One of the songs that put Redneck Rock on the map was London Homesick Blues by Gary P. Nunn. Staying in London while on tour with fellow redneck rocker Michael Murphy (before he morphed into pure country singer Michael Martin Murphy), Nunn wrote it over a few weeks in March 1973. After the tour ended and returned to Austin and ran into Jerry Jeff Walker who like the song when Nunn played it for him. Walker invited Nunn to join him at Luckenbach for the live recording of the seminal LP in Redneck Rock Viva Terlingua.
As Nunn said in his article in lonestarmusicmagazine.com, “The place was packed to the max. Late in that show, Jerry Jeff looked over at me at said, “do that song you were singing under the trees this afternoon.” I did.” While most folks remember Walker’s rendition of Up Against the Wall Redneck Mother from the album, for me the true revelation has always been London Homesick Blues.
One of the complaints still made about the Department of Justice (DOJ) is that companies are not made aware of the requirements of a best practices compliance program. There could be nothing further from the truth. Beginning with the Metcalf and Eddy enforcement action in 1998, the DOJ has consistently communicated its expectations around compliance programs. Moreover since at least 2004, the DOJ has provided very public guidance on what should compose a best practices compliance program.
In Opinion Release 04-02, the DOJ reviewed the proposal by an investment group which was acquiring certain companies and assets from ABB Ltd. Certain assets being acquired by the investment group, ABB Vetco Gray Inc. and ABB Vetco Gray (UK) Ltd., had previously pled guilty to violations of the Foreign Corrupt Practices Act (FCPA).
JPMorgan Partners Global Fund, Candover 2001 Fund, 3i Investments plc (the Private Equity Group) became requestors under the FCPA Opinion Procedure. The Private Equity investor group was acquiring certain companies and assets from ABB Ltd. [“ABB”] relating to ABB’s upstream oil, gas, and petrochemical businesses [“OGP Upstream Business”].
In 2004, the DOJ announced guilty pleas ABB Vetco Gray, Inc. and ABB Vetco Gray (UK) Ltd., two of the entities being acquired by the Requestors. On the same date, the Securities and Exchange Commission (SEC) also settled an enforcement action ABB with violating the anti-bribery, books and records, and internal accounting and controls provisions of the FCPA relating to transactions involving business in several foreign countries, including Nigeria.
In 04-02, the Private Equity investment group desired to protect itself from further liability, to the extent possible, by proposing to the DOJ a comprehensive best practices compliance program. While the DOJ noted that this compliance program was not a shield against future violations, the DOJ would not “intend to take an enforcement action [against the investors] for violations of the FCPA prior to their acquisition from ABB.”
The Private Equity Group proposed the following which became the basis of a best practices compliance program at that time. In the following chart I listed out all the undertakings proposed by ABB and how it compares with the 10 Hallmarks of an Effective Compliance Program from the 2012 FCPA Guidance.
This comparison demonstrates the substantive policies that the DOJ has consistently advocated, since at least 2004. The items which do not have any current equivalents under recent best practices have to do with the FCPA violations of the ABB Vetco Gray entities which the investment group was acquiring. Nevertheless, they are still good suggestions to follow in your company’s compliance program. It is a good idea to review the source material that is available to you. Sometimes to know where to go, you have to know where you have been.
|04-02 Requirement||10 Hallmarks of an Effective Compliance Program|
|A. Clearly articulated policy of standards and procedures against violations of FCPA||Hallmark 1-Written Standards; consisting of Code of Conduct, Policies and Procedures|
|B. Assignment of one or more corporate officials to report to the Compliance Committee of the Board of Directors||Hallmark 3-Resources, Autonomy and Oversight, direct line of sight from the CCO office to Board of Directors|
|C. Effective communications to shareholders (Private Equity owners) of FCPA training and annual certifications.||Hallmark 5-Training and Communications, everyone must have training|
|D. Hotline reporting system to report suspected violations.||Hallmark 7-Internal Reporting, an operating and effective internal reporting mechanism|
|E. Appropriate disciplinary procedures for violations of FCPA or compliance policy.||Hallmark 6-Incentives and Discipline, a company must discipline those who violated company policy around bribery and corruption|
|F. Procedures to ensure company forms business relationships with reputable and qualified business partners.||Hallmark 8-Third Parties, steps 1-5 in the lifecycle of 3rdparty risk management|
|G. Extensive pre-retention due diligence and post-retention oversight of agents and business partners; maintenance of complete files thereon||Hallmark 8-Third Parties, steps 3-5 in the life cycle of 3rdparty risk management|
|H. Clearly articulated procedures which ensure that discretionary authority is not delegated to persons who the company knows have a propensity to engage in illegal or improper activities.||No equivalent|
|I. A management review committee to monitor agents||Hallmark 8-Third Parties, step 5 in the lifecycle of 3rdparty risk management|
|J. Inclusion of compliance terms and conditions in all agent contracts.||Hallmark 8-Third Parties, step 4 in the lifecycle of 3rdparty risk management|
|K. Financial and accounting procedures designed to ensure that accurate books and records are maintained.||Hallmark 2- Internal controls including financial and accounting procedures which should ensure that the company has accurate and fair books and records, which cannot be used for or conceal bribery.|
|L. Independent audits by outside counsel and auditors at no longer than 3 year intervals to ensure effective compliance program implementation.||Hallmark 9-Continuous Improvement, audits are required now at 2-year intervals|
The DOJ has consistently communicated its expectations on what constitutes a best practices compliance program, since 2004. As the bad guys have gotten more sophisticated, companies have developed new programs to prevent, detect and remediate and as technology has advanced; compliance has evolved. But the DOJ has been open and obvious since at least 2004. For those who do not think so you should sit up and listen to the music.
Jerry Jeff Walker and Gary P. Nunn Set List (all from YouTube)
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, 2019