This week I am running a special five-part sponsored podcast series with Vincent DiCianni, founder and President of Affiliated Monitors, Inc. (AMI) and Eric Feldman, Senior Vice President of AMI. We are considering the global view of ethics, compliance and monitoring in non-US companies, outside the US; in both their home countries and in other countries where they may do business. AMI does independent integrity monitoring in multiple countries outside the US and for many non-US organizations and so is well placed to both observe and participate in developments. I was interested in how US based monitors can help move non-US companies from a reactive to a proactive approach to compliance and therefore make more effective their compliance regimes.
However I first want to pay tribute to Stan Lee. There is probably only mere handful of men and women who have had more impact on American and world culture over my lifetime than Stan Lee. While there have been musicians like the Beatles, sports figures like Ali, and artists like Andy Warhol; there is probably only one hand of people more impactful than Stan Lee. One of the original founders of Marvel Comics, Lee and his creation overtook DC Comics (home of Batman and Superman) to become the top comic in the US and then the world.
According to his New York Times obituary, “In 1961, Mr. Lee and Mr. Kirby — whom he had brought back years before to the company, now known as Marvel — produced the first issue of The Fantastic Four, about a superpowered team with humanizing dimensions: nonsecret identities, internal squabbles and, in the orange-rock-skinned Thing, self-torment. It was a hit.” This led to Spider-Man, Thor, The Hulk, X-Men and all the rest.
But that was only the start as Lee took the Marvel characters to the movies, “Spider-Man,” the blockbuster movie franchise and Broadway spectacle. Think of “Iron Man,” another Hollywood gold-mine series personified by its star, Robert Downey Jr. Think of “Black Panther,” the box-office superhero smash that shattered big screen racial barriers in the process. And that is to say nothing of the Hulk, the X-Men, Thor and other film and television juggernauts that have stirred the popular imagination and made many people very rich.” So here’s the Fantastic Four (my personal Marvel favorites and who started it all) and all the rest. And here’s to you Stan Lee, a true original.
Eric Feldman noted that while the word ‘monitor’ can sometimes drive fear into the heart of a non-US company, this not need be the case. Feldman said that the AMI is collaborative in nature. The approach the company takes is, “about improving, remediating the company, not going after them with a baseball bat, not attempting to continue the investigation of the problems that led to the settlement and the agreement in the first place. That proactive mindset that we have is geared towards identifying what works within a company, taking into account the culture of the company and the culture of the country that the company is located in and how we come up with recommendations to strengthen the ethics and compliance program and the culture.”
It is about the demonstration of value to the company retaining the monitor. Feldman posed the question, “What is the value of an independent third party coming from the outside of your company and assessing the extent to which you’ve done due diligence to prevent fraud, waste, abuse, mismanagement and corruption and due diligence?” He further noted, it is also about “ensuring that your ethics and compliance activities actually are working and are having an impact on the workforce.”
There is an ongoing evolution by many non-US companies, literally around the world, regarding compliance. They are responding to increased enforcement activity and action by not just the United States but by their own countries. This has led to the same requirement to have an independent third party come in to let them know where they stand, to let them know what is and is not working for their own internal corporate cultures.
One of the things about monitors and monitoring outside the US is the different types of judicial approaches prosecutors might invoke. For instance the UK model of Deferred Prosecution Agreements (DPAs) has much greater judicial involvement and presumably ongoing oversight. This could well lead to differences in monitoring from the US approach. Feldman noted, “a big part of monitoring process, whether it’s proactive or reactive, is to take into account the different cultures of the countries where the companies operating.” He cited to the example of a whistleblower hotline and a speak up culture, stating, “when you’re looking at employee reporting in some countries it’s not part of the culture and it’s seen as a lack of respect for employees to speak up and tell their supervisors that they’re wrong or to question what a supervisor or manager is doing, it’s seen as a lack of respect. So in order to encourage a speak up culture in a country which is not a speak up country, you have to devise other methods of extracting employees, opinions and views and making them feel comfortable to raise issues and ask questions.”
This is the type of issue that requires an independent monitor to “have some people on the ground working with you and with a really good understanding of the culture in that country and how it impacts how the employees view their roles in each individual company.” A monitor must consider the methodology and approach. While monitor expertise is always critical, it must be tempered with “an eye toward ensuring that the local culture.”
Feldman concluded that it comes down to dialogue with the multiple stakeholders and parties involved. From the regulators and the judiciary, it may be a discussion around the form of the penalty and its resolution. With the sanctioned company, it could be around its goals for a more robust compliance program going forward and completion of whatever ongoing term a judge may apply. Having this conversation around expectations, where there is very clearly a public interest involved, what is in the public’s interest in terms of settling the case corruption with the company and focusing on remediating what led to the problem in the first place is most critical.
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© Thomas R. Fox, 2018