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FCPA Compliance Report

Tom Fox has practiced law in Houston for 30 years and now brings you the FCPA Compliance and Ethics Report. Learn the latest in anti-corruption and anti-bribery compliance and international transaction issues, as well as business solutions to compliance problems.
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Now displaying: Category: compliance commentary
Nov 20, 2017

We have a bit of a compliance smorgasbord of topics this week. I was in London and sat down to be  interviewed by Jonathan Armstrong, a partner at Cordery Compliance, at the law firm offices in London. We consider when disruptive companies should institute a compliance program, even during its start up phase. Does the simple fact it is disruptive make compliance antithetical to its business approach. We both believe that disruptives and start-ups need to institutionalize compliance sooner rather than later. We then consider the disruptions of political events such as the ongoing antics of the Trump Administration and continued non-negotiations in the Brexit miasma. We discuss where might compliance be going in the future. We conclude with a discussion of the internationalization of anti-corruption investigations and enforcement and why compliance is the key to wading through the minefield of multiple jurisdictions and regulators. 

Nov 17, 2017

Jay and I return for a wide-ranging discussion on some of the top compliance and ethics related stories of the week, including: 

  1. The DOJ/SEC FCPA Guidance turned 5 years old this week. For the compliance practitioner, it is the seminal document on how to do compliance. See Tom’s article in the FCPA Compliance Report.
  2. Wal-Mart reserves $283MM to settle its outstanding FCPA matter. See article by Dick Cassin in the FCPA Blog. Henry Cutter reports in the WSJ Risk and Compliance Journal.
  3. Tom Fox and Matt Kelly explore the intersection of shareholder activism and the structure of a compliance program. See Matt’s blog posts on Radical Compliance Part I and Part II. See Tom’s blog post here. Finally Tom and Matt took a deep dive into the issue in Episode 60 of Compliance into the Weeds.
  4. The FIFA trial is ongoing in NYC. It has featured anonymous jurors, threat against witness and claims that Fox Sports paid bribes. See stories in the WSJ Risk and Compliance Report, The Daily Mail, and Reuters.
  5. Mike Volkov has a four-part series on putting ethics back into corporate culture. Part I; Part II; Part III and Part IV.
  6. Tom visited with Marc Havener and Bryan Belknap about using movie clips to expand your compliance training classroom. See Tom’s blog post here.
  7. Will there ever be another corruption conviction of a politician in the US? Sam Rubenfeld explores this question in light of the hung jury in the Menedez mistrial in WSJ Risk and Compliance Journal.
  8. SEC report indicates hundreds of millions in whistleblower bounty awards coming. See article in National Law Review.
  9. Join Tom’s monthly podcast series on One Month to a More Effective Compliance Program. In November, I consider how a 360-degree view of communications can enhance your compliance program. This month’s sponsor is the Dun & Bradstreet. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
  10. The Everything Compliance gang put together an eBook of their reflections from the recent SCCE 2017 Compliance and Ethics Institute. It is available for download free on JDSupra.
Nov 14, 2017

In this episode, Matt Kelly and I take a deep dive into the Cardinal Health corporate governance imbroglio. In it, a disgruntled shareholder, the Teamsters Pension fund brought a motion to have the CEO stripped of his title as Chairman of the Board. Although the motion failed, the Teamsters prevailed as the company took the requested step and separated the position. This matter included complaints about GC/CCO pay where those roles were held by one person who received a sizeable bonus even though the company did not meet its financial goals.

We consider the joint role of a GC-CCO and the potential corporate governance issues involved when the roles are held by one person. Does this create an irreconcilable conflict? What are the different functions of the General Counsel and the Chief Compliance Officer and how should we interpret a bonus payment? Should it be for one role or both roles. How does a joint GC-CCO role impeded the work of each corporate function individually? Finally, we consider how shareholder activism may now impact not only corporate governance but also corporate structures in functions such as compliance. What does this mean for the compliance function and Chief Compliance Officers going forward. 

We also touch on the role of compliance in drug distribution companies which have been drug into the opioid crisis. Cardinal Health shipped drugs totaling up to 55 pills for every person in the state of West Virginia to one town in that state. What, if anything, should the compliance function do in such a situation?

This case makes a fascinating case study in corporate governance and much more. 

For more information, see Matt Kelly’s blog posts

Compliance Lessons in the Cardinal Governance Fight and

Teamsters Blast Cardinal Health Compliance Efforts

Does the merger of the GC-CCO role create an irreconcilable conflict in corporate functions?

Nov 13, 2017

In this episode, I am interviewed by Jonathan Armstrong, a partner at Cordery Compliance in London on the implications of the Paradise Papers and Saudi Arabian corruption crackdown for the compliance practitioner. 

What every international business person should absolutely remember that there is no country in the world which makes bribery and corruption legal by statute. That means if and when a government decides to clamp down on what may have been a long-standing accepted business practice, of which you have been an active participant, there is nowhere to hide and very few places to hide. Witness GlaxoSmithKline PLC (GSK) in China in 2013 and 2014 where the Chinese subsidiary unit President returned to China to be criminally charged and convicted. He was summarily deported back to the UK where GSK almost as quickly summarily terminated him from his employment. Now we have the omens of a potentially equally seismic event, this time from Saudi Arabia.

For more information, see my blog post Saudi Arabia Has a Corruption Crackdown - What is Your Response?

Nov 10, 2017

Jay and I return for a wide-ranging discussion on some of the top compliance and ethics related stories of the week, including:

  1. Justice Department announces 4 guilty pleas and one indict as follow on prosecutions from the Rolls Royce corruption case. See Tom’s article in the FCPA Compliance Report. See Sam Rubenfeld’s article in WSJ Risk and Compliance Report.
  2. Dick Cassin asks if the SEC is targeting foreign companies for FCPA enforcement. See article by Dick Cassin in the FCPA Blog.
  3. Hui Chen suggests there should be more FCPA enforcement of US domestic companies, reviews monitorships and the FCPA Pilot Program. Henry Cutter interviews Chen in the WSJ Risk and Compliance Report.
  4. Saudi Arabia has a corruption crackdown. What does it mean for the compliance practitioner? See Tom’s article in FCPA Compliance Report.
  5. What happens if your General Counsel is also your CCO? Joe Murphy explores this conundrum in the SCCE Blog.
  6. What will become of the DOJ’s Evaluation of Corporate Compliance Programs? Matt Kelly explores in Radical Compliance.
  7. What do the Paradise Papers mean for the compliance practitioner. Sam Rubenfeld considers in the WSJ Risk and Compliance Journal.
  8. Mike Volkov has a two-part series on the intersection of COSO and compliance. Part I on the framework; Part II on using the framework to break down siloes.
  9. AML concerns. Adam Davidson returns to the Compliance Report-International Edition podcast to explain the intersection of money-laundering and the Trump business empire. DAG Rod Rosenstein discusses the intersection of FCPA, AML prosecutions and international investigations in a speech to Clearing House 2017 Annual Conference.
  10. Join Tom’s monthly podcast series on One Month to a More Effective Compliance Program. In November, I consider how a 360-degree view of communications can enhance your compliance program. This month’s sponsor is the Dun & Bradstreet. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
  11. FCPA Master Class Training in NYC on November 28 & 29. For information and registration, go here.
Nov 9, 2017

In this episode, I have New Yorker writer and reporter Adam Davidson on his recent article entitled, "Piercing the Veil of Secrecy Shrouding the Trump Deal in the Republic of Georgia”. In this article Davidson looks at some of the business practices of the Trump organization. It is a look the Silk Road Group, a mysterious holding company that set out, several years ago, to build a Trump Tower in the Republic of Georgia. Davidson found it to be a diffuse container holding at least several dozen corporate entities who, legally, at least, were registered in different countries around the world and had uncertain relationships to each other. In light of the recent indictments from Mueller’s office, it makes fascinating reading. Davidson is the author of “Trump’s Worst Deal” one of the most significant articles on the Trump organizations business dealings outside the US.

Nov 8, 2017

In this episode, Matt Kelly and I take a deep dive into the Justice Department’s Evaluation of Corporate Compliance Programs, released in February 2017. We consider this document in light of the wide-ranging review by the Justice Department of the various Memos from DAG’s over the past 15 years or so to determine if there should be consolidation or clarification into a new “Rosenstein Memo” or if there should be updates to the US Attorney’s Manual. Will the DOJ simply declare the Evaluation is no longer operative because it came out of the Obama Administration’s Justice Department? We consider the information presented in the Evaluation and how its value works in numerous ways for the compliance practitioner.

For more reading see Matt’s blog post “Future of the Effectiveness Questions

Looking for one of the top Master Classes in Compliance? Join myself and Jonathan Marks of Marcum LLC at the FCPA Master Class will be held on November 28 and 29, 2017 at the offices of Marcum LLC, 750 3rd Avenue, 11th Floor, New York, NY 10017. A Certificate of Completion will be provided to all who attend in addition to the continuing education credits that each state approves. The cost to attend is $1,495 per person. Breakfast, lunch and refreshments will be provided both days. For registration information, click here.

Nov 3, 2017

Jay and I return for a wide-ranging discussion on some of the top compliance and ethics related stories, including: 

  1. Astros win the 2017 World Series in seven games. See Tom’s complete report in the FCPA Compliance Report.
  2. SEC names Charles Cain as head of FCPA Unit. See article by Dick Cassin in the FCPA Blog.
  3. Small banks face the same risks on money laundering as larger banks do, as small Texas bank fined by FinCEN. Sam Rubenfeld reports in the WSJ Risk and Compliance Report.
  4. The myth of the revolving door. See article in Just Anti-Corruption (sub. req’d)
  5. French Court Convicts Equatorial Guinean Vice President Teodorin Obiang for Laundering Grand Corruption Proceeds. See article by Shirley Pouget and Ken Hurwitz in the Global Anticorruption Blog.
  6. Compliance goes Hollywood. Is Jay Rosen involved? Matt Kelly reports in Radical Compliance.
  7. Adam Turteltaub speaks with incoming SCCE President Gerry Zack on the SCCE’s Compliance Perspectives podcast.
  8. Brandon Fox (no relation) takes a look at the report of corruption at FIFA, its responses and implications in NYU’s Compliance and Enforcement blog. Part I on the Garcia Report; Part II on responses going forward.
  9. Will the Trump Administration blow up America’s biggest trading relationships? Tom considers this question with Doreen Edelman about the ongoing NAFTA negotiations the Compliance Report-International Edition podcast.
  10. Join Tom’s monthly podcast series on One Month to a More Effective Compliance Program. In November, I consider how a 360-degree view of communications can enhance your compliance program. This month’s sponsor is the Dun & Bradstreet. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
Nov 1, 2017

In this episode, Matt Kelly and I take a deep dive into the scandal around Harvey Weinstein. We consider it from the compliance perspective, both programatic and for the CCO. We consider the different types of harassment which comes may face claims of from the fallout. We also consider the Board response by The Weinstein Company board and for the claims involving Bill O'Reilly. 

For additional reading see Matt Kelly's blog post Fighting Harassment Where it Lives

Oct 31, 2017

In this episode, I visit with Doreen Edelman, a partner at Baker Donelson. We discuss the current state of NAFTA negotiations and some of the key issues including:

  1. The demand for a US content requirement in the auto industry. Currently under NAFTA, vehicles require at least 62.5 percent North American content but the U.S. is proposing to increase the North American content requirement to 85 percent, along with a United States content requirement increase to 50 percent. The goal of such a requirement is the reduction of the current $64 billion U.S. trade deficit with Mexico.
  2. The US has proposed inserting a sunset clause that would formally end NAFTA after five years, unless all parties agreed to re-authorize and extend the agreement.
  3. The US has demanded to amend the dispute-resolution framework and wants to either eliminate the arbitration panels entirely, make them non-binding, or make them voluntary.
  4. There are requests from Mexico and Canada for more access to US government contracts.  NAFTA currently ensures that there is a roughly proportional amount of its parties’ government procurement budget available to other NAFTA member countries. The US position is the current process is inherently unfair, and now seek a system that limits US procurement from companies in Canada and Mexico while granting greater access to US companies seeking to sell goods and services to those governments.
  5. The US is seeking to end the current Canadian supply management system for dairy, chicken, eggs, and turkey. The current protections have been in place since the 1970’s and set prices that protect Canadian farmers from competition. The system’s detractors view it as government overreach that runs counter to free-market principles. 

For more information on Edelman’s thoughts on the current state of the NAFTA negotiations see her blog post “As “Significant Conceptual Gaps” Persist, NAFTA Talks Extended to 2018” on her blog site Export Compliance Matters.

Oct 30, 2017

In this episode, I visit with John Wood, who has served in numerous high-level executive branch positions, including U.S. Attorney for the Western District of Missouri, Chief of Staff for the U.S. Department of Homeland Security, Deputy Associate Attorney General, Counselor to the U.S. Attorney General, and Deputy General Counsel for the White House Office of Management and Budget. He was also a Supreme Court clerk.

We consider the recent speech by Deputy Attorney General Rod Rosenstein on the comprehensive review the Justice Department will go through looking at various and sometimes disparate Memos regarding corporate and individual prosecutions. 

Wood goes through some of the process the Justice Department will go through in this review. We discuss how it may impact the DOJ’s priorities regarding not only enforcement but also investigation. He notes the remarks by Rosenstein on corporate compliance programs and how the DOJ views their value in the overall fight against the global scourge of bribery and corruption. We also consider where the DOJ might go with an extension of the FCPA Pilot Program and what compliance practitioner might expect going forward.

For a copy of the text of DAG Rosenstein’s speech click here.

Oct 27, 2017

Jay and I return for a wide-ranging discussion on some of the top compliance and ethics related stories, including: 

  1. Hui Chen details the failings of ISO 37001 on her blog, Hui Chen Ethics. Kristy Grant-Hart responds in the FCPA Blog. Henry Cutter summarizes the two positions in WSJ Risk and Compliance Journal. For additional perspective, see Tom’s blog post from February in the FCPA Compliance Report.
  2. DOJ convenes working group to boost corporate cooperation. See text of speech here.
  3. What is compliance contagion? Ben DiPietro reports in the WSJ Risk and Compliance Report.
  4. How IBM is using Big Data in FCPA compliance. See article in Just Anti-Corruption (sub. req’d)
  5. Transparency International UK has a new online tool to provide businesses with practical and in depth guidance on tackling bribery and corruption. See article by Rory Donaldson in the FCPA Blog.
  6. Matt Kelly considers the intersection of compliance and harassment in Radical Compliance.
  7. Astros come home tied 1-1 with the Dodgers. Will they close things out in Houston?
  8. Join Tom’s monthly podcast series on One Month to a More Effective Compliance Program. In October, I consider compliance with business ventures such as in the M&A context, joint ventures, distributors, channel ops partners, teaming agreements and all other manner of business venture. The fourth week I take a deep dive into compliance for different types of business ventures. This month’s sponsor is the Volkov Law Group. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
  9. The Everything Compliance gang recorded a podcast at the 2017 Compliance and Ethics Institute, with special guest Roy Snell sitting in for Mike Volkov. The podcast went up Thursday October 26th and you can check it out here.
  10. AMI SVP Eric Feldman is speaking in Houston on November 2, at 1:30. If you are in Houston, please plan to join us. For more information see the GHBER website for details and registration.
  11. Jay previews his overdue Weekend Report.
Oct 26, 2017

In this episode, we report from the SCCE 2017 Compliance and Ethics Institute, which was recently concluded in Las Vegas. We are joined by Roy Snell, the President of SCCE. We all relate some of our highlights of this year's events and look at some of the most recent compliance and ethics stories which caught our collective eyes. Rants will return in our next episode. 

The members of the Everything Compliance panel include:

  • Jay Rosen (Mr. Monitors) – Jay is Vice President, Business Development and Monitoring Specialist. Rosen can be reached at rosen@affiliatedmonitors.com.
  • Mike Volkov – One of the top FCPA commentators and practitioners around and is the Chief Executive Officer (CEO) and owner of The Volkov Law Group, LLC. Volkov can be reached at mvolkov@volkovlawgroup.com.
  • Matt Kelly – Founder and CEO of Radical Compliance and can be reached at mkelly@radicalcompliance.com.
  • Jonathan Armstrong – Rounding out the distinguished panel is our UK colleague, who is an experienced lawyer with Cordery in London. Armstrong can be reached at armstrong@corderycompliance.com.
  • Special guest in from the bullpen on this episode was Roy Snell, President and CEO of the SCCE.

 

Oct 23, 2017

In this episode, I visit with Vin DiCianni, President and Founder of Affiliated Monitors, Inc. We discuss the recently announced strategic alliance between Affiliated Monitors, the US’s premier independent compliance monitoring/evaluation company and RS Legal Strategy Limited, a UK Q.C. led legal one stop shop white collar crime and fraud boutique.  We discuss the strengths that at party brings to this new business venture and what they hope to achieve. 

We use this new strategic alliance as a mechanism to discuss how companies can take a more pro-active approach to addressing their ethics and compliance deficiencies comprehensively, through the efforts of an independent advisor. When an independent monitor is utilized, there is a much greater likelihood that a successful outcome and improved practices will be achieved. 

Through the combination of RS Legal’s expertise in UK enforcement actions, taken with AMI’s pro-active global ethics and compliance approach, you begin to see how an independent review can facilitate the operationalization of compliance from the detect prong to the prevent prong into more of a prescriptive approach.  We explore how investigations and monitoring, when used pro-actively, can increase the likelihood of any of a corporate client securing a beneficial outcome resulting from ongoing investigations. 

This podcast continues the theme I have been following on the evolution of best practices compliance program, continually moving away from the simple paper program approach articulated by some. The Justice Department’s Evaluation of Corporate Compliance Programs is designed, in large part to get companies to think about and ask questions about their compliance program. The proactive use of a monitor is one of the key innovations in this path. 

For more information, Vin DiCianni can be reached at vdicianni@affiliatedmonitors.com.

Oct 20, 2017

In this episode, Jay and I return for a wide-ranging discussion on some of the top compliance and ethics related stories, including: 

  1. We discuss our highlights from the recently concluded SCCE 2017 Compliance and Ethics Institute. See Tom’s blogs, here, here, here and here. Click here for a report from Matt Kelly.
  2. Mike Volkov explores ISO 37001 in a week-long series. See the full week’s series on his site, Corruption Crime & Compliance. Henry Cutter reports on the standard’s slow acceptance in the WSJ Risk and Compliance Report.
  3. What is the status of your Board’s training for compliance? Ben DiPietro reports in the WSJ Risk and Compliance Report.
  4. Italian prosecutor charges Shell and former execs with overseas bribery. Dick Cassin reports in the FCPA Blog.
  5. Revenue recognition rules change in December. Auditors are under orders to ‘show no mercy’ to companies which have not prepared for the changeover. Tammy Whitehouse reports in Compliance Week.
  6. Continued chaos in the Trump Administration. Matt Kelly is back with addition ethical considerations from HHS Secretary Tom Price in Radical Compliance.
  7. Astros come home down 3-2 to the NY Yankees. Will they overcome?
  8. Join Tom’s monthly podcast series on One Month to a More Effective Compliance Program. In October, I consider compliance with business ventures such as in the M&A context, joint ventures, distributors, channel ops partners, teaming agreements and all other manner of business venture. The third week I continue to take a deep dive into JVs under the FCPA. This month’s sponsor is the Volkov Law Group. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
  9. The Everything Compliance gang recorded a podcast at the 2017 Compliance and Ethics Institute, with special guest Roy Snell sitting in for Mike Volkov. The podcast will go up Thursday October 26th.
  10. Tom premiers an exciting new service offering the Doing Compliance Master Class.
  11. AMI SVP Eric Feldman is speaking in Houston on November 2, at 1:30. If you are in Houston, please plan to join us. For more information see the GHBER website for details and registration.
  12. Jay previews the Rosen Weekend Report.
Oct 16, 2017

In this episode, Jay and I are joined by Louis Sapirman, CCO at Dun & Bradstreet for a look the the 2017 SCCE Compliance and Ethics Institute. We discuss the pro-conference events, what we hope to achieve at this year's event and why it is important to give back to the compliance community. We end with a discussion on why the Harvey Weinstein affair may well change the face of compliance going forward. 

Oct 16, 2017

In this episode, I visit with Doreen Edelman, a partner at Baker Donaldson on the top FCPA enforcement action of 2017, the Telia Company matter. We discuss the background facts of the case; we explore the amount of the fines and penalties, were they too high or were they too low; we consider the involvement of senior management right up to the CEO and the Board’s role; we explore the multiple lessons for the compliance professional, the CCO, senior management and the Board of Directors. We conclude with what the enforcement action means going forward and the increase in international enforcement, cooperation and investigation in anti-corruption. 

Doreen Edelman can be reached at dedelman@bakerdonelson.com.

 Doreen blogs at Export Control Matters.

Oct 11, 2017

In this episode Matt Kelly and I discuss the Treasury Department’s recently released A Financial System That Creates Economic Opportunities-Capital Markets report. The report has multiple proposals, including multiple ideas about rolling back Sarbanes-Oxley compliance, especially for smaller public companies. In this podcast, we discuss the three most significant ones for the compliance practitioner.

  1. Exempt more companies from audits of internal financial control. Companies with market cap below $75 million are currently exempt from the SOX 404(b) requirement that an annual outside audit of internal control over financial reporting. The Trump Administration proposes raising that exemption ceiling to $250 million in market cap.
  2. Doubling the lifespan of Emerging Growth Companies. Congress created a new class of public filers in 2012, “emerging growth companies,” that are exempt from numerous corporate governance and compliance rules for the first five years of their lives; to 10 years.
  3. Ending “social disclosure rules” required under the Dodd-Frank Act. The Dodd-Frank Act imposed several required disclosures such as the Conflict Minerals Rule, the CEO Pay Ratio Rule, and the Mine Safety Rule.

For more on this subject, see Matt’s blog post Treasury Report Eyes SOX Compliance

Oct 9, 2017

In this episode, I have back James Koukios, a partner in the law firm of Morrison and Foerster. We review some of the top FCPA and international anti-corruption cases and issues which have occurred over the summer of 2017. The topics are based on the firm’s most excellent monthly newsletter Top Ten International Developments for Anti-Corruption, which is available at no charge on the firm’s website. In this podcast, we discuss topics from the following newsletters: 

From the June newsletter 

  1. The Supreme Court decision in Kokesh-what does it mean for prosecutors, what does it mean for compliance practitioners and does it change the calculus around self-disclosure?
  2. DOJ Continues to Pursue “Declinations with Disgorgement.” What does this mean for companies going forward? Should it encourage or discourage self-disclosure?
  3. DOJ Files Forfeiture Complaint in connection with Alleged Malaysia Bribery Scheme. How does this tool relate to anti-corruption enforcement? Why is it such a powerful tool for prosecutors?

From the July newsletter

  1. The Halliburton FCPA enforcement action. What does it mean for the compliance practitioner?
  2. Three Long-Standing Corporate FCPA Investigations End without Charges. What can be learned from these cases about enforcement going forward?
  3. Dimitri Harder was sentenced to Five Years’ Imprisonment for FCPA Violations. What was the basis of the sentence? Do you see anything in this sentencing unusual?
  4. Was the Second Circuit decision in the FOREX trading case a setback for International Law Enforcement Cooperation? What is compelled testimony? What are the implications for international cooperation going forward? 

From the August newsletter

  1. Following Undercover Investigation, DOJ Charges Retired U.S. Army Colonel with Conspiring to Bribe Haitian Officials. How do undercover operations work in the FCPA and what they might mean going forward?
  2. UK Financial Reporting Council Announces Plans to Require Increased Anti-Corruption and Bribery Disclosures. What does this mean for US companies doing business in the UK?

Check out the firm’s newsletter or better yet subscribe to it.

Oct 6, 2017

Jay and I return for a wide-ranging discussion on some of the top compliance and ethics related stories, including: 

  1. Roy Shell considers whether compliance officers should be liked or respected. See his article on the SCCE Compliance and Ethics Blog.
  2. What is the intersection of sports, corruption and compliance? Jaclyn Jaeger explores in Compliance Week.
  3. The Alere FCPA enforcement action emphasized the convergence of rev rec and corruption. Richard Bistrong considers in the FCPA Blog.
  4. Bill Coffin asks who will be the next compliance hero, see his article in Compliance Week.
  5. Ireland requested a review by the European Court of Justice of the legality of contracts governing data transfers between Europe and the U.S. Ben DiPietro reports in the WSJ Risk and Compliance Report. Jonathan Armstrong reports from the UK perspective on the Cordery Compliance website.
  6. More chaos from the Trump Administration as Secretary of HHS Tom Price resigns. Matt Kelly reports on the ethical considerations in Radical Compliance.
  7. Proving once again that he is not a mere mortal, Jose Altuve hits 3 home runs in the first division playoff game, which the Astros win 8-2. He becomes only the 9th player in MLB history to do so. Stephanie Apstein reports in SI.com.
  8. Join Tom’s monthly podcast series on One Month to a More Effective Compliance Program. In October, I consider compliance with business ventures such as in the M&A context, joint ventures, distributors, channel ops partners, teaming agreements and all other manner of business venture. The second week I continue to take a deep dive in M&A and begin JVs under the FCPA. This month’s sponsor is the Volkov Law Group. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
  9. Jay and I will be podcasting a live episode of This Week in FCPA from the SCCE 2017 Compliance and Ethics Institute, stay tuned for details on time.
  10. The Everything Compliance gang is back with Episode 19. Check in with the top roundtable podcast in compliance by clicking on Everything Compliance.
  11. Tom premiers an exciting new services offering the Doing Compliance Master Class.
Oct 5, 2017

The top compliance roundtable podcast is back with a wealth of new topics.

  1. Matt Kelly opens with a discussion of the Equifax data breach and its implications for the compliance profession.

For Matt Kelly’s posts on the Equifax data breach and cybersecurity, see the following:

Vendor, Cybersecurity Risk, Ugh

Clayton, Congress Talk Cybersecurity

  1. Jonathan Armstrong considers the Uber situation in London where it recently lost it license to do business from the regulator Transportation for London (TfL). He discusses a prior case that he handled which had similar issues.
  2. Jay Rosen considers the massive FBI undercover operation resulting in 10 arrests in college basketball for corruption regarding high school recruits.
  3. Tom Fox sits in for Mike Volkov, who is on assignment this week. He discusses the top FCPA enforcement action of all-time, the recently announced Telia enforcement action.

For Tom Fox’s posts on the Telia enforcement action, see the following:

The Telia FCPA Resolution, Part I - Introduction

The Telia FCPA Enforcement Action: Part II - The Bribery Schemes

The Telia FCPA Enforcement Action: Part III - The Individuals

Telia FCPA Enforcement Action: Part IV - Getting Some Monies Back

Telia FCPA Enforcement Action: Part V-Lessons Learned 

The gang is back with rants which follow the discussions.

The members of the Everything Compliance panel include:

  • Jay Rosen– Jay is Vice President, Business Development Corporate Monitoring at Affiliated Monitors. Rosen can be reached at JRosen@affiliatedmonitors.com
  • Mike Volkov – One of the top FCPA commentators and practitioners around and the Chief Executive Officer of The Volkov Law Group, LLC. Volkov can be reached at mvolkov@volkovlawgroup.com.
  • Matt Kelly – Founder and CEO of Radical Compliance, is the former Editor of Compliance Week. Kelly can be reached at mkelly@radicalcompliance.com
  • Jonathan Armstrong – Rounding out the panel is our UK colleague, who is an experienced lawyer with Cordery in London. Armstrong can be reached at armstrong@corderycompliance.com
Sep 29, 2017

Jay and I return for a wide-ranging discussion on some of the top compliance and ethics related stories, including: 

  1. The DOJ announces a major criminal case which rocked the world of college athletics, involving pay for shoes scandal. See article by Michael McCann in Sports Illustrated. See article by Mark Schlabach on ESPN.com. Sam Rubenfeld looks at the corruption in college sports angle in the WSJ Risk and Compliance Journal.
  2. Consumer product sellers need to check the SDN list before a sale? Before shipping? If you are Cartier jewelers, yes, according to SEC enforcement action. See article by Dick Cassin in the FCPA Blog.
  3. Alere settles FCPA and accounting fraud SEC enforcement action. Dick Cassin reports in the FCPA Blog. See copy of SEC Cease and Desist Order.
  4. McKinsey reminds us that a promise to pay can be a FCPA violation as its imbroglio in South Africa continues. See article Tom’s article in Compliance Week.
  5. Todd Haugh, an assistant professor of business law and ethics at Indiana University, wrote in the most recent issue of the MIT Sloan Management Review that even best practices compliance program fail to take into account behavioral best practices and one important but too often overlooked key to strengthening both individual and overall corporate behavior is eliminating rationalizations. See Tom’s blog post in the FCPA Blog.
  6. Uber loses it license in London and for the first time an Uber CEO apologizes for the company’s unethical behavior. Prashant S. Rao and Amie Tsang reports in the New York Times.
  7. After the Equifax breach comes news the SEC was hacked. Joe Mont reports in Compliance Week. Matt Kelly reports on SEC Chairman Jay Clayton’s testimony before Congress on this and other subjects this week in Radical Compliance.
  8. Jose Altuve reaches 200 hits for fourth straight season, becoming on the 4th Second Baseman to do so. He has also clinched the AL top hitter for the 3rd time in four years. Is an MVP far behind. Cubs clinch and Red Sox magic number is 1, having been stomped by the Astros 12-2 last night.
  9. Join Tom’s monthly podcast series on One Month to a More Effective Compliance Program. In October, I will consider compliance with business ventures such as in the M&A context, joint ventures, distributors, channel ops partners, teaming agreements and all other manner of business venture. The first week I take a deep dive in M&A under the FCPA. This month’s sponsor is the Volkov Law Group. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
  10. The Jay Rosen weekend report preview.
Sep 27, 2017

In this Episode 2 of Compliance Man Goes Global podcast of FCPA Compliance Report International Edition, we focus on real priorities of the corporate compliance programming at high-risk markets.  In each podcast, we take two typical concepts or probably misconceptions from in-house compliance reality. We check out if these concepts work at emerging jurisdictions. For each podcast, we divide roles with Tim Khasanov-Batirov, a compliance practitioner who focuses on high risk markets for 17 years and myself.

Corporate Concept #1. We have officially deployed compliance program at a high-risk market. All hallmarks are duly identified in it. I do not understand what kind of priorities I have to consider in addition to regulatory hallmarks. When enough is enough?     

Tim Khasanov-Batirov: Here are my pros:

Argument #1.

To address regulatory expectations you should have a program that is comprised of 10 Hallmarks. Here are your priorities. This is a very straightforward and in my view a very clear philosophy.

Argument #2.

10 Hallmarks cover both legal aspects along with implementation side. If we want to find priorities for particular organization among already identified regulatory priorities we can simply choose them from 10 Hallmarks.

Argument #3.

Attempt to perplex the framework could harm the execution of the program. I do not see any merits from practical side to distract attention of the team and to spare resources on reinventing the wheel.

Tom:  OK, let me give you some examples, which probably allow you to re-think about priorities. Here are cons:

Argument #1.

You definitely want to avoid paper compliance program. Therefore, you probably need to distinguish 10 Hallmarks from practical methods on implementing them. We can call these practical methods priorities.    

Argument #2.

The following priorities come to my mind when I think about practical side on implementation of the corporate compliance program in emerging markets. First, clear understanding by compliance personnel of how they could achieve goals prescribed by the hallmarks. Second, obtaining trust from the management by compliance team. It is vital. Third, constant engagement and cooperation with key stakeholders aimed on keeping compliance team’s eye on the ball.    

Tim: I believe Compliance man referred to this topic in the first episode of the illustrated series entitled: First Things First.  

 Corporate Concept #2 “In real world compliance goals and priorities mismatch business needs or even prevent business from growing”. Tim, will you support this philosophy if you look at high-risk markets?  

Tim: It is common place to oppose corporate compliance efforts to business growth. Moreover, this statement is a kind of vague. I strongly disagree with it. I believe compliance priorities exist on the radar of business leaders at least due to very pragmatic and even cynical reasons. 

 Argument #1.

Threat of personal liability and possible negative impact on the company in case of enforcement actions.

Argument #2.

Wish to comply with corporate rules and maintain status of a “good corporate citizen” in the company.

Argument #3.

I also believe in scenario when compliance philosophy gets a high priority status in the in-house reality due to Compliance team’s efforts.

Tom: My concerns are the following:

Argument #1.

As we know the main business goal is earning money. What we call compliance in certain cases is viewed by business leaders as obstacle in money making.

Argument #2.

Sometimes top managers unfortunately are not aware about compliance risks and consequently their own duties to mitigate them. Thus, unintentionally management might ignore even basic compliance rules.

Argument #3.

The worst-case scenario when compliance team was not able to demonstrate the ability to work in the team rather than being just bureaucratic “Dr. No” department.

Tim: As key takeaways from today discussion, I think we can mention the following ones: a compliance practitioner should implement the program based on regulatory requirements in cooperation with business leaders. To achieve this goal he or she should obtain trust from top management and get awareness (and even appreciation) of compliance activity by key stakeholders.  

Join Tom Fox and Tim Khasanov-Batirov for the next episode of Compliance Man Go Global episode of FCPA Compliance Report International Edition.  Join us again as we bust more corporate compliance myths.

Sep 26, 2017

In this episode, Matt Kelly and I take a deep dive into the Telia FCPA enforcement action. It is the largest FCPA fine ever, coming in at $965MM. The breadth and scope of Telia’s illegal conduct was about as far-ranging as one could imagine. The fines and penalties certain bore this out. The bribes were specifically approved by the highest level of Telia, including senior executives and the Board of Directors. There was an explicit awareness that the bribery scheme would violate the FCPA, so the company tried to navigate its way out of potential FCPA liability. Clearly those efforts were lacking.

We discuss the blatant nature of the bribery scheme, the international investigation and enforcement effort involved, how this enforcement actions differs from other types of enforcement actions and lessons to be learned from the matter. We also consider that the company did not self-disclose but did cooperate in the investigation and provided extensive remediation. This netted the company a 25% discount off the minimum penalty as calculated under the US Sentencing Guidelines. 

The resolution documents include the SEC Cease and Desist Order, the DOJ issued an Information and a Deferred Prosecution Agreement, Telia. The DOJ also issued an Information and DPA for Coscom LLC, the Telia subsidiary through which the bribery occurred and a Plea Agreement

In a separate Press Release, Telia said in part, “The information being reported by media about the terms of the resolution is not complete. Telia Company has already announced that it has taken a provision with respect to the expected financial sanctions. It is correct that we are very close to a final resolution with all authorities (SEC, DOJ and the Dutch prosecutor), but cannot comment further at this time.” Cassin reported, “The company said in April it had adjusted its “estimate of the most likely outcome of the ongoing investigations into the company’s market entry and operations in Uzbekistan to $1 billion from $1.45 billion.”” 

The bribery scheme involved the company illegally buying its way into the Uzbekistan telecom market through its bribery of Gulnara Karimova, the eldest daughter of the late Uzbek President Islam Karimov. Karimova was also the bribery conduit in the VimpleCom matter, resolved in February 2016. In the Telia case Karimova parlayed her providing telecom licenses and upgrades into bribe payments of over $330MM to shell companies which she controlled. 

In the DOJ Press Release, Acting US Attorney Joon H. Kim stated “Telia, whose securities traded publicly in New York, corruptly built a lucrative telecommunications business in Uzbekistan, using bribe payments wired around the world through accounts here in New York City. If your securities trade on our exchanges and you use our banks to move ill-gotten money, then you have to abide by our country’s laws. Telia and Coscom refused to do so, and they have been held accountable in Manhattan federal court today.” 

The SEC Press Release stated, “Telia entered the Uzbek telecommunications market by offering and paying at least $330 million in bribes to a shell company under the guise of payments for lobbying and consulting services that never actually occurred. The shell company was controlled by an Uzbek government official who was a family member of the President of Uzbekistan and able to exert significant influence over other Uzbek officials, causing them to take official actions to benefit Telia’s business in Uzbekistan.” 

For more on the Telia enforcement action, see Tom’s blog posts:

Part I-Background;

Part II-the Bribery Schemes; and

Part III-the Individuals involved

Compliance into the Weeds is a part of the Compliance Podcast Network

Sep 25, 2017

Linda Justice bring Nancy Drew to your side to fill all those knowledge gaps in your pursuit of clients. Using her technical background in corporate investigations, brings experience to business development, strategic management of risk and compliance. In this episode, she discusses her new consulting venture and how using a range of tactics, from strategizing with a CEO of a small company on the best go-to-market strategy, to helping a solo practitioner target and triangulate a very specific company, to working with a larger group of Partners within an organization create an underlying process and nurture multiple opportunities simultaneously. It is fascinating interview with a learn know compliance practitioner from the Bay Area. 

Linda Justice can be reached at linda.justice@justiceconsultingllc.com. 

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