Compliance in a New Era - an Agri- Commodity Perspective
By Tim Bhatnagar, Head of Compliance Asia, Olam
“It takes less time to do things right than to explain why you did it wrong”—Henry Wadsworth Longfellow.
Contrary to common belief, Compliance is not a “boring” or “stale” role. In fact, to make a good Compliance Officer, one requires unique agility and adaptability. Like anything else, Compliance is forever an evolving subject, especially in today’s rapidly harmonizing world. It expands and revolves around business’ needs and requirements. In my opinion, it is the BFF (best friend forever) of business units. Provided it’s a two-way collaboration, as with any good friendship. It is there to help and facilitate any business opportunity within the remit of a defined boundary. However, Compliance officers, do require time to earn their due recognition.
Since starting my career, Compliance has changed tremendously. It is no longer a “reactive” part of a business. In contrast, Compliance is one of the most proactive domains. It predicts the trends and changes to the future before one even realizes and requires a solution to these trends for business. I count myself lucky to be part of the next generation who have pioneered evolution of compliance as we see today.
Unlike other roles, we did not have the luxury of time to prepare for change. We had to adapt fast and first learn what changes were required, second to translate these changes and finally to implement these changes. I saw and experienced this first hand when I was working in what many consider trendy M&A within the energy sector when the recession hit. As I stated earlier, a good Compliance programme is “Proactive” and not “reactive,” which is what resonates with me and has stuck with me since the start of my Compliance stint within the financial domain. Back then working in Europe, the global economy was coming out of recession, markets started showing signs of buoyancy and banks and financial institutions had started on a Compliance hiring frenzy.
The global economy has since moved on and so have I. Working for one of the biggest Agri-commodity companies in the world, heading Compliance for APAC, Middle East and Africa, challenges are exciting, diverse, distinct and sometimes uncorrelated.
Olam’s compliance program is being proactive and helps make companies like our future proof
Olam International Limited (Olam) is known as one of the few fully integrated seed-to-shelf companies. A model I was quite familiar with working for energy majors in the past. Olam is primarily an Agri business with its beginning in Africa, and now present in approximately 70 countries globally. A large mandate of growing, sourcing and supplying to some of the biggest firms in the world requires effective risk management, foresight and agility. Thus, various businesses within Olam, hedge their financial exposures of various cash crops by trading through their respective futures derivatives on exchanges globally. The various global exchange and regulatory trading rules are very complex and in many instances do not correlate with different regions. Therefore, everyone requires a BFF and Compliance can be that for a business. This is where the role of the Market Compliance Office (MCO) which oversees the global futures derivatives trading in Olam comes in.
Traditionally, Compliance has been a very polished and well-oiled machine and increasingly sophisticated in all the Investment Banks (IBs) and Energy majors. However, in many non-financial trading houses like Olam Boards of Directors have mandated it to ensure that companies ours are doing well and effectively. Any good Compliance program is only as good as the leaders that implement it. Although “Tone from the Top” is often cited in various compliance programmes, I cannot stress the emphasis of those 4 key words enough. A good Compliance programme needs vision, leadership, consistency and most importantly, support of the business leaders.
Olam is setting itself apart from many companies by not being just an ethical or sustainable agribusiness but is also taking significant steps to be a compliant one. In another word, we are preparing for the future. Should the company decide to expand its share of the market, our Compliance program is already putting these requirements in place. This is how Olam’s compliance program is being PROACTIVE and helps make companies like our future proof.
The global economy and more importantly various national regulators are increasingly putting boundaries within their markets as recent developments have shown. This is now cascading down to Asia, where MAS (Monetary Authority of Singapore) and SFC (Securities and Futures Commission) are leading the way. The regulators are busy signing MoUs to cooperate and engage with each other to ensure market integrity and transparency. With various companies and financial institutions transferring their business to this part of the world, it is a golden time for Asia and we are once again becoming the silk road of the world. Therefore, there is an immediate need to be able to facilitate and prepare for this change. However, as any Compliance officer will tell you, no two compliance programs are the same. A good program needs to understand their business activities in detail and cater to their specific needs with a tailored approach.
Companies like Olam that recognise the need to be proactive are putting controls and measures in place to ensure we are in line with rapidly changing market conditions and expectations. At the end of the day, in order to establish a true “Culture of Compliance” for the company the front line businesses (e.g., commodity traders) and Compliance team need to be in alignment. By striving to be the pack leader and not merely a follower, we can give assurance not only to the Board and Executive Management, but to all of our customers and investors that we are here to do business the right way.