The American Canon of Letters lost another giant this week, Phillip Roth. In his New York Times (NYT) obituary, Charles McGrath called him “prolific, protean, and often blackly comic novelist who was a pre-eminent figure in 20th-century literature”. Short of the Nobel Prize, he won almost every other literary prize there was including, “two National Book Awards, two National Book Critics Circle awards, three PEN/Faulkner Awards, a Pulitzer Prize and the Man Booker International Prize.” He is also only the third living writer to have his work enshrined into the Library of America.
Roth had several different periods of work. Like most teenage boys in the 60s, I was introduced to him through his protagonist, Alexander Portnoy in “Portnoy’s Complaint”, which, as described by McGrath, “surely set a record for most masturbation scenes per page. It was a breakthrough not just for Mr. Roth but for American letters, which had never known anything like it: an extended, unhinged monologue, at once filthy and hilarious, by a neurotic young Jewish man trying to break free of his suffocating parents and tormented by a longing to have sex with gentile women.”
Roth was often described as a “Jewish” writer and lumped together with Saul Bellow and Bernard Malamud. While he certainly did write about “Jewish identity, anti-Semitism and the Jewish experience in America” he rejected that categorization. Roth once said, ““The epithet American-Jewish writer has no meaning for me,” he said. “If I’m not an American, I’m nothing.””
I thought about Roth, his writing and his life considering the Monday Keynote speech by Deputy Attorney General Rod Rosenstein, at the just concluded Compliance Week 2018. In his remarks he discussed the importance of corporate culture. He said, “Ethical, law-abiding companies can better attract investors and partners. People want to do business with companies that they perceive as honest and reliable”. Moreover, a culture of compliance “mitigates risk, making companies more valuable and less likely to encounter unanticipated costs that may result from protracted investigations and penalties.”
Most interestingly Rosenstein went on to add, “Compliance should not be treated as separate and distinct from other business goals. A culture of compliance must be fully integrated into corporate culture. Employees should be trained and encouraged to think about compliance issues in making business decisions.” Finally, he noted, “In a company with an adequate and effective compliance program, the legal, compliance, and audit departments are not the only repositories of professionals monitoring and evaluating what the business side does.”
These remarks by Rosenstein are significant for every compliance practitioner and corporate compliance program. They clearly portend that the Department of Justice (DOJ) will begin to evaluate corporate culture as a part of their assessment of a company under a Foreign Corrupt Practices Act (FCPA) investigation. It also ties into a key second component of Rosenstein’s remarks, being two basic questions the DOJ will consider.
When companies come under investigation, he indicated that the DOJ would ask two principal questions about the company’s compliance function:
The first question is “what was the state of the compliance program at the time of the improper conduct?” This question “focuses on whether there was an adequate compliance function. Under the 2008 Filip Factors, the DOJ “directed prosecutors to determine “whether a corporation’s compliance program is merely a ‘paper program’ or whether it was designed, implemented, reviewed, and revised, as appropriate, in an effective manner.”” Yet Rosenstein also made clear that prosecutors “recognize that even the best compliance program may not stop individual bad actors.”
The second question is “what is the current state of the compliance function,” followed immediately by “after remediation to address any lessons learned?” Obviously, it will begin with a root cause analysis to see what the base reason for the compliance failure was. But the next inquiry is to consider what steps did a company take and are they (or were they) effective?
Rosenstein noted the FCPA Corporate Enforcement Policy, announced in November 2017, “incentivizes companies to promptly report misconduct and fully cooperate, as well as to enact effective remedial measures.” However, “Companies that lack adequate compliance measures are less likely to uncover a problem at an early stage. They are less likely to be able to make a voluntary disclosure that qualifies them for the most significant benefits under the Corporate Enforcement Policy. And they are less likely to stop the conduct before it becomes pervasive.” All of this means “Companies without adequate compliance programs need to undertake more dramatic efforts to remediate damage and change their culture.”
Rosenstein neatly tied together how a culture of compliance drives to not only protect a company by preventing illegal conduct from occurring but should employees go off and engage in conduct which violates the FCPA, if you do not have a robust compliance program with a detect prong, you will not find out about conduct. This will not only remove your opportunity to self-disclose and begin with the presumption of a declination but it will also allow the conduct to continue, making your illegal conduct greater and your final penalty more costly.
Rosenstein rounded out his remarks with some final words on the new anti-piling on initiative. However, this has been applied in the FCPA enforcement arena for several years. What is new about this new policy is in domestic prosecutions where the DOJ has mandated greater cooperation in investigations and penalties with US governmental agencies, federal departments and state Attorneys General.
Phillip Roth was a true giant of American Letter. For myself, I think Megan Abbot, writing in the Paris Review said it best, “Will there ever be another writer like Phillip Roth? A writer with such intellectual heft, emotional acuity and artistic bravery? Probably. But today, it doesn’t feel so. Today, the loss feels immeasurable and ours.” And of course, good-bye to Alexander Portnoy.
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© Thomas R. Fox, 2018