Defence SMEs: 9 considerations to initiate a compliance programme
Companies that design military equipment and dual-use goods and technologies shoulder significant responsibilities. To prevent the risk of corruption, that of using goods and technologies to commit serious violations, or of harming national interests, vigilance is required on many fronts. While major groups have dedicated teams and are often in the vanguard when it comes to compliance, the defence industry also consists of many SMEs and start-ups, for whom the subject may seem daunting. The aim of this guide is to help them with their initial thoughts on the subject.
Identifying the rationale behind the process
Several reasons may justify a company initiating a compliance/
It may be obliged to do so, as in the case of companies falling within the scope of the law on the duty of vigilance;
A company may implement a compliance programme to ensure that obligations are met. That would be the case of an exporting company which, in order to ensure compliance with export control rules, implements a dedicated
A compliance approach may also enable the company to prevent risky behaviour from a legal standpoint, particularly in terms of corruption or responsibility for any violations that may be committed using the equipment sold, or from a reputational point of view.
A company's relationships with its partners may also be the source of a compliance initiative. Clients, banks and investors may demand adherence to principles, values or processes that are essential to their own compliance programmes. Whether their liability could be engaged by your presence in their value chain, they need to be sure of the integrity of the use you make of their funds, or they simply are attached to their reputation, identifying their needs and expectations will give you the keys to building your approach effectively and sustaining your relationship with them over the long term. Furthermore, your compliance approach can itself be used as a leverage in your commercial negotiations with your suppliers;
Finally, a company may wish to initiate a compliance process in order to implement the values and vision to which it is committed.
Identifying which of these reasons justifies your commitment to a compliance approach will enable you to build a coherent project.
Identifying priorities
The sensitivity of the goods and technologies developed by defence companies imposes a wide range of obligations with which they are required to comply.
Export controls, the fight against corruption, preventing the sale of equipment that would be used to commit human rights violations or protecting national interests: there are many issues for defence companies to consider, and they need to be prioritised.
Companies therefore need to think ahead to identify priorities, which vary from one to another. For example, investing in compliance with export control regulations is only relevant when the company has serious export prospects. Similarly, addressing issues relating to the risk of participating in serious human rights violations will only make sense for companies producing sensitive equipment, such as components that could be used in lethal weapons, surveillance equipment or equipment that could be misused to commit acts of torture.
Mapping risks will help determining priorities.
Mapping risks, the foundation of your programme
The result of a reflective process involving the company's critical functions, risk mapping consists of documentation detailing the processes at risk, the level of risk and the measures that need be taken to manage it. It forms the basis of your compliance approach.
Given the wide range of issues faced by companies operating in the defence industry, from export controls to the fight against corruption, or the criminal risk that may arise from the use of the goods and technologies in the perpetrating of international crimes, it is often more appropriate to draw up a specific map for each risk (corruption risk map, export control violation risk map, buyer risk map, investor risk map).
Compliance as a process
A compliance approach is by its very nature evolutionary and dynamic, for a number of reasons:
First, changes in legislation and regulations mean that regular updates are required;
Second, the process involves constant adjustment, to take account of under- or over-estimated risks, and to refine the measures;
Lastly, the efforts made to ensure compliance are likely to increase as the company grows.
As a result, a compliance approach is best viewed as a process whose developments will punctuate the life of
the company and affect its operations. This approach will also enable the process to be built up gradually and to be approached in a serene way.
Considering all aspects as complementary
This process can also be seen as the construction of a project whose stages support each other. Mapping the risks of corruption will thus inform your thinking about the users to whom you wish to sell your equipment and those who would expose you to risks that are too singular. These considerations will also feed into your vision of foreign investments that could be subject to authorisation by the Ministry of the Economy.
By carrying out these various reflections, you will gradually build a robust system associated with a culture of compliance anchored at the heart of the company.
Tailoring objectives to resources
The idea of proportionality between resources and measures implemented is central to any compliance approach. In commercial negotiations or legal proceedings, being able to demonstrate that a compliance approach has been designed to be proportionate to the company's resources is essential. This factor also provides a compass for a company that would find determining the right balance in the degree of granularity that is expected of it challenging.
Instilling a culture of compliance within the company
Taken together, these initiatives will have the effect of instilling a culture of compliance at the heart of the company, which should be encouraged. Only if there is a commitment from the management team can an approach find its place in the company and win the support of all the teams. Bringing up the subject at meetings, investing in team training, and taking the necessary measures without hesitation in the event of any deviation are all signals that the company is committed to its values. They guarantee the effectiveness of your approach.
Communicate
Making the most of a compliance approach also involves communicating your efforts to interested parties. Several levels of publicity can be established, from the documents you wish to make available to the public, to those you wish to keep internally, to the ones you will communicate to your partners only.
This communication will also facilitate your relations with observers.
Make use of the resources made available by state agencies
In order to optimise company resources, relying on the guidelines made available by dedicated government agencies, such as the French Anti-Corruption Agency, may be a valid initial solution. The Agency has published an online guide for SMEs wishing to embark on an anti-corruption initiative, which can serve as a basis for initial reflection within the company.