'Cadillac Compliance' Breakdown

Abstract

This Essay argues that the best corporate compliance programs, what are known as “Cadillac compliance” programs, are becoming increasingly criminalized. In at attempt to avoid application of the criminal law, companies have adopted compliance protocols that are motivated by and mimic that law, using the precepts of criminal legislation, enforcement, and adjudication to advance their compliance goals. This approach to compliance is inherently flawed, however—it can never be fully effective in abating corporate wrongdoing. Criminalized compliance regimes are inherently ineffective because they impose unintended behavioral consequences on corporate employees by fostering rationalizations that allow offenders to square their self-perception as “good people” with the unethical or illegal behavior they are contemplating, thereby allowing wrongdoing to go forward. By importing into the corporation many of the criminal law’s delegitimizing features, criminalized compliance regimes create space for rationalizations, facilitating the necessary precursors to the commission of white collar and corporate crime. This insight, which offers a new way of conceptualizing corporate compliance, explains the ineffectiveness of many compliance programs and also suggests how companies might go about fixing them. The Essay addresses, through real-world examples, how companies might use behavioral compliance strategies to combat rationalizations and help repair their “Cadillac compliance” programs.

Keywords: corporate compliance, corporate crime, white collar crime, behavioral compliance, behavioral ethics, business ethics, rationalizations, legitamacy

JEL Classification: K2, K14, K42