As Tom and Jay mourn the death of cultural icon Stan Lee, they consider that story and look at some of the week’s top compliance and ethics stories.

  1. Why Goldman’s ‘tick the box’ compliance program not good enough. FT editorial board. (sub req’d) What are 4 questions the DOJ is likely to ask and what are 4 areas of inquiry under the FCPA Corporate Enforcement. Tom explores in Part I and Part II. Mike Volkov asks ‘what about respondent superior’?; in his blog Crime, Corruption and Compliance. Richard Bistrong explained what happened during his guilty plea hearing for his FCPA criminal action, in the FCPA Blog.
  2. How can ISO 37001 be fixed? Joe Murphy lists 44 ways on the FCPA Blog.
  3. MoneyGram spanked again as it’s DPA is extended. John Rausch reports in his Dipping Through Geomotries
  4. Tesla names new Board Chair. Will she be able to rein in Elon Musk? Tom Krisher reports in the Washington Post.
  5. Has your company assess the impact of Brexit? If not, the SEC says you should do so. Tatyana Shumsky reports in the WSJ Risk & Compliance Journal.
  6. Why 2019 may well be a challenging year for internal audit. Rafael Go and Leslee McKnight write in Corporate Compliance Insights.
  7. Are companies meeting their human rights requirements? Sam Rubenfeld explores in WSJ Risk & Compliance Journal.
  8. What is the business impact of bribery and corruption in Venezuela? Chevron weighs pulling out. Kejal Vyas and Bradley Olson report in the WSJ.
  9. Chuck Duross says cutting back on compliance programs would be both short-sighted and foolish. Adam Dobrik reports in GIR.
  10. How has GDPR impacted M&A deals? Nina Trentmann reports in the WSJ Risk & Compliance Journal.
  11. In a sponsored podcast, Tom visits with Vin DiCianni and Eric Feldman of Affiliated Monitors on the impact of culture, compliance and monitoring for non-US companies in countries outside the US. Part I-Introduction, Part II-International Enforcement Trends, Part III-Spain, Part IV-Development of Monnitoring in International Enforcement and Part V-International Challenges for Monitors.

For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.

NOVEMBER 16, 2018 BY TOM FOX

In today’s edition of Daily Compliance News:

NOVEMBER 15, 2018 BY TOM FOX

In today’s edition of Daily Compliance News:

  • How has GDPR impacted M&A deals? (Wall Street Journal)
  • AstroBall nominated as one of the best business books of 2018.(Amazon)
  • What is a public spanking? Goldman Sachs finds out as the FT Editorial Page calls out its check the box compliance mentality. (Financial Times)
  • Why cutting back on compliance programs would be short-sighted and foolish. (GIR)

If you thought I would go the full week without a proper homage to Stan Lee, think again, as today I profile my favorite Marvel characters, the Fantastic Four. Over the next two blog posts I will paying tribute to Lee’s creation. Today, I will look at how the Fantastic Four became ‘fantastic’. Tomorrow, I will take up each character. Which of the Fantastic Four is your favorite character? Leave a note in the message tab and let’s find out. So a big thank you to Stan Lee for his creation of the Fantastic Four, all of whom have given me many years of enjoyment in print, TV and film. 

The Fantastic Four gained superpowers after exposure to cosmic rays during a scientific mission to outer space. In this trip, the ship carrying the four was bombarded with cosmic rays. According the Comic Vine, “When the rocket ship eventually crash-landed back on Earth the crew saw Sue briefly disappear when as turned invisible. This caused Ben to get angry with and aggressive towards Reed which triggered a radical physical transformation causing Ben to suddenly change into a monstrous “thing.” Ben tried to attack Reed, but Reed transformed into Mr. Fantastic, using his lengthy arms to wrap them around Ben. Johnny then suddenly changed into the Human Torch. Reed gathered the group together and convinced them that they must use their powers to help mankind. Thus the Fantastic Four was formed, though Ben was somewhat reluctant. By the way, it was Susan Storm who first called Ben “a Thing” and so when it came time for each member of the team to choose names, Ben decided to go with the name that Susan had already given him. This must have been Ben’s way of getting back a little at Reed and Sue, for their being at least partially responsible for his tragic transformation.”

The Fantastic Four introduce four questions that Goldman Sachs will have to answer around its role in the 1MDB scandal. While the company has tried to separate itself from its former partner Tim Leissner and former Managing Directors Roger Ng and Andrea Vella; given Leissner’s remarks about company culture and the company’s expectations at his guilty plea hearing this past summer. David Crow, writing in a Financial Times (FT) article, entitled “Key questions for Goldman Sachs about Malaysian scandal, said that Goldman Sachs was scheduled to meet with the Department of Justice (DOJ) this week. Crow believes there are four key areas of inquiry the DOJ will pose to Goldman.

  1. Was this the work of a rogue banker?

Was Leissner really a rogue employee or was the culture of Goldman Sachs such that it was expected that a partner could misrepresent to the compliance function? In a court hearing, “Leissner said concealing facts from internal compliance officials was “very much in line” with the culture at the bank”, stating, ““I conspired with other employees and agents of Goldman Sachs very much in line of its culture of Goldman Sachs to conceal facts from certain compliance and legal employees of Goldman Sachs,” he said.”

  1. Has Goldman co-operated fully with prosecutors?

Goldman has tried to claim, “that much of the information in the complaint against Mr Leissner was provided by the bank.” However the underlying information on the 1MDB scandal has been known for years. It has consistently been reported on in the Wall Street Journal (WSJ) and FT. According to Dennis Lormel, a former chief of the FBI’s Financial Crimes Program, “prosecutors will ask when Goldman first suspected that Mr Leissner had acted illegally, and how quick it was to inform the relevant authorities.” Further, ““The fact the bank is co-operating is in their best interests, but the question becomes ‘did Goldman self-report when they became aware of any problems’. If they did so expeditiously, they will be less culpable,” he said.”

  1. Who knew?

It is clear that Leissner attempted “to conceal the importance of Jho Low, a Malaysian financier at the heart of the 1MDB scandal who acted as a middleman to grease the wheels on deals with Goldman.” Unfortunately it has now come out that “Lloyd Blankfein, former chief executive and current chairman, attended a meeting with Mr Low on two occasions.” John Byrne, a former head of the Association of Certified Anti-Money Laundering Specialists, noted, “Even if the bank can show Mr Leissner acted entirely alone, prosecutors could argue that Goldman had “collective knowledge” of the illegality.” He further stated, “If the business people knew something and the compliance did not, you can combine those to get a collective knowledge theory of liability.”

  1. What has Goldman done to fix the problems?

Prosecutors will expect Goldman to show that it has investigated Leissner’s other deals and a more wide-ranging investigation of deals across the “region to ascertain whether 1MDB was an isolated instance, or if it was typical of his way of doing business. And they will ask how he managed to circumvent the bank’s oft-touted compliance operation. Elise Bean, a former congressional investigator, said she would ask questions such “Are these the only bribes he paid?” “Is this the only type of deal like this? How was he able to bypass compliance and legal personnel? And what has Goldman done to tighten its procedures?”

Just as the Fantastic Four were pummeled by cosmic rays that led to their transformation, Goldman Sachs continues to be pummeled literally across the globe. Reuters reported that “Malaysian Prime Minister Mahathir Mohamad said bankers at Goldman Sachs Group Inc (GS.N) “cheated” the country in dealings with state fund 1MDB and that U.S. authorities have promised to help return the fees the Wall Street bank earned from the fund.” Bloomberg reported that the firm’s share price had dropped to its lowest level since 2011. It cited Gerard Cassidy, from RBC Capital Markets, who said ““It’s not so much the dollar amount. It’s more that we don’t know all of the facts yet, we don’t know all of the important points to the story at this time. It’s the fear of the unknown.””

Tomorrow I will look at the individual members of the Fantastic Four and consider four questions from the FCPA Corporate Enforcement Policy.

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, 2018

NOVEMBER 14, 2018 BY TOM FOX

In today’s edition of Daily Compliance News:

  • Creating jobs not a defense to FCPA violations. (FCPA Blog)
  • Bad Blood wins FT Financial Book of the Year. (Financial Times)
  • Creating jobs not a defense to FCPA violations. (FCPA Blog)
  • In a win for fairness both Google and Facebook end forced arbitration for sexual harassment claims? (Washington Post)
  • Jay Clayton worries companies are understating the Brexit effect. (Wall Street Journal)