Tom in is London this week, thinking about Gary P. Nunn, the Lost Gonzo Band and London Homesick Blues (special bonus points if you have heard Nunn or his group live). He takes a look  at some of this week’s top compliance and ethics stories which caught his eye, across the pond.

  1. Swedish court lets Telia execs walk free. Rick Messnick in the Global Anti-Corruption Blog.
  2. How bad are things at Tesla? New GC backs out after 2 months. Ryan Lovelace reports in com.
  3. In a stunning FCPA enforcement action, Cognizant Technologies obtains a declination. Matt Kelly is so stunned he has two blog posts on it, Lessons Learned and More Lessons. Tom and Mike Volkov are so stunned they have there first bonus podcast, on the the FCPA Compliance Report. Mike Volvok takes a deep dive in a four part blog post series on Corruption, Crime and Compliance: Part 1, Part 2, Part 3and Part 4.
  4. Former CEO and GC of Cognizant Technologies charged criminally under the FCPA. Sam Rubenfeld and Dave Michaels report in the WSJ Risk and Compliance Journal.
  5. What will be the impact of a Global Magnitsky Act. Kelly Swanson reports inGIR.
  6. Alison Taylor continues her run of great pieces, this one on the relationship of companies to suppliers to compliance. In the orgblog.
  7. GiGo is still relevant in AI. Heidi Maher explains in Corporate Compliance Insights.
  8. What are the basics of a Congressional investigation? Dan Portnov is back on com.
  9. How do you protect the attorney-client privilege and the 5thamendment will cooperating with the government? John F. Savarese and Carol Miller explore in NYU’s Compliance and Enforcement Blog.
  10. Danske Bank unceremoniously kicked out of Estonia, in com.
  11. Tom has a 5-part podcast series on ECI’s 2018 Global Business Ethics Survey. Check out the following: Part 1-The State of Ethics & Compliance in the Workplace; Part 2-Measuring the Impact of Ethics & Compliance Programs; Part 3– Building Companies Where Values and Ethical Conduct Matter; Part 4-Interpersonal Misconduct in the Workplace: What It Is, Where It Occurs and What You Should Do About It; Part 5-Final Reflections. The podcast is available on multiple sites: the FCPA Compliance Report, iTunes, JDSupra, Panoplyand YouTube. The Compliance Podcast Network is now also on Spotify. It is soon to be on Corporate Compliance Insights.
  12. Tom and Louis Sapirman are joined by Sean Freidlin for a Hanzo sponsored webinar on February 28 on the intersection of a corporate compliance program and corporate communications and marketing. Learn about knocking down silos and using social media in your compliance program. Registration and agenda are available here.

Tom Fox is the Compliance Evangelist and can be reached at tfox@tfoxlaw.com. Jay Rosen is       Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com.

In this podcast series I have visited with Pat Harned, Chief Executive Officer (CEO) of Ethics and Compliance Initiative (ECI), about the firm’s 2018 Global Business and Ethics Survey (GBES). In this series we have considered each of the four GBES reports released by ECI . These included The State of Ethics & Compliance in the Workplace, released in Q1 2018; Measuring the Impact of Ethics & Compliance Programs, released in Q2; Building Companies Where Values and Ethical Conduct Matter, released in Q3 and Interpersonal Misconduct in the Workplace: What It Is, Where It Occurs and What You Should Do About It, released in Q4. In our final episode we conclude by tying them all together, considering what the findings mean for the compliance profession and where the profession may be heading down the road.

I began by asking Harned about where she thinks the regulators may be headed on compliance; both the prosecutors at the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). Harned noted that ECI is privileged to have opportunities to talk with the DOJ and other enforcement agencies about this very topic, both in this past year and in prior years. “First of all is increasing awareness by enforcement agencies regarding their influence on the behavior in our industry, but also with business leaders more broadly. They have a greater understanding that if they make an enforcement decision or declined to prosecute and they focus on one part of any effective compliance, it draws an immediate amount of attention. This has led them to think more broadly about not just to focus on certain program elements but on overall compliance program effectiveness.”

Harned believes we will continue to see the regulators advance the dialogue around compliance program effectiveness and she added, “one of the things that ECI has tried to do and will continue to do, is to also challenge the enforcement community to think encouraging higher quality programs.” While having a minimum standard program does make some difference, a company that really invests in a high-quality program receives much better results. To the extent that regulators help reinforce that message, they are helping to improve business behavior across all industries.

We next consider the evolution of compliance from a rules-based paper program to a more proactive approach to compliance. A rules-based approach comes “from creating boundaries and guidelines for employees based on things that have happened. You can never have enough rules to anticipate all of the challenges that are on the horizon.” This is why compliance has “evolved to a more proactive mindset and a proactive approach.” One of the manners in which an  organization can act “is to focus on having a set of core values that articulate not just how and where are the outer boundaries are but instead focuses on the way an organization wants to do business.”

Your company should focus on culture. This means institutional justice and institutional fairness. So are you creating an environment where people feel free to raise concerns? Will employees come forward and report wrongdoing? These are things help to help an organization to think more broadly about what the compliance and cultural challenges are ahead and does it have an environment where people will alert the company if there are things it needed to know about.

We concluded by exploring technology but not focusing the discussion on the new technological innovations that help to make the compliance practitioner more efficient, rather we explored the human side of compliance and the need, even with all of the explosion of tech we have seen in compliance, for the human element now.

Harned said that while Artificial Intelligence (AI) is one of the examples of new technologies available to the compliance practitioner; it is also “one of the primary examples of what happens when you remove the human element from ethical decisions.” This will be one of the challenges in front of compliance professionals and organizations. She pointed to the example of “self-driving cars. In this field there are decisions that have to be made by a machine, by a programmed entity about in certain circumstances of what may be the best of all bad options. In some of these bad options, there are risks to people’s wellbeing.” She asked the question, “How does that decision get made?”

For Harned, the “bottom line, is that ethics is about trying to treat people well and doing good by others.” Yet there may be an ethical decision which has to do with making a decision, where “the outcome of which affects other people and you’re trying to do good in the world as opposed to doing harm or doing the wrong thing.” This quandary brings up the human element of compliance. Harned concluded, “You’re never going to be able to come up with rules to anticipate all of the risks on the horizon or how people will behave in certain situations. You can also never program a machine or create software that can anticipate all the human elements of an ethics issue that.”

I hope you enjoyed this five-part series summarizing the 2018 ECI Global Business Ethics Survey. The information can help you benchmark your compliance program, business ethics and corporate culture. I look forward to reporting on the 2019 GBES. 

For more information on ECI, check out their website by clicking here.

To obtain a copy of all four of the 2018 GBES surveys, click here.

Welcome to the only roundtable podcast in compliance. In this week’s episode, the gang looks at some the issues that are on their collective minds. Shout outs and one rant follow after the commentators say their peace, in this Kudos to Dick Cassin edition.

  1. Mike Volkov talks about trade sanctions and how the current US-Venezuela imbroglio may play out for US companies. Mike shouts out to Dick Cassin who retired on February 1 as the Publisher and Editor of the FCPA Blog. We all agreed the entire compliance community owes a huge debt of gratitude to Dick.
  1. Jay Rosen talks about corporate culture and its increasing importance in the overall ethical health of an organization. Jay shouts out to his New England Patriots for their 6th Super Bowl win in the defeat of the LA Rams.
  1. Tom sits in for Jonathan Armstrong and expounds on what regime change means for the compliance professional. Tom shouts out to Frank Robinson, one of baseball’s greatest players and first African-American manager who recently died.
  1. Matt Kelly considers four recent SEC enforcement actions involving internal controls and how it may portend greater scrutiny in the FCPA realm of internal controls. Matt rants about company CEOs who do not tell anyone else their passwords before they have the temerity to die.

The members of the Everything Compliance panelist are:

  • Jay Rosen– Jay is Vice President, Business Development Corporate Monitoring at Affiliated Monitors. Rosen can be reached at JRosen@affiliatedmonitors.com
  • Mike Volkov– One of the top FCPA commentators and practitioners around and the Chief Executive Officer of The Volkov Law Group, LLC. Volkov can be reached at mvolkov@volkovlawgroup.com.
  • Matt Kelly– Founder and CEO of Radical Compliance. Kelly can be reached at mkelly@radicalcompliance.com
  • Jonathan Armstrong– Rounding out the panel is our UK colleague, who is an experienced lawyer with Cordery in London. Armstrong can be reached at armstrong@corderycompliance.com

The host and producer (and sometime panelist) of Everything Compliance is Tom Fox the Compliance Evangelist. Everything Compliance is a part of the Compliance Podcast Network.

I have been in the UK this week. Each day I have dedicated the Daily Compliance News podcast to news items from UK newspapers. Today, I want to conclude with a few observations from the past week on the UK compliance scene with just over 800 hours left before Brexit and the growing likelihood of a no-deal Brexit. But first I want to say a few words about one of the first court jesters of rock and roll, Peter Tork of The Monkees, who died this week.

It is perhaps difficult to understand in this day and age how a network TV show could simply overwhelm American popular culture but The Monkees certainly did that in the mid-60s. As noted in his New York Times obituary, “The Monkees were an unabashedly manufactured band, created by Hollywood producers in the 1960s to capitalize on the astounding popularity of the Beatles. The members — Mr. Tork (the oldest, at 24), Davy Jones, Micky Dolenz and Mike Nesmith — were cast as the stars of an NBC sitcom, “The Monkees” (1966-68), in which they performed and dealt with comic situations with a childlike irreverence”.

Tork, if not an accomplished musician certainly a capable one, was hired because his good friend, Stephen Stills was not considered TV photogenic enough. However Stills recommended his friend who was “positioned as the goofy one, the court jester. The director Bob Rafelson, one of the show’s creators, compared him to Harpo Marx.” Just as there now two Beatles remaining, there are now two Monkees still with us, Texan Michael Nesmith and drummer Mickey Dolenz. As we once said, they were bigger than big and now they are two.

In the bigger than big category there are now approximately 35 days or just over 800 hours left before a no-deal Brexit is set to take effect. To say there is disarray in the British political establishment over this upcoming date absolutely belies the insanity which is being reported in the news here in the UK. While in America we certainly have been told about the lack of consensus among the UK political class for any one acceptable solution, here on the ground I can only say it is exponential more so. Indeed it was driven home most clearly this week with a group of (now former) Labor MPs leaving their party to form an independent group and three Tory MPs leaving their party to join this group. They all have not yet formed a new political party but that development seems only days away.

In meetings and presentations I have made this week, the Brits have been most interested in the US political scene and what might happen to Trump. However I have talked to numerous people about the impact of a no-deal Brexit on international business, the fight against bribery and corruption and compliance programs. Obviously, a no-deal Brexit will negatively impact the flow of goods and services from the UK to EU countries and vice-versa. Unless there is some deal, Ireland will revert to being split with a hard border. From long lines at Calais and Bristol for trucks, to lengthy delays at St. Pancras station for the Eurostar, to long passport control lines, the delays in transit will be one of the most public and no doubt irritating effects of a no-deal Brexit.

In one of the most disturbing aspects yet to arise in the fight against international bribery and corruption, German authorities have announced they will no longer extradite German citizens to the UK to stand trial. The Financial Timeshas reported that German authorities will no longer honor UK requests made under the European Arrest Warrant to send those charged with crimes under British law back to the UK to stand trial. The article noted that “Since 2010, the UK has made requests for the extradition of 15 German nationals, who were sought for offences such as child sexual offences, money laundering, fraud and drug trafficking. The European Arrest Warrant process can take as little as 48 days to complete in contested cases.” Unfortunately, this will be what one EU official called,  “a “sign of things to come” when Brussels and London try to find ways to overcome obstacles to continuing police and crime co-operation.”

On the compliance front there will no doubt be a great number of challenges as well. From the mundane operation of an international business such things as Visas and Passport Controls will now again have to be considered for any internal investigation or even a more routinely scheduled audit. Of course, GDPR will now become a prime concern as the UK will not be a part of the EU. Companies will have to map out all data assets and revamp policies around collection, storage, or usage of EU resident personal data. If you uncover something involving an EU citizen, will you be able to turn it over to the UK Serious Fraud Office (SFO) or other regulators? If you do not, will you receive sufficient cooperation credit? Open questions at this point.

One of the larger compliance headaches will be in the related categories of product compliance and efficient and functioning supply chains. Currently under the Mutual Recognition Principle, goods which are compliant with the national laws of one EU Member State can be sold in another EU Member State, even if the national requirements of the latter are different to those of the former in relation to the goods. That ends on a no-deal Brexit, where UK businesses exporting goods only meeting UK standards would have to meet the national requirements of the first EU country where they are placed on the market. It may therefore no longer suffice that the goods meet UK national requirements and so this could add an extra layer of compliance for UK businesses.

Supply chains and their attendant compliance issues will be front and center with a no-deal Brexit. For those companies using a just-in-time EU based supply hub, there will be significant disruption simply from the delivery timing and business process perspective. But it is more than simply the movement of goods, but other considerations as well. In a PwC client alert, it stated, “Businesses have to be ready to assess a three-way legal impact on contracts, people and intellectual property. How easy is it to renegotiate existing contracts, or leave them if you need to? What safeguards can you build into new contracts to protect against uncertainty?”

The insanity of a no-deal Brexit was counting down even as you were reading this blog post. To help ameliorate this negativism, I suggest you plug in your headphones (or just be modern and go Bluetooth) and listen to some of the top hits of Peter Tork and The Monkees. It is guaranteed to put a smile on your face for at least a few minutes of the 800+ hours left before a no-deal Brexit takes place.

The Monkees Set List (from YouTube)

Last Train to Clarksville

Daydream Believer

Pleasant Valley Sunday

I’m a Believer

(Theme From) The Monkees

A Little Bit Me A Little Bit You

(I’m Not) Your Steppin’ Stone

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 tfox@tfoxlaw.com.

© Thomas R. Fox, 2019

We are back with our fan favorite Oscar movie month. During the month of February each year, we look at Oscar-winning Best Pictures and consider the leadership lessons we glean from our viewing. This month we look at three: No Country for Old Men, The Sting and The Last Emperor. In this episode of 12 O’Clock High, a podcast on business leadership, Richard Lummis and I take at the 1973 Best Picture winning film, The Sting. Some of the highlights were:

  • Best Costume Design Oscar to Edith Head was key reason for the film’s success;
  • How many red flags did Doyle Lonnegan miss involving Gondorff and Hooker?
  • How did Marvin Hamlisch’s interpretation of Scott Joplin enhance the movie?
  • The script was discovered in an agent’s ‘slush pile’ of unread scripts; and
  • How can a leader use the talent and resources available to him or her to achieve a goal?