In this special five-part podcast series, I am joined by Mikhail Reider-Gordon, Managing Director of Global Affairs at Affiliated Monitors, Inc. (AMI) the sponsor of this podcast series. In this series we discuss various aspects of monitorships, including why independence matters, the American Bar Association’s (ABA) Guidelines on Monitors, Gordon’s professorial career at the International Anti-Corruption Academy, cultural differences between international and US domestic monitorships and the continuing evolution in monitorships. Today, in Part 1, we consider why independence in monitors is so critical.
Gordon began her career at the RAND Corporation, providing analysis to US governmental agencies. From there she took on investigators and crisis management roles at Homeland Security and then returned to the private sector, where she began her career leading piracy investigations for the Motion Picture Association of America, building their first global internet and piracy program. She then moved to one of the “Big Four”, Deloitte Touche Tohmatsu Limited (Deloitte), where she advised global corporations around anti-corruption and fraud, anti-money laundering (AML) and technology. From Deloitte, she transitioned to global disputes and investigations at Navigant Consulting, Inc. (Navigant), focusing on regulatory compliance and political cultural challenges where they intersect with laws and regulations for corporate and institutional ethics. She joined AMI several months ago as Managing Director of Global Affairs.
From this varied background Gordon has seen the continuing and ever-present need for independence by monitors and in monitorships. She noted that she has observed the selection of monitors “where their true independence is perhaps dubious.” There has also been a trend of “hiring former colleagues with their agencies or people that have worked with in the past by regulators.” This has led some commentators to accuse the process of cronyism but also that monitors may be more sympathetic to the enforcement side. This latter point has led many companies to shy away from monitorships when perhaps they could best use their assistance.
It has also led into what Gordon characterized as the “danger of informal sympathies” with “subtle influences that can remove true impartiality.” Gordon underscored that true neutrals are not as easily come by as many may have thought. Such informality can be found in so many of our human relationships, former law school classmates, work colleagues, friendships, even home or social background can play such a significant role in allowing dispensations to occur, all of which can impact success of combating noncompliance.
Additionally, “emotion driven exchanges, including values-based practices of solidarity and belonging and ubiquity.” She concluded that these issues are “not often visible to anyone outside and maybe not even consciously understood by those involved themselves, but it can certainly lead to the awarding a monitorship to an individual or firm that’s not genuinely independent.” All of this can lead to “a subtle spectrum here where informality and culture can allow biases to impact the value of the monitoring process before it is even kicked off.”
It is important that the monitor does not set out with a new agenda or most particularly is not concerned about retaining other business with an industry or company. This extends to not playing “gotcha” or coming into a monitorship with a regulators mentality. Rather, Gordon suggested that a monitor come in with an attitude of improvement or, in another word, remediation.
We turned to the issue monitors face perhaps not a recalcitrant company but one which genuinely believes they have done nothing wrong. Gordon emphasized the key is that there is still room for improvement. Even if a company begins from a “negative place” Gordon believes that one of the jobs of a monitor is “helping them get to an understanding that no compliance program is ever complete, that there are always improvements to be made.” Companies need to recognize where changes are occurring and monitors help in adapting to this change.”
Every company’s compliance program is in constant evolution. These changes could be driven by a wide variety of factors such as a change in a proposed marketing campaign, a new acquisition or merger, a new product or product line or an expansion into a new territory. Even a change in personnel can prompt revisiting elements of a program. Compliance and ethics programs need to be growing and changing constantly.
Gordon tied all this “back to understanding on ethical culture where informality can allow certain behaviors to slide into a negative situation.” It could be “a willingness to cross lines regarding a specific regulation or failing to see that the spirit of the laws are not being fully upheld in a particular entity.” All of this means a monitor “can start with the proposition that every compliance and ethics program can be improved and then move to address what changes have to occur that will demonstrate to the outside world company and to the regulator which is overseeing terms of settlement agreement. Let’s get you to that place and help you to understand the value of constant evolution and compliance and ethics program.”
I hope you will join us for Part 2, where we discuss the ABA Guidelines on Monitors.