In this episode Mike Volkov and myself take a deep dive into the Odebrecht/Braskem and Teva FCPA enforcement actions. We review the underlying facts, the conduct of the parties, the results obtained and what it all means for the compliance practitioner going forward.
Show Notes for Episode 33, week ending December 23, 2016-Holiday edition
In this episode SCCE CEO Roy Snell and I continue are exploration of issues of import to the compliance profession. We consider the penalty assessed by the NCAA on Notre Dame for it use of two ineligible football players and whether the punishment fit the crime; the forced transparency leading to hyper transparency for today's corporate scandals and the sanctions assessed against former Wells Fargo CEO John Stumpf; advise not send out stupid emails and consider how the safety industry evolved 20 years ago and what implications it might have for the compliance profession going forward.
In this episode I visit with Juliet Lui as we discuss how to best handle small and medium investigations in an efficient and cost effective manner. We discuss how such matters often slip through the cracks as they are not perceived as high profile yet can cause significant problems if allowed to fester. We discuss methodology, costs and deliverables. Lui details two case studies to emphasize how important small and medium investigations can be as they often uncover larger and more critical problems and issues.
In this episode SCCE CEO Roy Snell and I take a deep dive into corporate governance and compliance, the public skewering of former Wells Fargo CEO John Stumpf and ask if a CEO should be involved in the hiring of a CCO.
In this episode Matt Kelly and I take deep dive into the United Airlines SEC enforcement action for violation of internal controls around its reinstitution of a route from Newark to South Carolina at the insistence of the then Chairman of the New York and New Jersey Port Authority David Sampson in exchange for a concession to expand its physical facilities at the Newark airport. We review the background facts, as set out in the SEC Cease and Desist Order and the Justice Department Non-prosecution. We take a look at the internal controls violation of the former UA CEO for violating the company's Code of Conduct, the finding of a lack of internal controls around its route reinstitution protocol and finally discuss the problem of senior management override of internal controls.
For more information on this enforcement action, check out Matt's blog post on this matter, entitled, "This Weird United Airlines Case Just Happened" and my blog post entitled, "The Chairman's Flight and the US Corrupt Practices Act".
In this episode, I visit with Houston Chronicle business columnist Chris Tomlinson about his time working internationally for the Associated Press. He relates his first hand view of the invidiousness of corruption in African countries. He also talks about how a major FCPA corruption trial would be covered. He concludes with thoughts about the role of the Fourth Estate in the international fight against corruption.
Show Notes for Episode 32, week ending December 9, 2016-the Fly the Not So Friendly Skies edition:
We are back to our more rounded format for this episode on a variety of topics including anti-corruption enforcement across the globe, the new French anti-corruption law, Sapin II, the Agricultural Bank of China compliance enforcement action by the state of New York Department of Financial Services; how corruption influences as much as it pays money and individual accountability for corporate malfeasance is not a Democratic or GOP issue but a law enforcement issue. We end with a well-deserved one minute rant from the panel about what is in the front of their mind.
Mike Volkov discusses the internationalization of anti-corruption enforcement. He refers to the comments from the ACI FCPA conference, by Kara Brockmeyer and Dan Kahn about the increasing international enforcement efforts against corruption. This extends far beyond cooperation but also to enforcement. Recent examples are VimpelCom and Embraer where other countries received proceeds from fines and penalties. How does a company begin to deal with this type of complexity? Who does it disclose to? Who does it pay? When will the US give credit for payments made to other countries and when does it not? Finally this year saw of the third joint DOJ/SEC week long training for foreign prosecutors put on in DC. How do such events assist enforcement efforts, particularly around cooperation and mutual assistance?
For Tom Fox’s blog post, “Anti-Corruption Enforcement Has Gone International?” click here.
For Kelly’s posts, see post on the enforcement action involving the Agriculture Bank of China, click here.
For Cordery’s piece on the new law click here.
Jay Rosen takes us through a Paul Krugman NYT post on some of the invidiousness of corruption, focusing on the corrupting nature of compliance around undue influence. Rosen explains incentives more than anything else and how such incentives skew the marketplace. We consider whether Trump’s discussions with the Carrier Corp over jobs was unduly influenced recalling President Kennedy’s ‘jawboning’ of the US steel industry in the 1960s. He also discusses the remarks of Sally Yates at ACI national FCPA conference about individual accountability and how this is not a GOP or Democratic issue but a criminal enforcement issue. For a link Krugman post, click here. For a copy of the text of Yates remarks, click here.
For a copy of Jay blog post entitled, “The DOJ and SEC Share Patriots Mantra—Next Prosecutor Up” click here.
Rants this week include the new UK surveillance law, the SEC domestic corruption enforcement action involving United Airlines for the Chairman’s Flight and the Chicken Littles of the compliance world claiming the sky is falling.
In this episode, Matt Kelly and I take a deep dive into two areas which will impact compliance practitioners going forward. They are the Justice Department under the Trump Administration and the legislative process going forward. At the DOJ, there will probably not be too much change from the priorities of terrorism and cyber security. We discuss the legislative process in the context of the main street based campaign of candidate Trump and the Wall Street focus of his cabinet and the GOP dominated Congress. We also wonder how much the GOP congressional losses will require some cross-over from Democrats will impact the legislative agenda of Paul Ryan and Mitch McConnell.
For additional reading, see Matt's blog posts:
In this episode, I visit with Miller & Chevalier Counsel, Saskia Zandieh on the new French anti-corruption law, Sapin II. She discussion how it may improve the nation's current anti-corruption framework, and review the practical implications gleaned from lessons learned from the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. Zandieh addresses key changes made by Sapin II, including: (i) expanded jurisdictional reach of French prosecutors in bribery cases; (ii) creation of the "Agence française anti-corruption" (AFA), a new anti-corruption agency; (iii) a new compliance program requirement; (iv) whistleblower protection provisions; (v) the introduction of U.S.-style deferred prosecution agreements to the French legal landscape; (iv) and international double jeopardy considerations.
She notes that with Sapin II, France has the potential to become a major player in anti-corruption enforcement. For more information on the new law see the Newsletter co-authored by Zandieh entitled, "France's New Anti-Corruption Law: A Game Changer or More of the Same?" by clicking here.
Show Notes for Episode 31, week ending December 2, 2016-the Government Speaks edition
What is risk and how should it be evaluated? What is the data that should be reviewed to determine if an increase in sales is based on unethical or even illegal behavior? Finally, what happens when you migrate company personnel who have been involved in such illegal or unethical behavior to other locations, does their nefarious conduct spread throughout the organization or is it curtailed? In this episode Matt Kelly and I explore some of these questions and others.
Every Chief Compliance Officer (CCO) and compliance practitioner understands that the sales side of a business is where the highest risk is located because that is most generally the side of the business which generates the most money and potential profit. Yet looking at sales numbers are not something which compliance professionals will generally have access to as a part of a compliance program.
Sales spikes in low performing regions can and should be reviewed by a wide variety of disciplines within an organization, including compliance. One would think that companies would want to know and understand the reasons for any sales increase so that it could be determined if such strategies might work in other areas of a company’s operations. This is true for the compliance function as well. As far back as the December 2012, in the Eli Lilly Foreign Corrupt Practices Act (FCPA) enforcement action brought by the Securities and Exchange Commission (SEC), I raised the issue that a dramatic sales increase should be reviewed by compliance to determine if there were any corruption issues involved. This same logic works for sales in the US over products as benign as debit cards. Moreover, if you consider whether the issue should be reviewed by a Board of Directors, it certainly would be material for one state region going from worst to first in sales.
One CCO told me that every time he hears an employee who wins a sales award for making numbers wildly far above plan, he wonders what might have led to such remarkable attainment. Sales spikes is data that increasingly becomes more important for compliance to consider. Just as the Key Energy FCPA enforcement specifically mentioned transaction monitoring around massive increases in gift giving in a geographic region where sales had spiked.
What is the Federal Acquisition Regulation (FAR)
What’s the differences with DFARs?
What types of companies should be concerned?
Why should they be concerned?
This episode is dedicated exclusively to where FCPA enforcement, SEC enforcement, the compliance profession and compliance programs may be headed under the Trump administration, with a dash of anti-trust enforcement and EU Privacy Shield.
For Volkov’s post, “A New Administration: A New FCPA Enforcement Regime?” click here.
For Kelly’s posts, see the following:
For Armstrong’s blog post, “What does the election of President Trump mean for compliance?” click here.
For Rosen’s blog post (and great riff off of The Clash) “Should I Stay or Should I Go?”, click here.
The members of the Everything Compliance panel include:
For additional reading check out some of the following posts:
Show Notes for Episode 30, week ending November 18, 2016-the Thanksgiving edition:
In this episode, Matt Kelly and I take a deep dive into a couple of issues surrounding the new Trump administration. The first is the 'Trump Risk' disclosure that several companies have made since the election. The second is around Dodd-Frank and the SEC going forward. When Trump speaks about repealing Dodd-Frank, it means easing rules for capital formation, not the whistleblower program or other more traditional compliance related roles and issues. We discuss Paul Adkins, who is heading up the Trump transition at the SEC and what his prior tenure at the SEC may portend. Finally we discuss why the SEC whistleblower program is not going away but there may be a change in focus from the current aggressive approach under Chairman Mary Jo White. We wave good-bye to Kevin O'Connor who was in then out on the Trump DOJ transition team. For more reading see Matt's blog posts:
In this episode, I visit with white collar defense specialist Sara Kropf, founder of the Kropf Law Firm. She discusses defending corporate executives and employees who are caught up in corporate internal investigations which may be turned over to the government. She discusses how the Yates Memo has changed the relationship between such employees, their counsel and the company. She blogs at Grand Jury Target blog.
Some of the issues we explore include the following.
Show Notes for Episode 29, week ending November 11, 2016-the Brave New World edition:
In this episode, Matt Kelly and I take a deep dive into how the SEC may look under the Trump administration and what it may portend for FCPA enforcement. We consider how companies currently under investigation or engaged in negotiations for a resolution may position themselves during the final months of the Obama administration. For additional information check out Matt Kelly's blog post on the subject, click here- Five Post-Election Points for CCOs to Ponder.
Show Notes for Episode 1
At the SCCE 2016 Compliance and Ethics Institute, I sat down with four of the top compliance commentators in the field for my first roundtable-style podcast. It was so successful that I persuaded the gang to come back together every couple of weeks for a formal podcast, which is entitled Everything Compliance. The premier episode is available for your listening pleasure today. I will post a new episode every two weeks.
I host these four well-known compliance practitioners and commentators:
The format is a roundtable discussion where I throw out a question to one commentator to lead the discussion. From that starting point we will all join in. I also include an “On My Mind” segment where each participant discusses what is on the forefront of their mind. This podcast is longer than my others, coming in at around 60 minutes, which allows us to explore the week’s issues in depth.
In the inaugural episode we discuss the following subjects:
For Volkov’s post on conflicts of interest (COI) in internal investigations after the Yates Memo, click here.
For Kelly’s blog post on the intersection of CEO pay and Chief Compliance Officers (CCOs), click here.
For Rosen’s blog post Designing Your 2017 Ethics, Compliance & FCPA Conference Schedule, click here.
This new podcast Everything Compliance joins the four other podcasts I have on different aspects of compliance. The original FCPA Compliance and Ethics Report focuses on the nuts and bolts of compliance. Unfair and Unbalanced - is a podcast I do with SCCE CEO Roy Snell. In it we focus on wide ranging issues for the compliance profession. Compliance into the Weeds - is a podcast I do with Matt Kelly where we take a deep dive into the weeds of a compliance issue, typically technology, internal controls or GRC. We both indulge our inner geekiness in this podcast. Jay Rosen and I wrap up each week in FCPA, compliance and ethics with This Week in FCPA. All of these podcasts are available to you on my site, FCPAcompliancereport.com, and are available on iTunes under the same name.
In this second part of a two-podcast series, taped live at SCCE’s 15th Annual Compliance & Ethics Institute, Roy and myself get a chance to interact with a live audience and bounce from topic to topic, discussing:
In this podcast Matt Kelly and I take a deep dive into an area rarely discussed in the compliance space, namely budgeting. How should you think through the budgeting process; how does your company benchmark against its peer; how can you determine the proper amount of budget for your company's compliance department. We explore these and other questions on this podcast. For additional resources see Matt Kelly's blog post "Finding the Right Compliance Budget for You" on his site, radical compliance.com.
Show Notes for Episode 28, week ending November 4, 2016-the High Anxiety edition
In this episode, I visit with Duke Law School Professor Samuel Buell about his book Capital Offenses-Business Crime and Punishment in America's Corporate Age. We explore some of his theories on why corporations are so difficult to prosecute, what corruptly means under the FCPA and his ideas on potential reforms.