Companies must set and review compliance priorities.

AuthorHickey, Dave
PositionETHICS CORNER

Risk management is a critical aspect of any company ethics and compliance program. Corporate self-governance requires vigilance, proactive planning, critical analysis and flagging high-risks. As a new year begins, companies should take the time to review their ethics program, target highest potential risks, prioritize accordingly, and commit at least quarterly to review and adjust those priorities. Allocating compliance resources and tailoring ethics programs is unique for each company. That said, recent federal law enforcement actions and statements by regulators might offer a useful guide in setting those priorities.

As 2006 closed, the Department of Justice's criminal division announced the formal creation of a national task force "to promote the prevention, early detection and prosecution of procurement fraud."

The task force will include representatives from the Department of Justice, including the criminal, civil, antitrust and tax divisions; the FBI; the inspector general's and U.S. attorney offices; defense investigative organizations and similar entities.

In announcing the procurement fraud-task force, Justice identified certain areas for increased civil and criminal enforcement. Among those targeted for increased scrutiny were defective pricing, product substitution, misuse of classified and procurement-sensitive information, false claims, grant fraud, labor mischarging, foreign military sales, ethics, conflicts of interest, and procurement-related public corruption.

In its first two months, the task force announced a large settlement for defective pricing claims, guilty pleas for false statements by a former contractor employee, guilty pleas for bid rigging, and a jury conviction for defense contractor fraud. The task force's announced priorities and on-going activities provide a good benchmark for companies to evaluate their own practices and internal controls to ensure that employees are fully attuned to corporate requirements, how they are applied, and whether employees are acting consistent with those policies.

Obviously, the Department of Justice's announced priorities require emphasis on policies governing time and expense reporting and charging, truth in negotiations, political contributions and lobbying, the Procurement Integrity Act, and personal and organizational conflicts of interests.

In support of the procurement fraud task force, the administrator of the White House office of federal procurement policy directed...

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