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Compliance in Romania

Compliance in Romania

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Regardless whether you are a new start-up hoping to become the next “unicorn” or a renowned international corporation, Romania’s ever-changing business and legal environment will impose various issues and hurdles upon your organization’s compliance and ethics culture. From BP’s USD 20.8 billion fine for the Deepwater Horizon accident, to Volkswagen’s USD 14.7 billion fine for false diesel emissions, to Airbus’ USD 4 billion fine for bribery and corruption, keeping a company on the right side of the law and reducing employee malfeasance is always a challenge. 

With rules and regulations constantly changing and developing to ensure Romania’s market is in line with EU and international best practices, increased authority and resources available to regulators to pursue breaches and to impose large and “company killing” fines and sanctions, and enhanced cooperation between Romanian and EU/international regulatory/law enforcement bodies, compliance needs to be at the top of any organization’s management agenda. Furthermore, Romania, Moldova and other S.E. European countries are still seen by regulators and international organizations as having high levels of corruption, white collar crime, and employee misconduct.  The US Foreign Corrupt Practices Act, the UK’s Bribery Act, France’s Sapin II rules, and the EU’s growing anti-money laundering efforts are only a few of the numerous rules and regulations that may be applicable. This in addition to the Romanian laws regulating company activities. With three lawyers on staff who are Certified Compliance and Ethics Professionals (CCEP-I), Vernon/David has worked on numerous compliance matters and fraud and employee malfeasance cases, including compliance investigations involving the FCPA and matters before the Romanian National Anticorruption Directorate. We believe that a strong, active, and effective compliance program adds real value to your organization. The implementation of compliance programs and procedures as well as the development of a compliance culture strengthens the organization’s reputation and significantly reduces the risk of regulatory non-compliance or worse, serious criminal charges. 

With this in mind, there are some key elements that any compliance program should include.

First, develop a code of conduct which informs employees in a clear, simple, and straightforward manner about your organization’s requirements and expectations, as well as its core values. It is very important that this code be implemented and supported in the company’s internal rules and procedures.

Policies, guidelines and rules need to be tailored to your organizations’ needs, the applicable regulatory environment, and ongoing business. Clearly a hospital will have different needs and requirements than a grocery store.

Senior management should perpetuate a “tone at the top” approach to compliance which reflects the organization’s commitment to ethical and legal business conduct, as well as compliance with the letter and spirit of the law and relevant policies. This tone should be made clear throughout the organization’s entire business operations.

Develop, maintain, and constantly improve a compliance monitoring program which provides management with reassurance that key compliance issues or risks are being actively and adequately managed within the organization (including through regular trainings, awareness campaigns, or specific guidance and examples).

Set up multiple channels through which employees can seek guidance and raise concerns, such as hotlines or direct contact with the ethics and compliance officer/department.

Make sure you have proper investigation procedures and standards in place to address issues related to the authority of investigators, requirements for all employees to cooperate, and strict confidentiality of proceedings/investigations;

Create and maintain clear and objective standards when disciplining employees. Not only should the “punishment fit the crime,” but every employee must be treated equally. The CFO must face the same treatment as the secretary. We also find that developing an incentive program to reward employees for actively reporting wrongdoing and implementing the organization’s policies works well. 

Finally, as noted above, compliance programs are not “one size fits all” and not only about corruption. Programs should be designed to address a company’s specific activities and their real risks. Remember the examples above? BP’s problem was related to health and safety and Volkswagen’s problem was environmental and operational. A good compliance program is about helping the company and its employees reduce risks and comply with the law.

By Charles Vernon, Managing Partner, and Mihai Stan, Senior Associate, Vernon | David

This Article was originally published in Issue 7.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Romanian Knowledge Partner

Țuca Zbârcea & Asociații is a full-service independent law firm, employing cross-disciplinary teams of lawyers, insolvency practitioners, tax consultants, IP counsellors, economists and staff members. It also operates a secondary law office in Cluj-Napoca (Romania), and has a ‘best-friend’ agreement with a leading law firm in the Republic of Moldova. In addition, thanks to the firm’s dedicated Foreign Desks, the team provides the full range of services to international investors seeking to gain a foothold or expand their existing operations in Romania. Since 2019, the firm and its tax arm are collaborating with Andersen Global in Romania.

Țuca Zbârcea & Asociaţii is providing legal services in every aspect of business, covering all major areas of practice: corporate and M&A; litigation and international arbitration; corporate tax; public procurement; TMT; employment; insurance; banking and finance; capital markets; competition; healthcare and pharmaceutical; energy and natural resources; environmental; intellectual property; real estate; regulatory legal services.

Țuca Zbârcea & Asociaţii is a First-Tier law firm in all international legal directories and a multiple award-winning law firm both locally and internationally. It received the CEE Deal of the Year Award (DOTY Awards 2021) and the Law Firm of the Year Award: Romania (IFLR Europe Awards 2021). 

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