By Ibrahim YEKU, LLB, BL, LLM, CCEP-I, CAMS
Culture, as an integral component of compliance programs, plays a vital role in compliance programs. Culture has been identified as one of the critical success factors of corporate compliance programs. It is the primary driver of a compliance program and a pillar upon which an enduring compliance program can be built. According to the Merriam-Webster Dictionary, culture is the shared attitudes, values, goals, and practices characterising an institution, organisation, or group. Simply put, culture is how an organisation executes its business, which may be informed by its beliefs, values, aspirations and established corporate objectives. At the individual and societal level, culture is the way of life of a people. The concrete and symbolic framework orders how people live their lives and define what is acceptable or abominable in that society.
The importance of culture in compliance programs cannot be overstated. Compliance professionals often make the mistake of isolating an organisation’s corporate culture from the everyday culture of its society, all in the name of promoting compliance. However, any compliance policy that disregards the local culture risks alienating its stakeholders. The culture of the stakeholders should be respected and considered when developing compliance policies and programs, as their acceptance and cooperation are crucial for successful implementation.
What is the criminalisation of culture?
The potential harm of ‘criminalising culture’ is significant. It refers to the act of perceiving, designating, or classifying a culture or the cultural practices of a people or a society as inherently inferior or wrong because they don’t align with specific standards, principles, or practices. When culture is criminalised without the participation or resolution of the people who own it, it can lead to the dehumanisation of local stakeholders. Compliance professionals should be aware that corporate culture or compliance culture cannot replace local culture, and the consequences of doing so can be severe.
Compliance culture and local culture/practices
Compliance culture is a subset of the corporate culture of an organisation. Compliance culture is a corporate practice that ensures that all organisations’ actions, processes, and operations comply with existing regulatory requirements, international best practices, and ethical conduct. The local culture, as a way of life of the people, may share some similarities and dissimilarities with corporate culture. As outlined earlier, local culture is the prevailing way of life and social values in any given society, which various actors and constituents may share. An organisation that operates in a given locality may share the values of such a society and reflect the same as part of its corporate culture. Where this is the case, the corporate culture of an organisation and local culture will have a lot in common, in which case, the values of the organisation become similar to the values of the people. In other words, it is in the right place for the local culture and the corporate culture of any organisation that operates within a given locality to shape and influence each other. This is particularly the case when the alter egos are from the locality; the values of individuals, shareholders, directors and top management become part, if not the organisation’s corporate culture.
However, while both may potentially shape each other, the corporate culture of some organisations only sometimes reflects or shares the attributes of local cultures. There are several standalone cases of corporate cultures being entirely at variance with the everyday cultures of the people. This is often the case when the organisation is a subsidiary of a foreign company, where its culture may reflect its parent company’s culture and business objectives and seek to comply with the laws that govern or apply to the parent company. It is rare to see a subsidiary company maintain a distinct corporate culture or identity different from its parent company.
Also, local companies with a global outlook may adopt a corporate culture that reflects practices and values outside of their local environment for ease of market access and acceptance and to enhance their competitiveness in the global space. The danger of an international outlook for a local organisation is the resistance it may face from its local environment. The level of social acceptance may be low as society’s expectation of understanding the cultural nuances will be higher when compared to a subsidiary of a foreign company.
It’s crucial to understand that corporate or compliance culture is not superior to the culture of the people. It should not be imposed without regard for cultural values and local traditions. Such disregard can lead to a chauvinistic sentiment that may provoke the criminalisation of local culture. In this era of ESG, compliance professionals must grasp the weight of the ‘S’ in ESG and how it can impact compliance program implementation and administration, particularly regarding cultural practices.
How compliance contributes to the criminalisation of culture.
Compliance contributes to the criminalisation of culture when an organisation’s compliance policies view certain cultural practices as a crime because some foreign laws, such as the FCPA or UK Bribery Act, state so or because such cultural practices are prohibited under the corporate compliance programme. Going by the definition of compliance culture as “a corporate practice that ensures that all actions, processes, operations of organisations comply with regulatory requirements, international best practices and ethical conduct,” some may argue that compliance with the FCPA or UK Bribery Act passes for compliance with regulatory requirements; At the same time, this may be correct; its correctness cannot become a premise for condemning cultural practices permissible or allowed under the local laws. To do otherwise would be an extraterritorial enforcement of foreign laws by corporate organisations on a people whose local laws have no similar provisions prohibiting such cultural practices. Stretching the requirements of the FCPA or UK Bribery Act to prohibit local cultural practices by some compliance professionals has contributed to the criminalisation of culture. An excellent example of the criminalisation of culture by compliance professionals is prohibiting gift donations to support local festivals. In some cultures, gifting is essential to people’s way of life; in fact, people expect to receive gifts or to be gifted by any person or organisation that wants to have dealings with them.
Also, it is essential to note that when a gift is being offered, the recipient is not interested in signing or executing any document to evidence such a gift. The offer to sign a document evidencing the gift alienates some cultures. It may only be acceptable in some cases. Please acknowledge the social and cultural context of the compliance policy to ensure smooth implementation. As long as they do not interfere with due process, the payment of homage and the performance of other traditional rites, which entail support of festivals through donations, are cultural expectations of the local community where companies operate. Unfortunately, compliance professionals who need to learn how to strike a balance between the need to promote and enforce compliance policy and the cultural demands of society on the business often bring the organisation into conflict with the local stakeholders. When compliance officers are not sure, they want to be safe. In the quest for a secure position, they quickly criminalise every local practice that is alien to corporate compliance policy or laws that govern their parent companies.
Effects of criminalisation of culture on the compliance programme.
It bears a reiteration: the criminalisation of culture is a form of dehumanisation of the local people. It disrespects local people and culture and is contrary to best business practices. Culture is the people’s heritage, and corporations should try to preserve local culture. Organisations that criminalise local culture will find it challenging to operate peacefully and may need more social licences that guarantee smooth operations. The buy-in of community stakeholders and respect for local business culture and practices are the surest path to sustaining smooth operations. The criminalisation of the culture of the local people often leads to hostility against the company and hamper its operations. Companies that despise the culture of their operating environment are prone to being blocked by local people, the vandalisation of operating facilities within the communities, and the obstruction of operations.
How compliance professionals can avoid the criminalisation of culture
Compliance professionals should seek to understand the local cultural practices and the position of the local laws on such cultural practices that are of concern under their organisations’ compliance programs and, by extension, foreign laws that govern their companies’ operations. This is necessary to ensure compliance professionals know cultural practices are outlawed under local laws and are permissible. Where certain cultural practices are not prohibited under local laws, it will be out of place for a compliance professional to condemn such practices. The goal is not to criminalise a local cultural practice that puts no ethical pressure on regulatory frameworks. The appropriate action for a compliance professional is to propose an acceptable tolerance threshold to accommodate local practices and culture to the company’s senior management, considering the potential compliance risk associated with such actions. Compliance professionals must propose mitigation measures for senior management to manage the risk.
Conclusively, the social licence to operate in any given society is as essential as the need to ensure compliance with a company’s policies and procedures. Sound ethics and ethical practice start with respect for local people and culture. Compliance policy enforcement should not be stretched to criminalise the culture of local host communities, and foreign laws should not be a basis for the criminalisation of local culture when the local laws state otherwise.
Key Takeaways
• Culture is one of the critical success factors of corporate compliance programs.
• The criminalisation of culture is a form of dehumanisation of the local people. It disrespects local people and their culture and contradicts best business practices.
• Stretching the provisions of the FCPA or UK Bribery Act to prohibit local cultural practices by some compliance professionals has contributed to the criminalisation of culture.
• Compliance professionals should seek to understand the local cultural practices and the position of the local laws on such cultural practices that are of concern under their organisations’ compliance programs and, by extension, foreign laws that govern their companies’ operations.
