When Francisco Hernandez accepted a position as Mexichem’s first global general counsel about two years ago, he knew he was taking on a huge job – shaping one cohesive legal team from 18 lawyers who were spread across some 40 countries and who were answering to various functions, such as finance.
With 22,000 employees, Mexichem is a major producer of plastic pipes and is the third largest chemical and petrochemical company in Latin America.
“It’s very challenging,” Hernandez said of his job. “I am creating the company’s global legal, corporate governance and compliance structure.”
But he did not start from scratch. And he did not work alone.
Part of Mexichem’s growth strategy, Hernandez explained, is to aggressively acquire other companies. Since 2003 it has made 26 acquisitions, for a total of 82 acquired companies around the globe.
“Some of the acquired companies were privately held, some public,” Hernandez said. “Some had no lawyers. Others had one lawyer reporting to HR, or another to finance. But Mexichem didn’t have a global legal function.”
It had a code of ethics, he said, but when it came to compliance, each subsidiary did “its own thing.”
“I saw that some of these companies were partially integrated, and others were at different stages in the process,” he added. “So instead of just bringing a compliance program off the shelf and saying, ‘these are the policies,’ I saw a great opportunity to bring everybody on board.”
He divided Mexichem’s operations by region and business to gather information about local compliance standards and practices.
By analyzing best practices at all the companies, Mexichem achieved a program that everyone could accept. And enhanced the process of integration along the way.
Mexichem also had the help of Eversheds Sutherland during the endeavor.
To build the new compliance program, Mexichem teams analyzed more than 3,000 pages of documents. “We made sure everyone understood any concepts that may be foreign to them,” Hernandez added.
The GC said policies were kept short and in plain language, with no legal jargon and no need for definitions. The company created six policy handbooks on major topics: anti-corruption, antitrust and competition, international trade, global data privacy, human rights and anti-modern day slavery–as well as ever tricky third party transactions.
The next part of Hernandez’s plan was to further engage other departments. “Instead of having legal launch the program, run the training and essentially own the program, we did it at the ethics committee level,” the GC explained. The committee included leaders from legal, HR, Internal Audit and IT working in partnership with the business leaders.
He said it was important that it not be just a legal project.
“Compliance is way bigger than legal,” Hernandez said. “We need to respond to the culture, not just react to regulatory requirements.”
“The trainings were carried out in a way that everybody from the top down engaged in the process, fostering the right culture in integrity from the beginning,” he added.
He said a representative from the ethics committee traveled to each region to facilitate the trainings. “It involved a lot of time, a lot of travel, a lot of meetings,” he noted. He emphasized that “it was a lengthy process” to ensure that employees on the ground saw compliance training as coming not from global headquarters, but from closer to home.
The process paid off in another way: The compliance project recently received the Mexichem Collaboration Award, a company honor decided by employees worldwide, Hernandez said.
Parts of the compliance program are unfolding and still evolving, according to the GC.
Among other tasks, he said the company is:
- Revamping its whistleblower phone line to make it truly global and available in all local languages.
- Creating a hotline for employees to raise ethics questions or other concerns, to create a claim or make a report.
- Hiring a chief compliance officer, who will be part of the legal department.
- Working on an in-depth understanding of all third party relationships by engaging a tech platform to screen and manage third parties.
- Implementing the European Union’s General Data Protection Regulation, which goes into effect May 25. “We don’t manage massive amounts of personal data for customers,” Hernandez said, “but the risk of having a violation is way too high. The implications are tremendous.”