Today, I continue a five-part series on what a Chief Compliance Officer (CCO) needs to consider when working through the remediation component of a potential Foreign Corrupt Practices Act (FCPA) compliance violation. I am joined in this exploration by Dan Chapman, well-known in the compliance community for his in-house compliance role a Baker Hughes Inc. and his CCO roles at Parker Drilling and Cameron International. Today I will consider step two: project timing.
While noting this was only an initial step, Chapman believes the first thing you need to consider is “what are your goals” and that you should consider your long-term goals in developing your remediation plan. It begins with two considerations; the first is completing the project on time. The second is to maintain the confidence of the Board and C-Suite level executives.
The timing aspect is not only about your planning but also about setting expectations. You need to plan what you hope to achieve and then scale it out for timing. You must take care the overall length is not beyond what people expect. Chapman noted “If people have expectations that aren’t proper, you want to set them right.” And the sooner you set realistic expectations the better.
I found it interesting that Chapman emphasized confidence as a critical element for success. He noted, “maintaining confidence from your Board, maintaining the confidence of senior management and demonstrating some quick wins is important, because that will allow you to repeatedly show that you have accomplished things, things aren’t just lingering.” This also allows you to keep the confidence level high on the medium and longer term aspects of your remediation plan. You must maintain this confidence on both the medium and longer term deliverables of your remediation plan. Once again, as with timing, you need to ascertain that your stakeholders have the same view of high and lower risk that you do or expectations can become skewed.
To begin Chapman advocated to come right out of the box “burning the candle at both ends”, which he further articulated as “you want to attack the low hanging fruit, or the items that can be completed quickly” within six months. Simultaneously you need to begin on your longest-term remediation projects, such as those which might take up to two years. Then mix in medium term projects with a 12-18 month shelf life. With this approach, in six months you will have demonstrated some early successes, moved halfway through to completing some medium-term projects and then should be one-quarter of the way through the longest-term projects.
Chapman cautioned that throughout this time, you must communicate with the stakeholders and manage expectations. He said, “You have to communicate when you reach, before you reach that six-month period, by the way, we are going to get these six months, short term items and quick wins done, so we can show those to the government authorities, and then we are going to move into a period where we’ll begin our medium term, and we’ll continue progress on our longer-term projects, all of which will conclude around 24 months. I say this knowing that no one is going to want to hear that. If you are a board member you are going to say, “So then what you are saying to me is you are going to start up something that’s going to take two years to do.” You are going to do some things that will take six months, but after six months we are not going to see much progress for the next 18 months.”
You will need to overlay your planning process with the expectations of the stakeholders in another manner; which is around the high, medium and low risk categories of tasks. If your Board or C-Suite level executive “believes that training should be your highest profile and you disagree and you do nothing there until six or 12 months, but you didn’t think that optically, don’t appear so important, but you personally believe are important, you are going to lose the confidence of your Board.”
As a CCO, you should be cognizant of known-unknowns and unknown-unknowns in any remediation project during the pendency of a FCPA investigation. In the planning process, this means you need to plan time for the unknown which may become known to you during the investigation or through your remediation efforts. You need to budget time into your remediation plan for new matters which may arise, because, as Chapman succinctly noted, “that’s what we do in compliance.” Moreover, “If you develop a tight schedule in terms of your remediation plan, you should expect that you will not complete on time, because part of the remediation program necessarily is the discovery of areas of improvement and correction of those areas of improvement.”
Chapman concluded that you must plan for the unexpected and this requires close coordination with your investigative counsel if new matters are discovered which need to be added to your remediation list. It may be that some are high-profile and high-priority, which require more immediate attention. It may be that they can be placed into the medium-term or longer-term buckets for completion. The bottom line is that no CCO can predict on Day One what all the remediation issues will be. You may have a sense that you understand the overall problem or that you are only looking at the tip of the iceberg but you must resist the temptation to declare on Day One that you know what all the issues that require remediation are or will be going forward.
Tomorrow I will consider communications with stakeholders in the remediation process.
Dan Chapman can be reached at firstname.lastname@example.org.
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© Thomas R. Fox, 2017