In this episode, we consider Opinion Release 14-01, where the Department of Justice opined that paying a foreign government official for monies he was owed in the sale of a business interest that he owned prior to becoming a foreign government official would not be prosecuted as a Foreign Corrupt Practices Act violation. As intuitive as this decision might sound, there is, nevertheless, significant information for the compliance practitioner to take away from 14-01.
“Each case turns on its own facts.” How many times have you heard a representative of the Department of Justice (DOJ) or Securities and Exchange Commission (SEC) make that statement at a conference or other public event? The reality is that this is true and, in the context of Foreign Corrupt Practices Act (FCPA), both regulators look at the facts and circumstances around each case in making a wide range of assessments. While this is frustrating to business types, as a lawyer I find it to be not only an appropriate analysis but also an accurate way in which to look at things.
Late in 2013 the DOJ issued its only Opinion Release, that being Opinion Release 13-01. One of the things that this Opinion Release stands for is that each fact scenario presented under the FCPA must be evaluated on its own facts. While this maxim is certainly true, I believe that the Opinion Release goes further and provides significant information to the compliance practitioner for charitable donations going forward.
In Opinion Release 12-02, certain Requestors, which were 19 non-profit adoption agencies located in the US, asked the DOJ about bringing certain foreign governmental officials involved in the foreign country’s adoption process to the US. All the foreign governmental officials are involved in the process of allowing children from their country go through the adoption process with the US non-profits involved. The trips to the US were for two days of meetings. Can the Requestors do so, without running afoul of the FCPA?
In the Episode, I visit with one of the top outside counsel in field of FCPA and compliance. It is Stephen Martin, a partner at Arnold & Porter. In this episode we deconstruct the Petrobras FCPA enforcement action. Some of the highlights include:
The Petrobras FCPA enforcement action came in the form of a Non-Prosecution Agreement (NPA) with the Department of Justice (DOJ) and Cease and Desist Order (Order) with the Securities and Exchange Commission (SEC).
The baseball playoffs are here. For the Sox, the hated Yankees. For the Astros, they begin their World Series defense against the Cleveland Indians. Tom and Jay discuss and take a look at some of the week’s top compliance and ethics stories.
For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.
Welcome to the only roundtable podcast in compliance. This week’s episode is entirely dedicated to the spectacle of the Ford-Kavanaugh hearings from the past week. Jonathan Armstrong is on assignment so Tom Fox sits in for Armstrong. After the commentary we follow with rants.
The members of the Everything Compliance panelist are:
The host and producer (and sometime panelist) of Everything Compliance is Tom Fox the Compliance Evangelist.
Compliance into the Weeds is the only weekly podcast which takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. In this episode, Matt Kelly and I take a very deep dive into the increased prevalence of non-GAAP financial reporting.
Some of the highlights from this podcast are:
We unpack of all these points and consider strategies going forward.
For more reading: see Matt’s piece Non-GAAP Reporting, Popular as Ever
In this special five-part podcast series, I have visited with Thomas Sehested, founder and CEO of, Valerie Charles, Chief Strategy Officer and Peter Chang, Head of Customer Success of GAN Integrity. In this series, we will consider how the effective use of technology can drive not only a more effective, operationalized compliance program but make your business run more efficiently. In this Part V, I visit with Charles some of her birdseye view of compliance.
Charles has worked in private practice as a white-collar defense lawyer and as a Chief Compliance Officer (CCO). While in-house, Charles tended to view technology as a tactical solution to an issue. She did not see it as a strategic solution and frankly did not understand the power of tech in compliance. However, after her move to GAN she began to see how technology could bring a much larger strategic focus to compliance, for example in such areas a tech solution for compliance integrated into the company’s overall risk management strategy, leading to integrated reporting and an entire infrastructure of the tech solutions tied to the corporate structures.
We explored how Charles perceives that technology has changed the way(s) she considers compliance. She began by noting how much more advanced and mature the financial sector has been in developing and embracing tech than compliance. This extended to corporate financial disciplines so that now there are integrated standard-bearer platforms. Good technology can import and export data easily that allows greater movement of information with more transparency between business units. She noted that Human Resources (HR) has also benefited greatly from tech solutions.
She contrasted those examples with the corporate compliance function, which she believes has been hamstrung by the lack of an integrated tech solution in compliance. Tech for compliance has been fragmented. Typically, it has been the norm for a compliance professional to go one vendor to purchase technology to roll out policies & procedures, another vendor for e-learning and surveys and still another to register conflicts of interest, gift giving and receiving. Of course vetting your third parties is another set of vendors as is hotline and case management software.
She stated, “if you can't tie together the critical components of the program into one integrated system that talks to each other and can easily be checked out or have data flowing to and from the other business units, you're kind of still an odd guy out.” If there was such a tech solution, it would elevate the compliance profession.
Charles believes the most effective and forward thinking compliance professionals are those who consider how not only will compliance impact an organization but also how a compliance program should integrate into the company’s overall business strategy. She explained that this means considering “everybody from, you know, ops people to sales folks to the marketing team.” You should really try to understand how the business flows and sort of how do you put these gates, how do you put these processes, procedures, and controls in places that will meet your goal of keeping everybody safe and the company, but doing it in a way that will slow down the company as little as possible.”
A CCO can begin to accomplish this by having conversations with the corporate functions and business operations to understand how any changes from the compliance function will impact the day-to-day processes of the organization. If you do this spadework and take the concerns of those you talk to into account, Charles believes it will be much easier for you, as CCO, to get senior management buy-in for changes, upgrades and/or enhancements of your compliance program.
This research is effective is for a couple of reasons. First by garnering buy-in from other corporate disciplines, it makes those disciplines feel like they were a part of a team effort or at the very minimum their concerns were listened to. Which leads directly into a key (if not thekey) skill of any senior business leader, including a CCO, which is listening. Yet listening is even more important for a CCO or compliance practitioner because of the collaborative nature of the compliance function. But information is a two-way street so you must not only listen but also educate your corporate partners in finance, internal audit, HR and internal controls.
From such discussions, Charles believes you can determine the types of controls that would be effective for compliance. Such controls could be incorporated into policies and procedures or internal controls. She noted, “there’s an art to looking at the flow of a business and placing controls in those specific spots. If you are able to listen and process other people’s goals alongside your own and then marry those concepts together, it creates something that works for everybody and everybody can push for it. You listen to a bunch of ideas and then crunch them out in a way that people can understand and see the results.”
Another interesting observation by Charles was that she views the compliance profession as the “true partners of the business.” She contrasted this with a corporate legal department, which exists to protect the company. Compliance is there to prevent, detect and remediate, which means to enhance a business process through the lens of compliance. Charles stated, “compliance has the creativity and flexibility that the legal team doesn’t always have. We can utilize that to align ourselves with business goals in a way that the business team can understand.” This means that if a CCO or compliance function sees something that is not working, it can make a change. The more a compliance team focuses on dynamic and changing risks, the more it will appear as a way to respond to business needs. Equally important, such an approach not only anticipates but also supports the continuous improvement model of compliance. As you garner feedback and data from your compliance program you can use that information to improve your overall compliance process.
Charles concluded by noting that execution is a key element and this is where the rubber meets the road. After you have listened, designed or enhanced and received senior management buy-in, did you, as the CCO or compliance function, execute on your long-term strategy? At the end of the day, you will be judged on how you executed your strategy.
For more information on GAN Integrity, visit our sponsor’s website, www.ganintegrity.com.
Over this five-part podcast series, I have visited with Thomas Sehested, founder and Chief Executive Officer (CEO), Valerie Charles, Chief Strategy Officer, and Peter Chang, Head of Customer Success, from GAN Integrity, Inc. (GAN). In this series we consider how the effective use of technology can drive not only a more effective, operationalized compliance program but make your business run more efficiently. In Part IV, I visit with Chang on the GAN approach to client success and how it acts towards continuous improvement of a compliance program.
Execution is where the rubber meets the road in compliance. For any Chief Compliance Officer (CCO) or compliance practitioner, having not only an effective tech strategy for compliance but one that is executed is critical. This is where Chang and his team at GAN can step to make a very big difference. He began by emphasizing that typically a CCO has come from the General Counsel’s (GCs) office or has some type of legal or other non-tech professional. While resources and head count are always an issue for a CCO, work on administrative matters can also put a strain on the compliance program. Chang said that one of the first conversations he has with a CCO is do they have an automated program to handle the administrative tasks and then couples it with measurable data which allows a CCO to move from a detect mode to preventative and even prescriptive. With this consistency, you can deliver a more robust risk management strategy to senior management and the Board of Directors.
Another challenge for many CCOs is how to interpret the data they receive from a tech solution. In short, what does it all mean? Chang said that when his team begins a project, they actually work backwards to figure out not only what type of metrics will be generated but what a CCO might need going forward. You want to be “very clear on what you are capturing in terms of reporting and what is needed to execute the compliance program.” Chang advocates starting your analytics at the transaction level and “rolling them up in to a state where you can see the big picture”. While it is obviously important for a tech solution implementation to be successful, if you work towards it from the beginning it can help to make things “clear and concise” at the end.
Next, we considered system deployment. This means both adoption of a tech solution and its continued and even expanding use. Chang and his team begin by putting the compliance program into the tech solution and then moves to train on the solution going forward. This training works not only for the compliance professionals present at deployment but those who might come into the corporate compliance function after deployment. Chang called this continuous adoption, which is working with each customer so they can grow and expand the use of the tech solution to not only cover the original issue(s) but expand the tech solution to meet new challenges.
This approach has some very significant and positive implication for the compliance professional. This is another way to talk about continuous improvement in a compliance program. Chang noted that is to make sure there is a 100% attention rate in order to stay relevant within the organization. Ensuring there is continued coverage to support not only from the home office level but also the county level, essentially partnering with corporate compliance to ensure that as it grows the tech solution is right sized for them. Chang said there are cases where GAN has started with “medium sized companies who later want to grow into bigger due diligence solutions for their compliance program. In those cases, we may help them right size the program and make sure that if there’s high risk vendors who they may need, there are additional reports and the tech solution is configured properly so that they can get additional reports that they need. And this is all part of continuously working with the customers and with them to ensure that their programs are right sized.”
Think about that for a moment as this is taking the concept of continuous improvement and adding an ongoing tech solution. This is one of the areas both the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) discussed in their jointly issued 2012 FCPA Guidance, as Hallmark 9 in the Ten Hallmarks of an Effective Compliance Program. This is not simply taking data from your compliance program and feeding it back in to create continuous improvement, but it is using a tech solution to not only make your compliance program run more efficiently but using that same tech solution to help continuously improve your compliance program.
Such an approach uses the subject matter expertise (SME) of the tech solution provider to help the compliance professional come up with a more effective compliance program. For the compliance professional it is expanding out their reach and scope through the use of not only this tech SME but with the information from their own compliance program to create greater efficiencies and effectiveness.
Check out our sponsor, GAN Integrity by clicking here.
During this five-part podcast series, I have visited with Thomas Sehested, founder and Chief Executive Officer (CEO), Valerie Charles, Chief Strategy Officer, and Peter Chang, Head of Customer Success, of GAN Integrity, Inc. (GAN). Over this series, we consider how the effective use of technology can drive not only a more effective, operationalized compliance program but make your business run more efficiently. In Part III, I visit with Sehested on how tech solutions can make not only compliance more efficient, but companies run more efficiently and at the end of the day more profitably.
One of the things I evangelize the longest and loudest about is that properly practiced, an effective, fully operationalized best practices compliance program makes a company operate more efficiently and, therefore, more profitably. Organizations such as Ethisphere have consistently demonstrated, with nearly 15 years of data from its World’s Most Ethical awards, that companies who win the award outperform the Standard & Poor’s average. I was therefore very interested to visit with Sehested on this topic.
In a prior episode we discussed the tactical approach for tech in compliance; where a compliance professional can bring a tech solution to the plethora of administrative tasks which inundate every corporate compliance department. However, Sehested said that even this approach could well have immediate benefits beyond the compliance function’s greater efficiency as it begins the journey to use data. Here you might even consider Edward Deming’s well-known adage, “In God We Trust, all others bring data.” By using a tech solution to move a compliance function away from mundane administrative tasks, you begin to create a culture around data. This weans a corporate compliance function from the legalistic approach, which is primarily taught in law schools, to an evolving business process approach.
From this perch it is easy to see that all the data flowing through (or at least should flow through) a compliance function. It can range from employee gift, travel and entertainment (GTE) spend, charitable donations, commissions paid to third-party sales agents, corporate social responsibility (CSR) information, marketing spend and overall sales figures. If this amount of data can be accessed and then analyzed, you would have a well-spring of information to make your company run more efficiently.
It all begins with multiple sources of data which flow through the compliance function but moves on from there. If someone actually looked at the data, you could see where the inefficiencies in your own sales process were and actually increase efficiencies in your sales process. With such data, the compliance function could partner with other corporate functions to help determine greater business efficiencies, all while maintaining and even enhancing a corporate culture around doing business ethically and in compliance. A corporate compliance function should be closely aligning with multiple other departments, sales, procurement, finance and internal audit to name a few. Yet even the work with outside stakeholders, such as third-part sales agents or distributors, can be a part of this regime by sending out questionnaires and communications around compliance. Sehested sees this as “deploying different strategies of nudging to make sure that they influence their vendors to think the same way as their employees, when it comes to being ethical.”
How does a Chief Compliance Officer (CCO) make this pitch to a CEO or senior management? This is where Deming and Sehested come in as it is all about the data, not just the raw data but how it is presented. As a CCO, you need to come up with reports, backed up by the data to support these assertions. Sehested can attest that CEO’s have a wide variety of demands on their time so the more concise and direct you can be, the better it will be for your case. Use data, case studies and graphics to demonstrate not only the cost savings but the increase in efficiencies.
The opportunities for the compliance function to improve overall business efficiencies are only beginning to be appreciated. Moving from the legalistic approach to a more data driven business process is what the Department of Justice (DOJ) intoned in its 2017 Evaluation of Corporate Compliance Programs (Evaluation). As compliance programs and the compliance function continue to evolve into the 2020’s; those who are truly innovative will use the data to help drive business ethics. Having insights from someone outside the compliance space, such as Sehested, can help drive that innovation.
Check out GAN Integrity by clicking here.
In this special five-part podcast series, I visit with Thomas Sehested, founder and Chief Executive Officer (CEO), Valerie Charles, Chief Strategy Officer, and Peter Chang, Head of Customer Success, from GAN Integrity, Inc. (GAN). Throughout this series, we consider how the effective use of technology can drive not only a more effective, operationalized compliance program but make your business run more efficiently. In Part II, I visit with Charles on her journey from legal to compliance to tech.
Charles practiced law as a white-collar defense lawyer before moving in-house as a global compliance lead. Now she is the Chief Strategy Officer at GAN. It is somewhat unusual for a lawyer/compliance professional to move into a tech company which specializes in the compliance space. I was interested in what caused her to make this move. She related that she has always been curious about the use of technology in the practice of law and in the compliance profession. She said that her in-house compliance role demonstrated the inefficient use of her time. She was performing many administrative tasks which she felt could be handled more quickly with a tech solution. Charles stated, “for that reason when I bumped into the GAN folks and realized what they were doing a, it made a lot of sort of natural sense to me.” She then had a “now or never” moment and decided to jump into the tech side of compliance with both feet.
She related that many in-house compliance professionals are spending time chasing people to do things that people could be chased to do by technology. I asked Charles about some of the tasks she observed that lent themselves to a tech solution. She said it could be “rolling out a new policy, circulating the internal approvals to get that policy or that procedure approved. It could be wedding a third party or more often reinventing a third party at a predetermined frequency. It may be keeping up with a lot of administrative deadlines and then exercising the activity you are supposed to at that time.”
But the reality is that most compliance professionals would much prefer to spend their time strategizing about what they’re doing at a more macro level. Many of the tasks she articulated not only take up too much administrative time but keep folks from working on more significant tasks such as longer-term strategic issues. Charles said that one of the things that intrigued her after her move from compliance to tech was her shift in focus of how to use technology in a best practices compliance program.
While in-house, Charles tended to view technology as a tactical solution to a compliance issue. She did not see it as a strategic solution and frankly did not understand the power of tech in compliance. However, after her move to GAN she began to see how technology can bring a much larger strategic focus to compliance, in such areas as a compliance tech solution integrated into the company’s overall risk management strategy, getting integrated reporting with the entire infrastructure of the tech solution tied to corporate structures.
We explored how Charles perceives that technology has changed the way(s) she considers compliance. She began by noting how much more advanced and mature the financial sector has been in developing and embracing tech than compliance. This extended to corporate financial disciplines so that now there are integrated standard bearer platforms. Good technology can import and export data easily that allows greater movement of information with more transparency between business units. She noted that Human Resources (HR) has also benefited greatly from tech solutions.
She contrasted those examples with the corporate compliance function, which she believes has been hamstrung by the lack of integrated tech solutions. Tech for compliance has been fragmented. Typically, it has been the norm for a compliance professional to go to one vendor to purchase technology to roll out policies and procedures, another vendor for e-learning and surveys and yet another to register conflicts of interest, gift giving and receiving. Of course, vetting your third parties is another set of vendors, as is hotline and case management software. She stated, “if you can’t tie together the critical components of the program into one integrated system that talks to each other and can easily be checked out or have data flowing to and from the other business units, you’re kind of still an odd guy out.” If there was such a tech solution, it would elevate the compliance profession.
As tech has moved to cloud-based solutions, there is the ability to integrate many of these functions. When this can be accomplished, it will allow a Chief Compliance Officer (CCO) or compliance professional to review consolidated data and reporting. Charles concluded when that occurs, “the evolution of compliance technology will match the evolution of the importance of the field itself.”
Visit our podcast sponsor, GAN Integrity by clicking here.
In this special five-part podcast series, I visit with Thomas Sehested, founder and CEO of, Valerie Charles, Chief Strategy Officer and Peter Chang, Head of Customer Success of Gan Integrity. In this series, we will consider how the effective use of technology can drive not only a more effective, operationalized compliance program but make your business run more efficiently. In this Part I, I visit with Thomas Sehested on his journey from professional athlete to tech entrepreneur to compliance solution provider.
Some of the most interesting innovations in compliance come from folks who do not have a background in either compliance or legal training. I have found it is because their perspective is so different that they spot things that we legally trained compliance professionals often do not spot. That insight was reinforced when I recently interviewed Thomas Sehested, co-founder and Chief Executive Officer (CEO) of GAN Integrity Inc., (GAN) for an upcoming podcast series, sponsored by GAN. Sehested has been a world champion Windsurfer, became a tech entrepreneur in the antipiracy world and now works in the compliance space.
While in business he had felt (like many business folks) that compliance was the Land of No and Chief Compliance Officers (CCOs) largely inhabited it as Dr. No. Yet when he looked more closely into the compliance space he saw a profession that had been lawyer driven yet seemed to be more focused on business process, something that lawyers are certainly not trained for nor have the tools to accomplish. Moreover, the breadth and scope of requirements for a corporate compliance function are almost endless as it literally touches every other corporate discipline.
I found Sehested’s insight very interesting, that compliance professionals are faced with a pretty rigorous set of things that they need to live up to, “it’s really kind of a minefield in terms of what they need to focus on as a team”. However, he felt they lacked the tools to do this efficiently. He also saw “very small teams, two or three people, managing compliance for thousands of employees and thousands of third-party vendors.” To actively manage this number of persons and entities without a technological solution is well-nigh impossible. Sehested saw an opportunity to create technological solutions to remedy this anomaly. This is what he set out to do when he created GAN. Sehested not only wants to put more technological solutions in the hands of the compliance professional to manage the tasks they have at hand but also give them methods to present that information to senior management and the Board of Directors.
I asked Sehested what a compliance professional might consider to focusing on initially from a tech standpoint. Interestingly, he noted that even with the wide range of company sizes and industry foci, “you want to look at what you do on a day to day basis and automate that so that you, as a compliance professional, can focus on what you’re good at and that’s making the strategic decisions about how your company should handle compliance. It should not be about chasing people down and making sure that they filled out their questionnaires and trainings.”
This means you should consider automating the typical administrative tasks which fill so much of our day-to-day work. Sehested believes “All of that should be automated. If you have a lot of third-party vendors, you should make sure there’s a solid system in place to deal with the vast majority which do business in compliance. In that way, you can use your bandwidth to deal with the few rotten eggs that are likely to kind of float to the top.” The same is with employees from the compliance perspective, you should be “focused and dedicate your attention to where it’s needed. You need something to present you with the daily view of your organization from a compliance perspective to make sure you can dedicate your time to that.” The bottom line is that a compliance professional should consider the work they are doing today and see what can be automated.
I found Sehested’s perspective quite thought-provoking. As a compliance professional you should assess what is in your portfolio that can be automated for greater efficiency. By starting here, you can put together a business case about how a tech solution will save your organization money right out of the gate. From there you can move to higher level functions and duties in your department. This approach also has the benefit of incremental process improvements. You are not reinventing the compliance wheel in your organization but rather improving the business process. That is something that not only senior management and the Board looks for but the regulators as well.
For more information on GAN Integrity, visit our sponsor’s website, www.ganintegrity.com.