Management Consultant Mike Eldon

The growing compliance community

Nearly six years ago I wrote a column here about what I called “the necessary evil of compliance”, the theme of a Leaders Circle I had just co-hosted. In it I quoted former Deputy US Attorney-General Paul McNulty, who rightly pointed out that “If you think compliance is expensive, try non-compliance”. And in our conversation we agreed that one must be neither too trusting nor insufficiently so.

These thoughts were on my mind while attending the first day of the recent Nielsonsmith conference on “Compliance, Anti-Corruption and Ethics in Africa” where I was representing the Blue Company, one of the sponsors. During the conference I saw quite how prominent this compliance issue has become, with more and more organisations appointing compliance managers dedicated exclusively to this function.

We first heard from Tomell Ceasra, the co-founder of MEACA, the Middle East and Africa Compliance Association, and then from Laban Omangi, the chairman of the Compliance Society of Kenya, who told us how the society was formed in 2020 to bring together the compliance community within the finance sector, and now how it is spreading more broadly.

They’ve been studying the way to bring various institutions together to assemble compliance guidelines, and to offer professional training and certification in their specialty. They work together with Business Member Organisations (BMOs) and with regulators. And they worry about dealing with the financing of terrorism and with money-laundering funds derived from the proceeds of crime.

On the subject of whistleblowers, we heard about the factors that inhibit such people, including fear of retaliation; no response and no action being taken following their input – perhaps due to “untouchables” being involved; and a general lack of trust. Rita Mwangi, the Chief Legal and People Officer of Simba Corporation, talked about international and local legislation and how to comply. She highlighted the low positioning on Transparency International’s Corruption Perception Index of all but a very few African countries, with most either stuck where they are or regressing.

I was happy to hear her say we don’t lack legislation, either internationally or locally, rather what we need is improved enforcement – including through the increasing requirements of ESG reporting. As far as private sector self-regulation is concerned, because membership of many BMOs is voluntary the good guys join but the bad ones do not, thus evading the pressure to comply.

Peter Odedina, the Chief Compliance Officer of Airtel Africa next went into specifics on how to be compliant. He talked about the tone at the top being a key culture driver; appropriate incentives and penalties being important; the need for policies, codes of conduct; appropriate staff induction and ongoing communication with them; and the importance of enjoying an appropriate and aligned appetite for risk.

5% of the top line revenue of any company is lost due to fraud, he asserted. So what are the red flags? 43% are people seen to be living beyond their means, benefitting from a close association with vendors or customers; 23% face financial difficulties; and 21% are wheeler-dealers.

“Are compliance issues integrated into our organisation’s strategies and values, influencing the attitudes and behaviour of our people, thus forming an ethical culture?” we were asked.

The theme of the panel where I was a member read “Tone from the Top, Mood in the Middle, and Groove on the Ground”, where the role of middle managers was one of the issues discussed. There’s a whole spectrum at this level, from those who act as interpreters and mediators between the lower levels and their higher bosses, and those who are blockers and distracters. Much of course depends on that tone at the top. Are senior management keen to see the learning and growth of the next layers, so they rise up the organisation? Are they coaches? Do they provide a healthy performance management environment, with appropriate incentives? Do they inspire and motivate others to live their vision and values?

I was rather an exception in the room. Pretty much everyone else was deep in the compliance ecosystem, while I was viewing the topic from a much broader perspective. Those there were preaching to the already converted – which is fine, as it gave them the opportunity to interact, to learn and to reinforce each other. I hope they continue doing so beyond the conference, and that the event will have led to new alliances and collaborations that will raise the level of compliance… while not suffocating innovation and risk-taking.