Corporate Ethics: The Role of Internal Compliance Programmes under the US Sentencing Guidelines

This chapter addresses the crucial role of internal compliance programmes in policing corporate conduct. In 1991, the United States Sentencing Commission adopted unprecedented sentencing guidelines that reflected a ‘carrot and stick’ approach to sentencing corporate criminals (Murphy, 2000). For the first time in American history, these guidelines imposed a strict and determinate sentencing scheme upon corporations violating the law. The guidelines required Federal judges to sentence offenders within penalty ranges determined by the nature of the crime, amount of loss and other pertinent factors. To promote good corporate citizenship, chapter 8 of the guidelines allowed substantial sentencing reductions (potentially amounting to 95 per cent) for companies that had established effective compliance programmes designed to detect and deter criminal activity. Potential sentence reductions spurred American business organisations to implement such compliance programmes; however, implementation soon proved problematic, as the guidelines did not define the elements of an effective programme. Moreover, programmes that did not qualify as ‘effective’ did not qualify for sentencing reduction.