
advice from your in-house or outside counsel or their opinions concerning
company practices.