Ernst & Young recently held a seminar on risk compliance
for todays global oil and gas companies. One session in
particular during the seminar focused on emerging risk areas in
the energy market, which include antitrust, the Foreign Corrupt
Practices Act (FCPA) and financial statement fraud. To avoid
such potentially damaging missteps, many energy companies are
upping their investment in compliance. The addition of chief
compliance officers and the hiring of compliance professionals
to work in key business regions enable companies to better
implement formalized risk assessments and audits on a regular
basis. Communication between the compliance, internal audit and
legal functions occurs on a daily basis, and many companies
have a structure process to identify, rank and mitigate
Regardless of size and scope, however, all compliance
programs need the support of senior managers and the board of
directors, session panelists said.
Compliance must be taken seriously, and senior
management must set the proper expectations, said Jeff
Johnston, a partner at Vinson and Elkins. Companies must
be willing to walk away from business if there is something
unethical about the project. You cannot send employees
into high-risk countries without significant amounts of
training and a structured plan for how they are to
The tone at the top is the most important
element, said John Freeman, general counsel for Technip
USA. There has to be more than a formal code of conduct;
senior management must talk about compliance in a way that
shows commitment to following the law.
In recent years, the FCPA has become a focal point for
international energy companies. Most companies have some level
of compliance program in place to train employees on the FCPA
as well as auditing behavior in the field.
Yet antitrust issues continue to grow in importance as the
energy industry relies more heavily on joint ventures and
partnerships that require sharing of information and
cooperation among competitors.
The government certainly has not reduced its antitrust
efforts, Mr. Johnston said. Last year there were a
record number of antitrust cases and a record number of fines.
Regulators are very focused on the energy industry. They are on
the lookout for collusion, and they arent afraid to move
in if they suspect anything.
Antitrust issues can also arise during the acquisition
process. We are very concerned about
gun-jumping, Mr. Freeman said. There
are still a lot of people who dont understand that you
cant act as one company prior to the closure of an
acquisition. While you can do integration planning, you cant
share competitive information.
To increase awareness of antitrust regulations, companies
should implement mandatory training for all employees who have
any contact with competitors/partners. Because many antitrust
violations occur informally, follow-up monitoring and auditing
are difficult and the bulk of a companys efforts must be
Most violations of this nature dont have a paper
trail, Mr. Freeman said. They happen when people
are talking to one another at dinner or after a meeting, and
information is shared inadvertently.