Corporate Codes of Conduct
Frank Seales Jr. and Margaret P. Spencer
Within the last 30 years a number of scandals have tainted some of the nation's largest corporations and involved their officers in civil and criminal litigation. Corporate ethical codes or corporate codes of conduct represent a response to, and a shield against, such corporate misconduct. These codes are written statements of ethics, law, or policy (or some combination of the three) that define the obligations of corporate employees. They have been encouraged by government agencies, Congress, and commentators.1 The Sentencing Guidelines for Organizations, effective since November 1, 1991, theoretically encourages corporations to enact compliance programs or codes of conduct for deterring, detecting, and reporting criminal conduct by employees. Companies have thus been compelled to adopt codes and to implement "voluntary" compliance programs.
Great skepticism has been expressed about the impact of such codes. Although these codes have been adopted, outside of the federal sentencing guidelines little guidance exists about whether, when, and how they should be implemented. Perhaps more importantly the courts have not yet articulated the full legal effect of such codes.
The development of meaningful and effective corporate codes of conduct, however, will help avoid corporate and civil liability. These