In this episode Richard Lummis and I consider the movie Dunkirk and the leadership lessons which can be drawn from the movie and historical events. If you have not seen it, I would suggest you go to see what I believe is the summer’s top movie, Dunkirk. It is great cinema, good history and presents the view of soldier on the ground from the English perspective. It unfolds on land, sea and air; in decreasing time frames of one week, one day and one hour. I was lucky enough to see it in glorious 70MM wide screen so the resolution was outstanding. There are several leadership lessons which I believe can be learned from the British (and German) experiences at Dunkirk.

If you have not seen it, I would suggest you go to see what I believe is the summer’s top movie, Dunkirk. It is great cinema, good history and presents the view of soldier on the ground from the English perspective. It unfolds on land, sea and air; in decreasing time frames of one week, one day and one hour. I was lucky enough to see it in glorious 70MM wide screen so the resolution was outstanding. I do not think a spoiler alert is really necessary to tell you the British managed to evacuate nearly 400,000 men from certain annihilation. It may have begun as a disastrous retreat but it ended as a glorious victory which continues to inspire Brits today. As we were leaving the theater, my wife said it made her proud to be British.

There are several leadership lessons which I believe can be learned from the British (and German) experiences at Dunkirk, which was a series of battles, campaigns and events that lasted from May 25, 1940 until June 4, 1940. Obviously, Winston Churchill was the key English political figure in this entire series of events. While most remember his stirring post evacuation speech and apparent iron will to bring the British Army home to continue the fight, as with most of history, it was more nuanced than that simple narrative. The first thing Churchill had to do was navigate a War Cabinet made up of both Tories and Labour ministers where not everyone wanted to continue the fight. Some thought only a peace treaty or negotiation with the Germans would save England from the destruction wrecked on the Continent by Hitler. Churchill was able to move the War Cabinet to a position of resistance.

A Korn Ferry Institute piece, entitled “Dunkirk: What a Military Crisis Can Teach Us”, noted, “Beyond the entertainment value, however, business leaders may find some powerful lessons on the big screen: the importance of organizational agility in the face of a sudden turn of events; being decisive in setting forth and communicating a strategy; and, most important, having the courage to step up and lead in a crisis.” The piece went on state, “Business leaders may never face a crisis of the magnitude of a military battle or the life-or-death consequences of a plane crash. But they can learn lessons from how to emerge successful from urgent and dire events.” The article quoted Gerry McNamara, who said “It takes leaders who can communicate a vision—identify the problem and ‘take a picture’ of what results look like—what success looks like when the problem is resolved”.

Brian Dodd, in his On Leadership blog post entitled “19 Leadership Quotes and Lessons from Dunkirk, provided his thoughts on some of the key leadership lessons from the entire series of events. I found several of them important and I have adapted them for any Chief Compliance Officer (CCO) going forward.

  1. Smart Leaders Understand The Value Of Partnership – “He’s on me.” “I’m on him.” – Tom Hardy was one of a three-man squadron of British fighter pilots providing air support for the British convoy sent to evacuate the troops. Of the three, one was shot down, one ditched in the Channel and Hardy’s plane ran out of gas, landed on the beach where he scuttled it and he was captured. For any CCO, you should partner with other corporate functions and disciplines to accomplish anything.
  2. Smart Leaders Always Create Options – “Many of the soldiers on boats positioned themselves with an escape route if bombed. This would allow them not to become trapped below and drown.” This is the antithesis of Elizabeth Holmes, Chief Executive Officer (CEO) of Theranos, who famously said if you have a Plan B, you have already failed. In the business world, as in combat, you must have a backup plan as the business situation is never static.
  3. Passivity Is Not a Leadership Strategy – Mr. Dawson noted, “There won’t be a home if we don’t get our men across the Channel.” This is most clearly borne out in the Department of Justice’s (DOJ’s) Evaluation of Corporate Compliance Programs (Evaluation) which focuses on the operationalization or doing compliance. As Hui Chen has noted, the Evaluation is designed to get companies to ask questions about their own compliance program and incorporate the answers into the decision-making calculus going forward.
  4. A Leader’s Greatest Ability Is Their Availability – Mr. Dawson’s son said, “We have to pick up survivors.” He then noted, “To do that we must survive ourselves.” Fortunately for the CCO the business equivalent is not so drastic. However, it does bring up the larger truth that to be successful you need to get out of the office and into the field to meet your troops, whether it be your compliance team or your employee base.
  5. It Takes Everyone To Survive Times Of Desperation – In the English version of the Alamo, hundreds of average citizens sailed their private vessels to Dunkirk to rescue soldiers and get them safely back to England. Chuck Duross once referred to the compliance profession as a company’s “Alamo” to which I gingerly responded that everyone was slaughtered at the Alamo. However, that was not true at Dunkirk and even if a company has sustained systemic compliance violations at the C-Suite level, the company can make a comeback by stepping back and following the requirements under the FCPA Pilot Program.
  6. Ordinary People Have the Capacity to Do Extraordinary Things – Ordinary people used their personal vessels to rescue the soldiers. One of the greatest parts of the Dunkirk story was the response of the ordinary Englishmen and women who responded to the call for boats. Yet these boats largely ferried men from the beaches out to large transport ships moored in deeper waters and did not ferry the men back to England. The is the role that many corporate employees can play for any compliance function, doing their jobs to operationalize compliance.

Given the sad state of current Hollywood movie-making it may not seem a stretch to be the summer’s best film. Yet Director Christopher Nolan made a devastating war film without cursing and without undue gore, all the while communicating the horrors and terror of the individual soldiers at Dunkirk. It is worth it for that accomplishment alone. But also consider it for the leadership lessons you can learn.

 

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, 2017

In this episode Mike Volkov and I discuss the two official pronouncements from the Sessions’ Justice Department regarding FCPA enforcement. They were both declinations used under the FCPA Pilot Program, which was announced in April 2016. The first declination involved Linde Gas North America LLC and Linde North America Inc. Linde Gas is a wholly owned subsidiary of the Linde Group, a German based entity which is listed on multiple stock exchanges in Germany, but not listed in the US.  The second declination involved CDM Smith Inc. a privately held company, headquartered in Boston MA. As neither company is a US publicly listed entity, neither is subject to jurisdiction of the SEC. Hence both declinations were granted with the notation of declinations with disgorgement. In Linde Gas, the disgorgement amount was $7.8 million and forfeit $3.4 million, for a total of $11.2 million and in the CDM Smith declination the disgorgement amount was $4.037 million. Both declinations were superior results obtained by the companies as both had clearly violated the FCPA, for multiple years in ongoing bribery and corruption schemes.

For more on these two enforcement actions see the following:

  1. Linde in the Republic of Georgia: A Declination and Lessons Learned by Tom Fox;
  2. A Second Superior Result – CDM Smith Obtains a Declination by Tom Fox; and
  3. Justice Department Resolves Two Cases Under FCPA Pilot Program by Mike Volkov.

Ed. Note-today we have a guest post from Brian Alster, Global Head of Compliance and Supply, Dun & Bradstreet

With a growing number of complex regulations and directives, the only thing that is constant right now in the regulatory environment is change. Supply chain leaders and compliance professionals alike continue to grapple with how best to adequately identify, screen, and gain visibility into ownership structures of suppliers, resellers, manufacturers, distributors, and customers so that they understand exactly who they are doing business with at all times.

What’s at Stake?

Companies can unknowingly finance goods that are potentially obtained illegally or sold on the black market. Procurement teams that are unaware of the third-party restrictions and activities and have antiquated systems may put their company at risk. Without proper visibility, these teams could unknowingly be funding terrorism and human trafficking.

It’s not just regulatory concerns either. A higher overall demand for transparency and provenance today means there is more focus on how corporations conduct business and with whom. The demand for green and sustainable products and services, responsible sourcing, diversity in suppliers, and ethical business practices requires the corporate procurement teams to rely on consistent, fast, accurate, and global business compliance data and analytics that give them enough visibility into every supplier relationship in order to manage those relationships. At the same time, protecting brand reputation and avoiding costly non-compliance fines is also crucial. With the prevalence and speed of social media and digital news, a company’s image, honed over years or even decades, can be destroyed in mere minutes by a lack of supply chain insight.

Current Internal Challenges

As pressure mounts for Chief Compliance Officers (CCOs) to know third parties – customers, vendors/suppliers, TPIs, business partners, and acquisition targets — new pressures are growing for Chief Procurement Officers (CPOs) to Know Your Vendor (KYV), and for Chief Technology Officers (CTOs) to connect and consolidate platforms to onboard a customer, partner, or vendor. While CPOs and CCOs need to create a framework for vendor compliance around a single source of master data, most corporations use disparate systems and data that are dependent on the department’s individual compliance knowledge and corporate standards for registration and screening of outside entities. That structure is inadequate in a regulated world, and procurement leaders are often not equipped to do the level of due diligence required and instead rely on the traditional self-assessment onboarding of a supplier. That just won’t cut it.

In-depth research is needed to identify ultimate beneficial ownership (UBO) and third-party risks. No supplier with ties to or involvement in corrupt practices such as human trafficking or money laundering is going to self-report, so procurement must take the work on themselves and procure the third-party data needed to determine risk, protect against exposure, and comply with regulations around ethics, labor, diversity, health and safety, the environment, governance, and responsible sourcing.

Pressure is also mounting for companies to adopt corporate sustainability practices, such as the ten principles promoted by the United Nations Global Compact, which cover everything from areas of human rights and labor to environment and anti-corruption. Investors are also placing a premium on companies that have solid Environmental, Social and Governance (ESG) practices, because they often achieve greater profitability and are better investments. One-third of sustainability is risk management, which is comprised of regulatory management, reputation management, and operational risk management.

Real World Costs

The entire process, and the requirement for individual groups within a company to work together is daunting, but the rising costs associated with compliance pale in comparison to risk. Perhaps the most obvious and top-of-mind risk is the financial implication of being assessed fines for regulatory noncompliance. As two recent examples on the supply side illustrate, the fines can stop your business cold: Rolls-Royce agreed to pay $830 Million to UK, US, and Brazilian authorities to settle bribery and corruption allegations. In another recent example, two major Brazilian companies, Odebrecht and Braskem, were hit with a record $3.5 billion in criminal fines in what authorities say is the largest foreign bribery case in history. While Odebrecht’s US portion of the fine was significantly reduced, from $260 million to $93 million, fines that are assessed at such high million- and even billion-dollar amounts affect even the most profitable corporations.

The bottom line is that two key internal corporate functions — procurement and compliance — must work in lockstep as supply-side due diligence responsibilities fall increasingly to CPOs.

This convergence is crucial, but it’s also intuitive. Compliance teams have the master data and tools necessary to dig into third-party involvement and UBO, which is exactly what procurement teams across industries need to proactively manage third-party relationships efficiently, while accelerating due diligence, all while keeping up with ever-changing regulations and addressing customer demand.

Jay and I return for a wide-ranging discussion on some of the week’s top compliance and ethics related stories, including:

  1. The Mattis Memo on ethics. See Tom’s blog post on why this Memo is so significant for the compliance practitioner. Also check out Matt Kelly’s blog post on Radical Compliance.
  2. More Data Security Compliance on EU Horizon. See article Mara Lemos Stein’s article in Risk and Compliance Journal in the WSJ.
  3. One of the great musicians of the 20th century died this week, Glen Campbell. Tom pays tribute in a moving blog post.
  4. Matt Kelly explores the intersection of FCPA and non-GAAP financial reporting. See Matt’s article in Radical Compliance.
  5. Jay asks if FCPA defenses counsel are becoming to whiny, based upon an article in GIR (sub req’d) by Jenner & Block lawyers, David Bitkower and Nicholas Barnaby and associate Marguerite Moeller entitled, “DOJ must beware unintended consequences, as multilateral settlements rise
  6. Everything Compliance, Episode 16 is out. It is our first book review episode. We consider Jesse Eisinger’s book the Chickenshit Club. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra. Eisinger and key book source Paul Pelletier have agreed to come on the FCPA Compliance Report to discuss the book next month.
  7. This month’s podcast series on One Month to a More Compliance Program has premiered. In August I review how to have greater continuous improvement in your compliance program. Affiliated Monitors is this month’s sponsor. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
  8. Tom surpasses 2000 blog posts. See his blog post on surpassing 2000 blogs posts here.
  9. Jay discusses his Weekend Report, And you may ask yourself, well How did I get here?