I conclude my five-part review of Tom’s Top Five Drum Solos by ending with perhaps a surprising selection—Ringo Starr’s work on the song The End, the final song on the Beatles final album, Abbey Road. This is Ringo’s only recorded drum solo and comes in at a succinct 25 seconds. As much as emotion and flamboyance can be a part of a great drum solo, so can technical proficiency, even understatement. This is certainly true of Ringo Starr’s work with The Beatles and the reason it is on my Top Five list of alltime great drum solos.
Rob Litten on his site DrumstheWord.com said “Ringo famously said that he always hated drum solo’s but thankfully this didn’t stop him producing one of the most replicated drum solo’s of all time. Its beauty comes from its seeming simplicity. All of this is facilitated by a fact I did not know, which is Ringo is left-handed. This facilitates the sound by “alternates his sticking when going around the drums; from Left to Right when moving down the drums, to Right to Left when moving up the drums. This has the effect of the figure moving across the beats of the bar and against the straight bass drum. A very cool and simple idea! Ringo ends the solo with his right hand on the floor tom where the notes increase in volume before exiting to the next section of the song.”
I wanted to use this technical explanation of Starr’s only recorded drum solo to introduce my final consideration of the Microsoft Foreign Corrupt Practices Act (FCPA) enforcement action. We have previously considered the Securities and Exchange Commission (SEC), Cease and Desist Order (Order) and the information presented in the Department of Justice’s (DOJs) Non-Prosecution Agreement (NPA). Today I wanted to conclude with some final lessons learned and final reflections.
Initially, it would not seem that much was new or different about the Microsoft FCPA enforcement action but through this exploration, I think some clear lessons have emerge. The first is around internal controls. Here there was a massive internal control failure. It was not a work around or override of internal controls but an out and out failure. As the Order noted “Discounts above certain thresholds must be approved by Microsoft’s Business Desk, which had employees around the world.” But this approval had certain requirements to garner a discount, including “a justification for the discount, the MS Hungary employees cited, without support, competition with other bidders, end customer price sensitivity, and the possibility of winning related services contracts.”
These business justifications were provided with no back up documentation yet they were approved by the Business Desk. There was but one condition for the discount, that of a time limit expiration on the discounts. There was no follow up by the Business Desk to determine if the discount was revoked or otherwise take off the table. Finally after multiple requests for discounts from the Hungarian business unit all came with the same justification “competition with other bidders, end customer price sensitivity, and the possibility of winning related services contracts”; someone on the Business Desk might have at least asked them to cut and paste a different business justification.
The second point of interest is Microsoft’s response. The Order obliquely noted that Microsoft had created “expanded transaction monitoring initiative at the regional level, and developing and using data analytics to help identify high-risk transactions.” In his Email to Microsoft employees, President Brad Smith said, “We’ve increased our capability to prevent potential violations by using machine learning to help identify transactions and automatically flag those that pose heightened compliance risk. We now run billions of dollars of deals in 57 countries through this program and have a team apply additional scrutiny to these transactions.”
I was fortunate to see a description of this transaction monitoring system put in place in a presentation by Alan Gibson, Assistant General Counsel at Microsoft and Sean Torcasi, Partner at PwC, at Converge18. They described how they created the transaction monitoring system and how it had been implemented into the business units to more fully operationalize Microsoft’s compliance function by delivering compliance risk management solutions more quickly and more efficiently to the front line of the business units. It also allowed the compliance function to be brought in when their help was needed earlier in the sales cycle. All of this allowed a more robust risk management solution where the end result was a more efficient business process. It also had the side benefit of providing real time transactional data which could be used to not only create a more efficient business process but increase overall profitability.
Finally, through the first six months of this year and into July, we have seen the full force and effect of the FCPA Corporate Enforcement Policy. The NPA was quite explicit in stating that Microsoft Hungary accepted the description that both high level executives of the subsidiary were a part of the bribery scheme and that the scheme itself violated the FCPA. Yet Microsoft Hungary was not criminally prosecuted, receiving an NPA. While the company did not self-disclose, it did thoroughly investigation and extensively remediate and receive a 25% discount off the low end of the Sentencing Guidelines as a result. The parent Microsoft did not receive any criminal sanction and neither the parent nor its subsidiary was required to have a monitor. Finally, was the non-piling on of monetary sanctions.
The Microsoft FCPA enforcement is one of the clearest statements on the power of the FCPA Corporate Enforcement Policy and how companies can use the language of the Benczkowski Memo to work towards the lowest possible fine and penalty. All the while avoiding the additional burden of a corporate monitor.
The End- Abbey Road (drum solo at 0:19 to 0:34)
The End-Rob Litten tutorial on The End drum solo
Ringo talks drumming
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© Thomas R. Fox, 2019