Just as chief compliance officers are hit with increasing corporate demands for growth and more global regulations, a new survey suggests their budgets are being squeezed rather than expanding to meet the need.

The survey by Hogan Lovells showed that compliance leaders in the tech, media and telecom companies are more likely to be dealing with budget cuts and a lack of focus on compliance than in any other industry sector.

"I found that somewhat surprising," Hogan Lovells partner Stephanie Yonekura in Los Angeles told Corporate Counsel. "It looks like compliance teams are being squeezed in terms of dollars and numbers."

Yonekura said the dip may correlate with a ramp-up of budgets in 2015-2016 when the Obama administration was undertaking numerous prosecutions. The pace of that ramp-up has not continued under the Trump administration, she said.

"Some compliance budgets are continuing to decrease," Yonekura explained, "on what I believe is a misconception by companies that they don't have to be concerned about FCPA [Foreign Corrupt Practices Act] enforcement, or based on complacency because they think their industries won't be targeted."

She thinks enforcement numbers do not support such thinking, with trends toward higher fines and fiercer enforcement, not less. That is especially true in the tech and telecoms industry, where the U.S. Department of Justice seems to be homing in, Yonekura said.

"As DOJ focuses on telecoms, those companies need to spend extra money and ramp up compliance," she warned.

The survey, which looked at all aspects of anti-bribery and corruption compliance, collected opinions from 700 chief compliance officers and heads of legal departments at multinational companies with at least 2,000 employees in the U.S., Europe and Asia.

The report states, "There is evidence that these companies are treading a dangerous path when it comes to bribery and corruption. A substantial number of compliance leaders in this sector agree that their organization has made risky investments in Asia, Latin America, and Africa in order to meet growth targets (59%, compared to an average of 53% across all sectors)."

It went on to state that 55% of compliance leaders in this sector say that their organization just pays lip service to anti-bribery and corruption concerns in these regions, taking them seriously only if there's a chance of getting caught.

The report quotes Hogan Lovells Singapore partner Maurice Burke: "Compared to other sectors, TMT [tech/media/telecom] companies tend to have huge, disparate networks of users, and a global reach from the outset. Their work is inherently complex, and they are exposed to compliance legislation from multiple jurisdictions. Tech companies are also innovative by their very nature, and need to push boundaries to survive."

Burke recommended that companies in this sector follow the lead of highly regulated life science businesses by embedding compliance throughout the business and ingraining regulation and compliance deeply into the company culture.

The study showed that businesses in the life sciences and pharma sector have the fewest full-time compliance professionals, but they are the most diligent in terms of testing programs, updating procedures and delivering training. Yonekura said this sector boasts mature compliance systems that are evolving with time, rather than reacting by ramping up and cutting back.

She noted that 90% of all participants feel pressure to proceed with company growth strategies in high-risk areas, such as Asia, Latin America and Africa.

Businesses seeking growth are entering these emerging markets, she said, and compliance officers need to be ready with proper tools in hand. That means policies and procedures that are not just on paper, "but living, breathing documents to help employees understand how to navigate those markets."

One other significant point in the survey, Yonekura said, was how technology "cuts both ways." On one hand, new technology is helping compliance officers better implement and monitor procedures, tackle corruption and increase transparency.

But almost 60% of respondents also said new tech was making it more difficult for them to do their jobs, especially devices such as ephemeral messaging apps. And "the potential for encrypted messaging and payment services to enable corrupt behavior is keeping compliance leaders awake at night," the report states.

"Part of the problem is that chief compliance officers are being pulled every which way," Yonekura said. "With so much on their plate, the anti-bribery and corruption portion might get neglected."

In other findings the report showed:

• Some 38% of compliance chiefs report to the CEO, while 12% report to the general counsel. Other reporting tracks include to the chief operating officer, the chief financial officer and the head of internal audit.
• Over two-thirds of compliance heads said that regulatory pressure is increasing on their companies.
• Over half of compliance leaders said many people in their business fail to follow bribery and corruption procedures.
• There was some good news: 95% of compliance leaders said their teams are meeting or exceeding expectations.