Fcpa Compliance Report

In this episode, I visit with Roy Snell about his recent announcement that he is stepping down as head of the SCCE. We review the current state of the SCCE and how the Roy has seen the compliance evolve from its start after the 1992 US Sentencing Guidelines. We discuss where Roy sees compliance going in the next several years and where the SCCE may go to support the profession.  This announcement comes when the SCCE has grown to 50 staff members and one of the has one of the strongest boards in the professional association world. the SCCE has a strong footprint in the US and is a material player internationally with 17,500 members in 95 countries. It has a great reputation and its success to date has been quite remarkable.  The call for applications will close on August 20th 2017.  A detailed job description and position summary are available at http://www.corporatecompliance.org/CEO.  SCCE plans to complete the interview and selection process in the Fall of 2017 and onboard a Deputy CEO in early 2018. The De

Day 14-Miranda and Internal Investigations: What Rights Does an  Must an investigator warn an employee that concealing information from company lawyers conducting an internal FCPA investigation could be a federal crime? Even if the company attorneys handling the investigation provided the now standard corporate attorney Upjohn warnings, does a company attorney asking questions morph into a de facto federal agent during an internal company investigation regarding alleged FCPA violations and is the attorney thereby required to provide a Miranda warning to employees during a FCPA investigation?  In a recently released paper entitled “Navigating Potential Pitfalls in Conducting Internal Investigations: Upjohn Warnings, “Corporate Miranda,” and Beyond”[1] Craig Margolis and Lindsey Vaala, of the law firm Vinson & Elkins, explored the pitfalls faced by counsel, both in-house and outside investigative, and corporations when an employee admits to wrong doing during an internal investigation, where such conduct is rep

In this episode, Mike Volkov and I discuss how blockchain has the potential to transformation compliance and may facilitate some truly revolutionary modifications in key businesses processes. I see some great value propositions for the compliance function.  For further reading, see: Blockchain and the Future of Compliance, by Mike Volkov.  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. Learn more about your ad choices. Visit megaphone.fm/adchoices

When then Assistant Attorney General Sally Yates, announced the Memo that bears her name, she said the following, “we have revised our policy guidance to require that if a company wants any credit for cooperation, any credit at all, it must identify all individuals involved in the wrongdoing, regardless of their position, status or seniority in the company and provide all relevant facts about their misconduct. It’s all or nothing. No more picking and choosing what gets disclosed. No more partial credit for cooperation that doesn’t include information about individuals.” This statement ties directly into the first point of the Yates Memo, which stated, “To be eligible for any cooperation credit, corporations must provide to the Department all relevant facts about the individuals involved in corporate misconduct.”  The Yates Memo and Yates’ remarks indicated a transition to a new era of FCPA enforcement. The Yates Memo required that the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) to

This week, as their tribute to their Dad, we are guest hosted by Jay’s daughters, Millie and Michela. They lead us through a wide-ranging discussion on some of the week’s top compliance related stories, including: The Covington and Burling report on corporate culture at Uber. For what it means to the compliance practitioner, see Tom’s piece in the FCPA Compliance & Ethics Blog. For another view on the car crash of corporate governance at Uber, see Matt Kelly’s piece in Radical Compliance. Finally for an article the on investor who took on both Uber and Silicon Valley for similar issues, see this article on NPR. Swiss banker, Jorge Luis Arzuaga pleads guilty to laundering money for FIFA officials. See article by Dick Cassin in the FCPA Blog. DOJ files civil forfeiture complaints Thursday against an additional $540 million in assets allegedly bought with money looted from a Malaysian sovereign wealth fund, 1MDB. See article in the WSJ by clicking here. Adnan Khashoggi, the Saudi arms dealer in the middle o

What are the characteristics of a good interview in the context of an internal investigation? Is there one technique you can use which will provide you the results you want to achieve? How should you think through your questions and document review prior to the investigation? In this episode, I explore these and other questions, in an interview with noted internal investigation expert Jonathan Marks, a partner at Marcum LLP for this piece.  Marks began by making it clear there is no one right way to prepare for and conduct an interview. What is important is that you have a plan and execute on that plan. He said he begins by obtaining an understanding of what the various stakeholders want answers to. This could include the Board of Directors, C-Suite executives, the General Counsel and legal department, the Chief Compliance Officer and compliance function or up to government regulators such as the SEC or Justice Department. Marks feels it is important to interview witnesses as soon as you can reasonably do so

Today, I want to consider some of the challenges you may well face during an investigation.  Beyond the basics, a company must consider the intake process as a starting point, however Marks noted one of the biggest challenges is in the intake process. Rather surprisingly, he noted there are still companies without a hotline or anonymous reporting system, stating “we still see organizations whereby there is no formal ethics hotline except for the fact that they might send an email to some member of management or some member of the board.”  The lack of an intake process immediately presents a challenge in beginning to work through an allegation of wrongdoing due to the inability to track when the allegation or information was received, who sent it, who received it, what did the company do when they received it? If a company has a formal ethics reporting system, with recordation of information “there’s some workflow, it’s a lot easier to kind of work through some of those things”, so there is an appropriate leve

In this episode, I visit with Lauren Briggerman, a member at the firm of Miller & Chevalier. She discusses the latest edition of the firm newsletter, Executives at Risk: Navigating Individual Exposure in Government Investigations-Spring 2017. We discuss several recent developments in significant government investigations which highlight the tactics prosecutors are deploying and the risks faced by corporate executives:  German authorities raided an outside law firm retained by Volkswagen's supervisory board in the emissions investigation, as well as the offices of the company's Audi division.  U.S. agents conducted a multi-agency raid of three Caterpillar Inc. offices in Illinois related to the company's effort to shift billions in profit from the U.S. to a Swiss affiliate to secure a favorable tax rate.   The founding partners of the law firm at the center of the Panama Papers scandal were arrested by Panamanian authorities on money laundering charges related to Brazil's ongoing "Operation Carwash" corrupti

In this episode I visit with Luciana Silveira, a PhD candidate who is studying the FCPA and how it is has affected international trade flows. Some of the questions she is considering include the following: Was US business abroad affected? Did US companies decide to change their foreign business strategy because of the FCPA? After so many years of the law, what is the private sector overall opinion about the FCPA? Silveira believes the answers to these questions  are neither straightforward nor simple. To that end, the PhD research she is developing will hopefully provide us with some new and updated answers, as well shed more light to the impacts of the FCPA to US international trade. Equally importantly, she is using the FCPA as reference to my studies on potential impacts of the Clean Company Act, a similar anticorruption legislation that came into force in Brazil in January 2014. To complement a quantitative analysis regarding merchandise trade flows, she is using a 15-questions survey (available at https:

Mara Senn and a colleague, Michelle Albert, published in the FCPA Report, Volume 3, Number 1, entitled “Internal Investigations, How to Conduct an Anti-Corruption Investigation: Developing and Implementing the Investigation Plan”. I interviewed Senn on her thoughts about handling a cross-border investigation.  Offer Interview Translations            While many people outside the US have various levels of capabilities in a non-native language, when you get into the very detailed questions in an interview, they may have enough English skills that you assume they understand everything, but in fact, they do not. You may ask a key question, for example, about expense reports, maybe they understand conversational English, but there's no reason for them to know expense reports. This makes it important to have someone present in the interview that speaks the witness’s native language, and just assume that there are going to be times where you’re going to need to call on that person.  Avoid Cultural Pitfalls Cultu

In this episode, Matt Kelly and I take a deep dive into the corporate governance fiasco which is Uber. We consider the revelations in the failures of corporate governance, culture and internal controls at the organization. The company provides a fascinating study of what happens when a tech start up raised in the fraternity culture is successful and how changes are required for it to act like a multi-billion organization. Both Matt and I have written on Uber. Our podcast comes out the same day the Holder Report to the Uber Board was released so we weave in the recommendations from Covington & Burling as well.  For more on Uber see the following:  Matt Kelly’s piece Car Crash Governance at Uber Tom Fox’s pieces on Uber  Will Culture Change at Uber Before its Too Late CEOs and Win at All Costs-Where Does it Lead Uber and Corporate Culture   For a copy of the Holder Report on corporate governance, cultural and internal controls failures at Uber and recommendations, click here.Learn more about your ad choices

Beginning with the Department of Justice’s (DOJ’s) Yates Memo, its Foreign Corrupt Practices Act (FCPA) Pilot Program and then the release of the Evaluation of Corporate Compliance Programs (Evaluation), I believe the DOJ has put even more pressure on every Chief Compliance Officer (CCO), and indeed every company, to get an investigation done quickly, efficiently and most importantly done right is even greater.    Jonathan Marks, a partner at Marcum LLP and a well-known internal investigation expert, provides some of his thoughts around what goes into a well-run investigation. His perspective is from someone who performs investigations outside your organization, either because the matter was so serious an outside expert was required; specific subject matter expertise (SME) was not available in your organization or due to the objectivity of the investigation. Today I want to consider who should be on your investigation team.  As discussed previously data collection, retention and preservation are critical elem

  In the Department of Justice’s (DOJ) Evaluation of Corporate Compliance Programs (Evaluation), under Prong 7 Confidential Reporting and Investigation asks the following: Properly Scoped Investigation by Qualified Personnel – How has the company ensured that the investigations have been properly scoped, and were independent, objective, appropriately conducted, and properly documented? These questions were clearly presaged by the DOJ’s Yates Memo and the Foreign Corrupt Practices Act (FCPA) Pilot Program. The pressure on every Chief Compliance Officer (CCO), and indeed company, to get an investigation done quickly, efficiently and most importantly done right is even greater now.    Jonathan Marks, a partner at Marcum LLP and a well-known internal investigation expert, gave some of his thoughts around what goes into a well-run investigation. Marks began by cautioning that any CCO must be cognizant of the strictures laid out in the Evaluation. It all begins with who in-house is looking at the complaint and does

Today I am joined again by Professor Samuel Buell, from Duke University School of Law to discuss a recent paper he co-authored with Rachel Brewster entitled, "The Market for Global AntiCorruption Enforcement". In the paper and in this podcast Professor Buell discusses the internal structural changes which took place in the 1980s and 1990s which set the stage for the explosive growth in FCPA enforcement. He then relates the changes on the domestic scene which facilitated its explosive growth. He ends by exposing the myth of the revolving door.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Show Notes for Episode 56, for the week ending June 9, the Who’s On First Edition  This week, Jay and I have a wide-ranging discussion on some of the week’s top compliance related stories. We discuss:  The Kokesh case at the US Supreme Court is significant for SEC enforcement of the FCPA around profit disgorgement. For what it means to the compliance practitioner, see Tom’s piece in the FCPA Compliance & Ethics Blog. For a legal review of the decision, see Miller & Chevalier client alert authored by Saskia Zandieh. Marc Bohn considered the cased in the FCPA Blog. Marc and I discuss the case on the FCPA Compliance Report, Episode 332. Trevor McFadden to leave the DOJ for federal bench. See article by Matt Kelly in Radical Compliance. Hui Chen’s contract not to be renewed, her position is posted for job applicants. Apply for the position here. Andrew Weissman leaves as head of the Fraud Section to go Special Prosecutor’s staff. Former PetroTiger General Counsel Gregory Weismann is banned from SEC practice.

  There is nothing like an internal whistleblower report about a FCPA violation, the finding of such an issue or (even worse) a subpoena from the DOJ to trigger the Board of Directors and senior management attention to the compliance function and the company’s compliance program. Such an event can trigger much gnashing of teeth and expressions of outrage followed immediately by proclamations “We are an ethical company.” However it may well be the time for a very serious reality check.  The DOJ Evaluation of Corporate Compliance Programs focuses this question in Prong 7 with the following: Response to Investigations –What has been the process for responding to investigative findings? You may find yourself in the position that you will have to have some very frank discussions about what to expect in terms of costs and time outlays. While much of these discussions will focus on the investigative process and those costs, these discussions will allow you to begin to talk about remediation going forward and begin t

In an article in the Corporate Board magazine, entitled “Successful Board Investigations” by David Bayless and Tammy Albarrán, partners in the law firm of Covington & Burling LLP posited seven considerations to facilitate a successful board investigation. Consider whether you need independent outside counsel  The appearance of partiality undermines the objectivity and credibility of an investigation. That means you should not use your regular counsel. The authors cite to the Securities and Exchange Commission (SEC) analysis of how independent board members truly are to explain the need for independent counsel. They state, “the SEC considers the following criteria when determining whether (and how much) to credit self-policing, self-reporting, remediation and cooperation” which will consist of the following factors: Did management, the board or committees consisting solely of outside directors oversee the review? Did company employees or outside persons perform the review? If outside persons, have they done

  The dog days of summer are on the horizon and the Houston Astros lead the major leagues in winning percentage. Coincidence that the US pulls out of the Paris Climate Accords the same week the Astros are playing .700 baseball? The top four commentators in compliance return to talk about what is one their summer radar for consideration. This episode concludes with the panelists’ rants.  Matt Kelly opens with a discussion of the revisions to the COSO ERM Framework, which were based on comments by practitioners. Matt considers the integration of the COSO ERM Framework into functional business units moving to operationalize ERM in organizations and we consider how the ERM Framework differs yet is complimentary to the COSO Internal Controls Framework.  For Matt Kelly’s posts on the COSO ERM Framework, see the following: More Details on COSO ERM Framework Update to COSO ERM Framework Update ERM Framework: Govt. Calls for Unity More Clues on Draft ERM Framework Draft ERM Framework is Here: How to Get Started

Many companies have an investigation protocol in place when a potential Foreign Corruption Practices Act (FCPA) or other legal issue arises? However, many Boards of Directors do not have the same rigor when it comes to an investigation, which should be conducted or led by the Board itself. The consequences of this lack of foresight can be problematic, because if a Board of Directors does not get an investigation which it handles right, the consequences to the company, its reputation and value can all be quite severe. The SEC considers a variety of factors around corporate investigations including: Did management, the board or committees consisting solely of outside directors oversee the review? Did company employees or outside persons perform the review? If outside persons, have they done other work for the company? There is also role of the Sarbanes-Oxley Act (SOX) in internal investigations, most particularly for audit committees. Section 301 establishes certain requirements for Audit Committees, including:

In the case of Kokesh v. SEC, the US Supreme Court held the profit disgorgements operate as a penalty under the Securities and Exchange Act of 1934, as amended. As such “any claim for disgorgement in an SEC enforcement action must be commenced within five years of the date the claim accrued.” The position of the Securities and Exchange Commission (SEC) at the Supreme Court and in all other matters involving this issue was that profit disgorgement were not punitive, hence not a penalty but rather remedial in nature so the SEC could clawback all monies generated as a result of the illegal action.  The decision, authored by Justice Sotomayor, was a 9-0 opinion which in the rarified world of Supreme Court decisions is about as clear a message as one can get. The Court first determined that profit disgorgement met the definition of a “penalty” under two basis, “First, whether a sanction represents a penalty turns in part on “whether the wrong sought to be redressed is a wrong to the public, or a wrong to the indiv