Fcpa Compliance Report

Today, New York Times columnist David Brooks’ thoughts on building and maintaining order inform our discussion on internal controls. In the area of internal controls, I believe it is incumbent to consider not only the most obvious risk areas for your internal controls but also the universe of potential transactions within the operations of a particular company. There is a clear need for rigor in your internal controls protocols and adherence to that rigor can increased operationalization around the internal controls a company should consider including gifts, travel and entertainment (GTE).  One area that companies need to be mindful of is corporate checks and wire transfers, in response to falsified supporting documentation, such as check requests, purchase orders, or vendor invoices. The Delegation of Authority (DOA) is a critical internal control. So, for example a wire transfer of $X between company bank accounts in the US might require approval by the Finance Manager at the initiating location and one off

In this episode, I visit with Patrick Henz, a compliance practitioner and author of Access Granted: Tomorrow’s Business Ethics. Henz has written one of the most fascinating books on compliance going forward into the future that I have recently read. His book analyzes actual and future technological developments to discuss how these will affect tomorrow's business reality and its impact on the human. Henz believes that robotization and the implementation of Artificial Intelligence will change companies and societies. This does not mean automatically a shift for the better or worse, but life will be different, and it is in our hands to use technology for the first. Artificial Intelligence, robots, 3D printing, micro-learnings, virtual reality, self-driving cars and all other autonomous software and machines will be a part of tomorrow's business. We should start thinking about the consequences. A chance and challenge for management, where the Ethics & Compliance function can position itself as a key-player and

What specifically are internal controls in a compliance program? Internal controls are not only the foundation of a company but are also the foundation of any effective anti-corruption compliance program. The starting point is the FCPA itself, requires the following:  Section 13(b)(2)(B) of the Exchange Act (15 U.S.C. § 78m(b)(2)(B)), commonly called the “internal controls” provision, requires issuers to: devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that— (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary (I) to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and (II) to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for ass

In this episode, I visit with Ed Buthusiem, with BRG Business Transformation. BRG  partners with companies and their stakeholders to deliver sustainable results with speed and transparency through a data-driven and expert-led approach. We discuss the work of BRG and how BRG helps companies to drive a value proposition. We explore what this means for a Chief Compliance Officer or compliance practitioner and how can BRG help compliance professionals to operationalize compliance. We also discuss how compliance can become a more integrated part of the business process. You can find out more about BRG by checking out their website by clicking here. This episode is sponsored by Ark-Group publishing who recently released my latest book 2016-The Year in Corporate Enforcement. This is the only book which details one of the most significant years of FCPA and global anti-corruption enforcement. You can check more on this book at the Ark Group website by clicking here. Learn more about your ad choices. Visit megaphone.

In this week which starts the 4th of July holiday weekend, Jay and I return for a wide-ranging discussion on some of the week’s top compliance related stories, including:  The second Declination of the Session’s Justice Department, CDM Smith. For a copy of the Declination click here. For article in the FCPA Blog, click here.  The son of Equatorial Guinea's president went on trial this week in France for embezzlement of funds from the country. See trial reports of Days 2 & 3 in the Global Anti-Corruption Blog. Is the DOJ afraid to go to trial in white collar prosecutions. Jesse Eisinger considers this issue in his new book The Chickenshit Club. See review of Eisinger’s book in the Financial Times by clicking here.   Tom nominates former Uber engineer Susan Fowler for top blog of the year (so far). Who is your nominee from the first half of the year? See Tom’s article in the FCPA Blog.  Hui Chen talks to Matt Kelly on a podcast on Radical Compliance. Jay discusses his weekend report, which came out yeste

Yesterday I considered an article by Ryan Hubbs, entitled “10 Factors Leading to Reporting Mechanism Distrust”, in which he detailed 10 factors leading to hotline distrust. Today I want to pick up on that article with Hobbs' tips for building a trusted hotline reporting program and culture, talk about the SEC whistle blowing program, and conclude with a few thoughts on why experienced, invested counsel is so critical in these.  Organizations implement and maintain hotlines, trusted programs, hotline programs differently depending on their sizes, cultures, geography, and many other factors if they must decide if they'll construct such programs. Many organizations find benefit to taking it outside from the experience and expertise, the appearance of independence which can increase employee trust. A smaller organization may not be able to do so. Nevertheless, there are many competent companies that put on hotline services for small individuals.  What can you do to help build trust for your reporting system? 1. T

Today I want to consider some factors which can lead to employees’ distrust of an internal reporting system. Ryan Hubbs wrote an excellent article entitled “10 Factors Leading to Reporting Mechanism Distrust”.  The guidance and mandates for companies on reporting mechanism reporting are numerous, overlapping and sometimes very broad. There are the US Sentencing Guidelines; regulations under Sarbanes-Oxley (SOX), the Dodd-Frank Act and the 2012 FCPA Guidance. There are international guidelines from the EU, US and London based stock exchanges and even the United Nations deems reporting mechanism reporting a necessary good business practice. Dodd-Frank attempted to strengthen accountability by specifically providing protections for those who come forward as whistle blowers but also allows regulators to respond to misconduct through finding some legal action. While the goal of whistleblowers and reporting mechanisms might be to identify and correct wrongdoing, they do not guarantee success and they do not even gu

The top compliance roundtable podcast is back with a wealth of new topics. Stayed tuned to the end where there are some heartfelt and somber rants in this edition.  Matt Kelly opens with a discussion on Uber from the policies and procedures framework. Matt rants on the danger of overly legalistic approaches to compliance.  For Matt Kelly’s posts on Uber and the intersection of policies and procedures, see the following: What Uber Teaches About Culture & Policy Management Car Crash Governance at Uber Mike Volkov considers blockchain and how it will impact compliance going forward.  For Mike Volkov’s post on blockchain and compliance, see the following:  Blockchain and the Future of Compliance  For reading on blockchain and compliance, see the following: Will Blockchain Transform Compliance? by Tom Fox How Blockchain Will Change Organizations, by Don Tapscott and Alex Tapscott in MIT Sloan Business Review. Blockchain Explained, by Zach Church in MIT Sloan Management Review.  Jonathan Armstrong conside

In an article entitled “How to Launch and Operate a Legally-Compliant International Workplace Report Channel” or in compliance parlance, a hotline, author Donald Dowling of the law firm of White and Case, provided a useful guide to help navigate the challenges of setting up a multi-national whistleblower’s hotline, such as is required under the FCPA and UK Bribery Act. The majority of his article “analyzes the six categories of laws that can restrict whistleblower hotlines abroad, focusing on compliance.” You should obtain a copy of this article and keep it for reference in regards to your company’s hotlines. It is available on the White and Case website, by clicking here. Laws Mandating Whistleblower Procedures This group of laws “comprises mandates that require setting up whistleblower hotlines in the first place.” This includes the US Sarbanes-Oxley (SOX) as well as other jurisdiction laws which generally protect whistleblowers from retaliation but do specifically require any hotlines be set up on a comp

In this episode, Matt Kelly and I take a deep dive, literally into the weeds of the convergence of the compliance profession and the nascent cannabis industry. While several states have made pot for medical use legal and one state, Colorado has made it legal for personal consumption, it is still illegal under federal law. We consider such questions as: Lawyers and accountants are required to report large cash transactions to the federal government—but large cash transactions are common in the cannabis industry, since commercial operators don’t have easy access to the banking system. So if you report one of these transactions, are you turning over evidence of illegal activities of your client to authorities? Or do you not report, and risk sanctions against yourself? If the Justice Department does act against a commercial weed business, will prosecutors really seek to impanel a federal grand jury, with jurors drawn from a state where they voted to legalize? Could prosecutors ask a candidate juror whether he or

Is your hotline working for you? In an article entitled, entitled “Promoting Effective Us of the Compliance Hotline” José Tabuena provided an excellent example of the power of a hotline. He provide a case study of a company which had not integrated its IT function into its regular compliance and ethics training programs. As such there were zero calls into the hotline by employees from the IT department. This dynamic was changed and IT was integrated into the company’s regular compliance and ethics training. Thereafter, the hotline received several calls from IT department employees indicating where there were two major areas of complaints. The first general area was that there were conflicts of interests between IT department managers, family members who were hired and perceptions of favoritism. The second generally revolved around allegations that certain company managers were manipulating data to maximize their bonuses. The Favoritism Problem The Human Resources (HR) department led an investigation that inc

In this episode, I visit with Steven Durham, a partner in the law firm of Labaton Sucharow. The firm is one of the leaders in the SEC Whistleblower practice. Durham describes his background and how he got to the firm. He relates the Whistleblower Practice at Labaton, what is your role and how Jordan Thomas worked to create the firm’s whistleblower practice after leaving the SEC. He then  relates what the SEC Whistleblower program is and how has it worked to pay out over $150MM in bounties through this spring. Durham then discusses how the SEC Whistleblower office facilitates the SEC’s mission to protect investors, why whistleblowing benefits society and corporate America and how firms like Labaton assist the SEC in its practice. We conclude with a discussion of where Durham sees SEC Whistleblower program going under the Trump Administration.  For more information on Steven Durham, the law firm of Labaton Sucharow and its whistleblower practice, check out the firm’s website by clicking here.Learn more about yo

Today I would like to review some best practices regarding a compliance hotline.  The hotline should be developed and maintained externally. It seems axiomatic that em­ployees tend to trust hotlines maintained by third parties more than they do internally maintained systems. Through the submitting of reports via an external hotline there is a perceived extra layer of anonymity and impartiality compared to a sys­tem developed in-house. A third party provider is also more likely to bring specialist expertise that’s difficult to match within the organization. The hotline supports the collection of detailed infor­mation. As with most everything else, information is power. If a CCO can gather and re­cord information throughout a complaint life cycle, the company will have greater insight into the situation and a company can protect itself more effectively from accusations of negligence or wrongdoing. A hotline reporting system should provide consolidated, real-time access to data across all departments and locati

In this episode, I visit with James Gellert, CEO of RapidRatings, a company which uses a financial dialogue to determine third party supplier health and viability. Gellert explains what supply chain resilience is and how can examining financial health of your suppliers can lead to a more financially efficient supply chain. We then discuss the company’s third party risk management tools. We consider how a company might evaluate a potential purchaser, partner or someone buying a part of a business. Finally we have a lengthy discussion of how a corporate compliance function use the health of a third party as a tool to determine third party compliance risk?  For more information on RapidRatings, check out their website by clicking here.Learn more about your ad choices. Visit megaphone.fm/adchoices

After last week’s guest announcers, Jay and I return for a wide-ranging discussion on some of the week’s top compliance related stories, including:  The first Declination of the Session’s Justice Department, Linde gas. For a copy of the Declination click here. For Tom’s discussion of the lessons learned, click here.  The son of Equatorial Guinea's president went on trial this week in France for embezzlement of funds from the country. See article by Dick Cassin in the FCPA Blog. See Day 1 of trial report in the Global Anti-Corruption Blog. The UK SFO charges four former senior executives at Barclays Bank criminally around funding issues in the 2008 financial crisis. See Tom’s article by clicking here.   Embattled Uber CEO Travis Kalanick resigns under pressure. Will there be a backlash, who will run the company? See articles in the New York Times and Wall Street Journal.  Compliance in the 21stcentury, welcome to ComTech. See Tom’s article in Compliance Week.  Hui Chen departs the Justice Department with

Who to suspend during any Foreign Corrupt Practices Act (FCPA) investigation is always a delicate question to answer. Unfortunately there is never an easy answer. As the Volkswagen (VW) emission-testing scandal continues to reverberate, it continues to bring up some very knotty questions, which have bedeviled the Chief Compliance Officer (CCO) or compliance practitioner in many areas. Today there is an example around internal investigations. In an article in the Wall Street Journal (WSJ) entitled “Scope of VW Suspensions Grows”, William Boston reported on the ongoing internal investigation by the company’s outside counsel Jones Day. Boston noted that VW had “suspended a larger number of engineers than previously acknowledged, following a recommendation from the law firm conducting” the investigation. The article went on to state, “Jones Day urged suspension of anyone who could have been involved in the scam - from high level decision makers to ordinary engineers – to prevent possible perpetrators from tamperi

Prior to the Schrems decision by the European Court of Justice, US based law firms could rely on Safe Harbor to use and analyze information from investigations conducted in Europe. However the Schrems decision and subsequent EU privacy rulings and regulations have brought the entire issue around internal investigations into question. In a podcast interview with UK solicitor and data privacy expert Jonathan Armstrong about the decision, Armstrong noted that the decision puts real roadblocks in the path of a US company that could be investigating potential anti-corruption allegations in the UK or EU member country. The biggest issue would be around personal privacy and information. Unlike the US, work emails are covered by the privacy rights afforded to individuals and are not the property of the company. The same is true of other information. Under the Schrems decision, the ability of a US corporation to access that information and then take it back to the US under the safe harbor provision is no longer avail

On June 16, 2017, the Department of Justice (DOJ) issued a Declination to Linde North American Inc. and Linde Gas North America LLC (collectively “Linde”). This is the first Declination issued by the DOJ in the era of the Trump Administration. For that reason alone, it was instructive and should be studied by the compliance profession. However, the case presented several interesting factors which merit consideration so we are discussing in depth to present lessons to be learned for the Chief Compliance Officer (CCO) or compliance practitioner.  The Bribery Scheme  Linde acquired Spectra Gases, Inc. (Spectra Gases) in October 2006. In November 2006, it purchased certain assets from the National High Technology Center (NHTC) of the Republic of Georgia. One of the keys to this purchase was a piece of equipment called the ““boron column,” which were used to produce boron gas.” Sales of boron gas after the acquisition helped fund the purchase price and payout to Spectra executives who stayed on after Linde purchas

 The concept of privilege in an internal investigation is critical. Two important privileges are the attorney/client privilege and the work product privilege. Unfortunately both are often miss-understood, miss-applied and consequently lost.  One such recent example of the miss-application of the attorney/client privilege was in the trial of former PetroTiger co-Chief Executive Officer (co-CEO) Joel Sigelman has brought the issue of the parameters of the attorney/client privilege yet again. As part of its undercover operation the FBI wired up the then PetroTiger General Counsel (GC), Gregory Weisman, and instructed him to go meet with Sigelman to discuss the payments by the company to the wife of an official of the Columbian state owned energy company Ecopetrol.  Sigelman’s counsel sought to have the video and audio recordings of this meeting suppressed based upon the attorney-client privilege that generally protects open communications between lawyer’s and their clients, where legal advice is sought by the cl

In this episode, James Koukios, a partner at Morrison & Foerster returns to discuss the firm's newsletter Top Ten International Anti-Corruption Developments for April 2017. In this episode we highlight the three following matters for discussion and what lessons can be garnered from them.   World Bank Veteran to Change Positions.The World Bank announced that Pascale Helene Dubois would become the new head of the World Bank Group’s Integrity Vice Presidency, known as INT. The INT is an independent unit within the World Bank Group that investigates and pursues sanctions related to allegations of fraud and corruption in World Bank Group‑financed projects. Dubois is well known in the anti-corruption community and has long been a thought leader in this space. In her current post, she has worked to increase transparency and due process at the World Bank generally and in the Office of Suspension and Debarment specifically. Koukios relates how Dubois’s work and that of INT has helped foster greater cooperation between