Lin-sanity still reigns. How can you make this determination? I will give you two signs to consider. First Spring Training is in full force and here I am not only thinking about the NBA but also writing about the NBA. Second, I ordered the NBA League Pass package so that I can watch Jeremy Lin play each night the Knicks are on television. (Sam Rubenfeld is smiling somewhere.) But Lin-sanity still continues to inform the compliance practitioner and compliance programs.
How does Lin-sanity continue to inform your compliance program? That question came to mind as I was reading the Saturday edition of the New York Times (NYT) in an article, entitled “The Evolution of a Point Guard”, by reporter Howard Beck. In his article Beck destroyed the myth that Jeremy Lin emerged literally “overnight” as a star in the NBA. Beck wrote that this part of the Lin Legend is “altogether flawed, or at least woefully incomplete.” In my last piece on Lin-sanity and compliance I wrote about the analyst who saw the seeds of Lin’s play in his years at Harvard. Beck goes further to point out that the Lin who graduated from Harvard, got cut from both the Warriors and the Rockets is very different from the Lin who is now starting for the Knicks. How is Jeremy Lin different? Through hard work in his profession, the craft of basketball.
What work did Lin do that led to Lin-sanity? Beck went into extensive detail to report on the shooting drills he put in with an old coach to improve his jump shot; the personal fitness coach he worked out with to increase muscle size and speed; the tape of elite NBA guards he studied to learn how to set up and execute a pick and roll; the Developmental League time he put in to learn how to better read defensive double teams; and finally the lonely gym work to develop a 3-point shot. All of this hard work led to, as Beck quoted, a former coach of Lin’s saying that “He’s in a miracle moment, where everything has come together.”
Our last lesson learned from Lin-sanity was to look and think outside the box for compliance resources within your company. Lin-sanity Lesson Learned II is that the initial implementation or enhancement of a compliance program is only the beginning. It is after that time, the hard work really begins. So Jeremy Lin obviously, at least to one analyst, had some amount of talent coming out of college, but Lin-sanity did not begin until he put in all the hard work that Beck detailed in his article, you as a Chief Compliance Officer (CCO) or other person tasked within your company to implement or enhance a compliance program, must work equally hard to make the program truly best practices.
What are some of the things that you should do after implementation or enhancement? You should begin by reviewing your risk assessment to determine the nature and quality of the compliance risks that were defined. Use that list as a starting point to put in the hard work of remedying or better yet managing those risks. Some of the areas that you may need to remediate, while you are going through the initial implementation or enhancement phase of the compliance program, may be one or more of the following.
Foreign Business Representatives
A usual high risk is found by the use of agents, resellers, or other non-employee sales representatives in your company’s sales chain. You need to design a database where you collect information on all such foreign business representatives, such as contract term, underlying due diligence performed, commissions or other payments made to them over the past five years, nature of product sold or service provided and geographic territory. From this database you should risk rank these foreign business representatives and begin the process of remedial due diligence. If your sales model is distributors, you may need to review and assess your contractual rights and requirements for sales to certain end users for your products.
There may be many persons or entities that represent your company that are located in the Supply Chain, rather than the sales chain. This could include freight forwarders, visa processors, customs clearance companies, law firms, licensing representatives or any other service provider who might interact with a foreign governmental official on behalf of your company. In addition to the information that you should collect in a database, similar to the one described for Foreign Business Representatives above, you should also go back and audit invoices from such government service providers, to determine if there are any issues existing from before the go-live date of your compliance implementation or enhancement.
Your compliance program should consist of policies and procedures. However, it should also have the appropriate internal controls in place to effectively implement these policies and procedures across the organization. This means that policies from every department of the company may be impacted. Groups disparate as Human Resources, Finance, Accounting, IT, Treasury and others, will all have corporate policies that need to be reviewed and assessed through a Gap Analysis of your internal controls. Any discovered deficiencies will need to be remedied so that writing policies may well be a large part of your compliance effort going forward.
HR is key in any compliance program implementation, enhancement or ongoing evolution. One of the reasons that HR is so critical is that it is the group within your company which will be charged with identifying, evaluating and developing persons with strong ethical values who could become the leaders of your company tomorrow. As a compliance officer you will need to spend significant time with HR representatives to detect, train and promote such persons within your company to leadership and senior management positions in the years ahead.
There will certainly be other areas of your company which will need attention during your initial compliance program implementation or enhancement. It most certainly will seem like an overwhelming task. But here is where the Jeremy Lin example really kicks in. You do not have to create and perfect everything at once. Each step in the compliance journey builds on the prior step. The point is to keep moving. Your best practices compliance program will not emerge overnight, but as with Jeremy Lin, if you keep doing the things you need to do to make your compliance program more robust, you may well bring everything together to create a world class compliance program for your organization.
This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at firstname.lastname@example.org.
© Thomas R. Fox, 2012