Today is the anniversary of the most historic day of many in the history of the great state of Texas, the date of the fall of the Alamo. While March 2, Texas Independence Day, is when Texas declared its independence from Mexico and April 21, San Jacinto Day, is when Texas won its independence from Mexico, probably both have more long-lasting significance, if it is one word that Texas is known for around the world, it is the Alamo. The Alamo was a crumbling Cath olic mission in San Antonio where 189 men, held out for 13 days from the Mexican Army of General Santa Anna, which numbered approximately 5,000. But on this date in 1836, Santa Anna unleashed his forces, which over-ran the mission and killed all the fighting men. Those who did not die in the attack were executed and all the deceased bodies were unceremoniously burned. Proving he was not without chivalry, Santa Anna spared the lives of the Alamo’s women, children and their slaves. But for Texans across the globe, this is our day.
While Thermopylae will always go down as the greatest ‘Last Stand’ battle in history, the Alamo is right up there in contention for Number 2. Like all such battles sometimes the myth becomes the legend and the legend becomes the reality. In Thermopylae, the myth is that 300 Spartans stood against the entire 10,000 man Persian Army. However there was also a force of 700 Thespians (not actors; but citizens from the City-State of Thespi) and a contingent of 400 Thebans fighting alongside the 300 Spartans. Somehow, their sacrifices have been lost to history.
Likewise, the legend that lifts the battle of the Alamo to the land of myth is the line in the sand. The story goes that William Barrett Travis, on March 5, the day before the final attack, when it was clear that no reinforcements would arrive in time and everyone who stayed would perish; called all his men into the plaza of the compound. He then pulled out his saber and drew a line in the ground. He said that they were surrounded and would all likely die if they stayed. Any man who wanted to stay and die for Texas should cross the line and stand with him. Only one man, Moses Rose, declined to cross the line. The immediate survivors of the battle did not relate this story after they were rescued and this line in the sand tale did not appear until the 1880s.
But the thing about ‘last stand’ battles is they generally turn out badly for the losers. Very badly. I thought about this when Chuck Duross, then the head of the Department of Justice’s (DOJ) Foreign Corrupt Practices Act (FCPA) unit, said at a conference that he viewed anti-corruption compliance practitioners as “The Alamo” in terms of the last line of defense in the context of preventing violations of the FCPA. I gingerly raised my hand and acknowledged his tribute to the great state of Texas but pointed out that all the defenders were slaughtered, so perhaps another analogy was appropriate. Everyone had a good laugh back then at the conference. But in reflecting on the history of my state and what the Alamo means to us all; I have wondered if my initial response too facile?
What happens to a Chief Compliance Officer (CCO) or compliance practitioner when they have to make a stand? Do they make the ultimate corporate sacrifice? Will they receive the equivalent of a corporate execution as the defenders of the Alamo received? This worrisome issue has certainly occurred even if the person ‘resigned to pursue other opportunities.’ My fellow FCPA Blog Contributing Editor Michael Scher has been a leading voice for the protection of compliance officers. In a post entitled “Michael Scher Talks to the Feds” he said, “a compliance officer (CO) working in Asia asked for recognition and protection: “A CO will not stand up against the huge pressure to maintain compliance standards if he does not get sufficient protection under law. Most COs working in overseas operations of U.S. companies are not U.S. citizens, but they usually are first to find the violations. Since the FCPA deals with foreign corruption, how could the DOJ and SEC not protect these COs?”” In the same post, he asked of the DOJ “Wal-Mart’s compliance officers and professionals allegedly were intentionally obstructed by senior executives from conducting a compliance review and subjected to career-ending retaliation. If confirmed, will the DOJ and SEC’s settlement demonstrate that such harassment of compliance professionals is not condoned? Will the DOJ and SEC also make it clear that compliance officers working for multi-national companies like Wal-Mart in countries outside of America will receive the same protections as those working in America?”
The DOJ is now looking at not only the quality of your CCO and compliance function, but how they are perceived, treated and received in the corporate setting. Throughout Hui Chen tenure as the DOJ’s Compliance Counsel, she has consistently advocated for CCOs and compliance practitioners. In the FCPA Pilot Program, Prong 3 requires “sufficient resources to the compliance function”, independence of that function, the experience and quality of your compliance personnel and not just the compensation paid to your compliance personnel but how it compares to other employees, together with their promotion within your organization. These are all new foci on the CCO and compliance team. If your compliance team is run on a shoestring, you will likely be downgraded for your overall commitment to doing business in compliance with the FCPA. The same is true for promotions and other opportunities for advancement within an organization. Not many organizations have such a mature compliance function that a CCO is appointed to another senior level position within an organization.
In the recently released Evaluation of Corporate Compliance Programs (Evaluation), the DOJ expanded out its inquiry to include the following questions regarding the CCO and compliance functions “Stature” within the company:
- How has the compliance function compared with other strategic functions in the company in terms of stature, compensation levels, rank/title, reporting line, resources, and access to key decision-makers?
- What has been the turnover rate for compliance and relevant control function personnel?
- What role has compliance played in the company’s strategic and operational decisions?
In the section entitled “Empowerment” the Evaluation makes the following inquiries:
- Have there been specific instances where compliance raised concerns or objections in the area in which the wrongdoing occurred?
- How has the company responded to such compliance concerns?
- Have there been specific transactions or deals that were stopped, modified, or more closely examined as a result of compliance concerns?
Finally, in the area of “Funding and Resources” the Evaluation asks:
- How have decisions been made about the allocation of personnel and resources for the compliance and relevant control functions in light of the company’s risk profile?
- Have there been times when requests for resources by the compliance and relevant control functions have been denied?
- If so, how have those decisions been made?
Upon further reflection I now believe Duross was correct and the Alamo reference was appropriate for compliance officers. It is because sometimes we have to draw a line in the sand to management. And when we do, we have to cross that line to get on the right side of the issue, the consequences be damned. The DOJ has made clear they expect CCOs and compliance professionals to draw that line when they must do so and when they do, companies must heed their warnings.
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© Thomas R. Fox, 2017