Miriam Baer of the Brooklyn Law School published an interesting article on “New Governance”: Governing Corporate Compliance. The professor rejects the notion that adversarial relationships produce good regulation. She looks towards the “theory of regulation characterized by a collaborative tone between regulator and regulated entity, a problem-solving orientation, continuous assessment and revision of both expected outcomes and implementation processes, pooling of information by and among regulated entities and regulators, and inter-agency cooperation.”
She views compliance programs as “instrumentalities of hard law: formal regimes designed to supply internal monitoring and punishment, so that the firm can then assist the government in fulfilling its duties of external monitoring and punishment.” Of course you are not going to get a cooperative method of regulation when the primary response to corporate wrongdoing is the prosecution and punishment of individuals. Executives put compliance programs in place because it is good business. They also implemented them because they don’t want to go to jail. Executives are increasingly being punished for the bad acts of their frontline employees.
The professor advocates a model in which “regulators and regulated entities would treat compliance problems—even large scale violations of criminal law—as a symptom of a continuing problem to be addressed over time, rather than as a cultural failure that could be “cured” by some combination of prosecutorial threat and internal ethics remediation.”