Use of Six Sigma for Continuous Improvement of Compliance Programs

Patricia Eastwood, Senior Corporate Counsel, Caterpillar USA
Wes Blumenshine, Deputy General Counsel of the Legal Services Division of Caterpillar Inc. and General Counsel of Caterpillar Financial Services Corporation, Caterpillar Financial Services Corporation

Having a compliance program deemed “effective” has many potential benefits for a multinational company. Under some country laws, such a designation stands as an affirmative defense in an enforcement action. In other countries, recognition of effectiveness means improved chances of avoiding prosecution or favored treatment in the sentencing phase. All of these benefits are valuable and encourage in-house counsel to explore what it takes for the programs with which they assist to achieve the “effective” description wherever they are scrutinized. In the absence of definitive precedent regarding what constitutes an effective compliance program addressing any particular risk area, businesses worldwide must look towards guidance from a government agency or supervisor. Whereas, the Federal Sentencing Guidelines promulgated in the United States speak primarily in terms of the rigors that must be met to qualify for reduced sentences, other similar guidelines, such as those set forth by the United Kingdom Office of Fair Trading, speak more directly to the indicia of what constitutes an effective compliance program. Whether an in-house counsel spends time studying the Thompson Memorandum (and later the McNulty Memorandum) clarifying the US Federal Sentencing Guidelines or the growing recognition of the emerging global standard for effective anti-corruption programs, it quickly becomes clear that continuous improvement of compliance programs and the processes that serve as the core of such programs is an important element in convincing regulators that a program is “effective”.