Political tides shift, and the historical benevolence extended to corporate America by Republican administrations has given way to an enforcement-driven policy designed to salvage conservative voter discontent. The losers, of course, are not just the corporations suddenly facing a barrage of potential fines and sanctions. Both undocumented AND lawful workers are being caught in the fine bureaucratic net intended to enforce existing -- and often conflicting -- Social Security, labor, and immigration laws. And while they will not receive much sympathy from either the U.S. government or the public, corporate legal departments are in the front line of the current battle.
The October 2007 issue of Inside Counsel magazine features an excellent discussion of this phenomenon by Charles James, Chevron's General Counsel and Vice President. Mr. James astutely points out that the days of "innocent until proven guilty" are long past for U.S. companies, and GCs must carefully determine how best to deal with this reality:
"In today’s world, law enforcement personnel expect that a mere government letter questioning company behavior will prompt the company to launch a comprehensive investigation and deliver the results to government enforcers. The government also expects that a company of any significant size will maintain its own internal police force—not just a passive organization that comes when called, but rather one that aggressively patrols, monitors, detects and investigates all aspects of legal compliance."
The question suggests, he says, is clear: "Should corporate legal departments also act as the corporate police or, more politely, the corporate compliance group?"
Mr. James argues that the GC is ill-equipped to serve as that "internal police force", and here's why:
"First and foremost, there’s the question of resources. A corporate compliance scheme that meets current government expectations must involve ongoing monitoring, testing and auditing programs. These activities, which must be integrated into daily business operations, are more in line with what auditors and accountants typically do. If the corporation is going to task its legal department with performing such duties, it must be prepared to provide the expertise and resources necessary and to deploy those resources in a manner that provides a clear line of sight to potential problem areas."
You can read Mr. James' article in its entirety here. He goes on to explain that in Chevron, they keep compliance distinct from the law function, but acknowledges that there are a number of ways to "skin the cat".
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