Ken Berry died over the weekend. He was one of the great “everyman” actors who played regular guys, if with a comic turn. If you grew up in the 60s, I am sure you remember F-Troop, where he played a hapless US Military Post Commandant, on the frontier. It is probably not PC enough for today but it did showcase Berry’s comic talents. He also took over Andy Griffin’s role in The Andy Griffin Show when he starred in the loose reboot, Mayberry R.F.D. According to his New York Times (NTY) obituary, Berry’s career was helped by his US Army service where his sergeant was none other than Leonard Nimoy, who later helped him in his acting career in Hollywood. Finally, Berry was quoted in his obituary from a 2012 interview; “Get on the stage. Get on your feet. You’ll learn more from that the first time out than you’ll ever learn from any class.” Wise words for every compliance professional.
There were more wise words for every compliance professional last week as the week after Thanksgiving is usually the week of the ACI National FCPA Conference in the Washington area. This event largely concludes the fall compliance conference season. This national conference is notable because representatives of the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) turn up to review the past year in Foreign Corrupt Practices Act (FCPA) enforcement. There is also usually a high-level DOJ representative who breaks the news of a policy change or makes some other significant announcement.
The ACI speakers did not fail to disappoint this year, as Deputy Attorney General Rod Rosenstein delivered a keynote address to the conference. Earlier in the week, the head of the DOJ FCPA Unit, Daniel Kahn, was joined by his counterpart from the SEC, Charles Cain, on a panel of wrapping up the year’s FCPA enforcement. On another panel was Stephanie Avakian, co-director of the SEC’s Division of Enforcement. Christopher Cole, writing in Law360, reported on their remarks.
This year there was an added benefit of a speech by Principal Deputy Assistant Attorney General John P. Cronan who spoke at the Practising Law Institute Event in Washington the same week as ACI. Taken together, the talks and speeches from these events provided interesting insight into where FCPA enforcement has been and is headed but, more importantly, provided solid information for the compliance practitioner going forward into 2019. Over the next couple of blog posts, I will be exploring what these speakers said, what it means for the compliance profession and how a Chief Compliance Officer (CCO) or compliance practitioner can use the information going forward.
Both Kahn and Cain emphasized robust FCPA enforcement has continued and will continue to be a strong effort from both their perspectives. Turning to the FCPA Corporate Enforcement Policy, which was announced by Rosenstein at last year’s ACI National FCPA Conference, Kahn, who likes the program and is happy with it, said “I just find it a very effective and helpful policy to have. The department wants to convey that a company coming in and doing the right thing can help the DOJ effectively prosecute some of the individuals who were involved.” Finally, Kahn noted, “the process also provides transparency to investigations and since the policy has taken effect, all the companies that have voluntarily self-disclosed ended up with declinations.”
For the compliance practitioner, Kahn’s most direct message is that a compliance program must not be a paper program but must be effective. He stated, “Just because a company is investing in compliance, that doesn’t mean it’s committed to compliance and has a culture of compliance.” SEC FCPA Unit head Cain echoed this sentiment stating, “You can throw a lot of money at a problem, but is it effective? There’s not enough people to investigate all the instances of corruption that are out there.”
The new anti-piling on policy was also discussed. Avakian “said in a different panel that she does not see a problem with that because the two agencies are handling different aspects of the matter. Under their partnership, the DOJ is handling disgorgement and the SEC works on penalties. She also “does not expect to see a policy mirroring the DOJ’s corporate enforcement policy, for similar reasons. “There’s a huge difference between a criminal case and a civil case,” she said, and most companies facing both possible actions would be “pretty happy in the end when they only end up with an SEC case.””
She also answered directly the criticism by some that the SEC is (or has been instructed by the Administration) not to be aggressive in enforcement of US securities laws, such as the FCPA. Cole reported, “Avakian pushed back against recent reports that under Trump the securities regulator has backed off rigorous enforcement in general, telling the audience composed largely of corporate attorneys that there is no current effort to scale back investigations.” He quoted her as saying, “There has been no backpedaling, backsliding … from a focus on corporate-type cases. There’s been no pullback.”
While you might have expected all of the above, it drove home several themes that we heard in both the panels at ACI and the speeches by Rosenstein and Cronan that we will consider later this week. First compliance must be fully operationalized to be effective. This means much more than having a paper compliance program in place, it means doing compliance going forward. Second, even with a potential FCPA violation, a company can, if it meets the requirements of the FCPA Corporate Enforcement Policy, hold the presumption of receiving a declination. This continues to be a powerful incentive for corporations to self-report. Based upon the comments of Kahn, it certainly appears that the 2017 amendment to the US Attorney’s Manual has fostered not only greater FCPA enforcement but greater FCPA compliance.
Tomorrow, I will consider the remarks of John P. Cronan.
To listen to the iconic opening theme song from F Troop on YouTube, click here.
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 firstname.lastname@example.org.
© Thomas R. Fox, 2018