Today we consider how monitors work. On my podcast, the FCPA Compliance Report, I am visiting with Don Stern, the Managing Director, Corporate Monitors and Consulting Services at Affiliated Monitors, Inc., (AMI) who sponsored the podcast series. To hear Stern’s more complete remarks, click here.
Stern explained that there are variety of tasks and roles a monitor uses when engaging in an independent monitorship. A monitor should understand the type of approaches they will take to make an organization more compliant, starting with understanding the work plan. Many times, the monitor must push the organization along by getting buy-in and building consensus. Finally, there should be an awareness of helping the company to become compliant in the future.
The starting point is understanding what the mission of the monitorship is. As Stern put it, “we really begin at the beginning. We sometimes meet separately with the government agency to get an appreciation and understanding as to why they think things have reached that point, what they see as the problems in the company, what they see as the problems in the industry. And then, of course, we do the same thing with the company.” Such meetings could also include “outside counsel who have been sort of living with whatever the precipitating cause of a problem which led to the settlement with the government or the investigation. They’ve lived with it for years. And in many cases, by the way, the company has already remediated significant portions of the problem.”
A monitor should have a particular focus on a particular goal, a particular set of tasks. Yet from there, Stern explained it is “very much a people exercise. The thing that is often obvious relatively early on, one way or the other is whether the company has a paper program or real program.” Stern indicated that a monitor should spend time at the higher levels and the middle and lower levels of the company. Some of the specific techniques can be one on one interviews, site visits to specific offices and with “focus groups where we get people at the same level so we don’t get middle managers and upper managers together in one room.”
Stern emphasized it is critical that both company management and the regulators not be surprised by a finding. This means the monitor (and team) should literally “pour through the company” to come up an honest final assessment or report for the organization. It is important to give the company credit where it has remediated or shown improvement and this means emphasizing to the government the wins a company’s compliance program may have sustained.
Interestingly, Stern emphasized that in monitorships, as with compliance programs in general, one size does not fit all. A monitor should test whether there is sufficient training on the Code of Conduct, compliance policies and procedures and other issues such as Conflicts of Interest policy. There should also be inquiries into hotline overview and use. Yet there can also be recommendations which arise from the employee interviews, which the monitor may raise to senior management for implementation.
Here Stern presented a simple yet powerful example. It was around having a compliance moment once per week at company meetings. The organization was an engineering company and they took safety very seriously, opening each company meeting with a safety moment. This led to the suggestion of opening meetings with a compliance moment, which employees used not simply to state ethics and compliance issues but to describe situations they faced daily.
A situation arose where an employee was offered tickets to a baseball game by a vendor. The company policy on conflicts of interest prevented the employee from accepting the tickets and he felt conflicted because he wanted to go to the game. More importantly, he did not know what to tell the vendor to make them understand he could not accept the tickets. Through discussing this issue after a compliance moment in a company meeting, there was a dialogue that allowed the company employees to feel that they have an opportunity to be part of the process. It demonstrated that ethics and compliance is not something imposed on them, but something that is part and parcel of their job and part and parcel of their responsibility.
A monitor must literally work with groups as diverse as the Board of Directors to employees on the shop floor. It is incumbent to use a variety of tactics and techniques to fulfill the mission of a monitor. An independent and experienced monitor is required to use a variety of tools to help an organization move forward with a compliance regime. Stern noted, “a monitor should also have the experience to come in and not only look at how your company is doing, but also benchmark against what is happening not only in your industry but in other industries. And at the end of the day it’s a little bit like the making of sausage. At the end of the day we’re going to have some recommendations and the expectation is that your company is going to be top of the heap, that you will have a state of the art compliance and ethics program and you will have contributed to making it better.”
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 email@example.com.
© Thomas R. Fox, 2018