Show Notes for Episode 36, week ending January 20, the Jeff Bagwell in the Hall of Fame edition

  1. Jeff Bagwell admitted into the Hall of Fame. See article in Houston Chronicle.
  2. Rolls Royce-stunning $800MM global settlement, including resolutions with the UK SFO, DOJ and Brazilian authorities. See Tom’s blog posts on the FCPA Compliance and Ethics Report, Part I and Part II.
  3. Orthofix-another recidivist FCPA enforcement action-see the FCPA Blog
  4. Las Vegas Sands concludes its FCPA enforcement action. On the FCPA Blog.
  5. Jay’s question answered. See Tom’s blog post on the FCPA Blog.
  6. NFL Conference Championship Predictions

Show Notes for Episode 5, Year End Review, Part II

We turn to the 2016 year in review, in this Part II of a two-part series.

Jonathan Armstrong leads a discussion on Privacy Shield, information and data privacy issues the past year. Mike Volkov relates what he saw as the top enforcement highlights from 2016, the block-buster year for FCPA fines and penalties and the growing trend of globalization of enforcement. Matt Kelly discusses the arrival of front pay, and general escalation of retaliation risk for company’s vis-a-vis whistleblowers, ideas on auditing corporate culture and what types of data and information should go on a compliance dashboard.

For Matt Kelly’s posts on these topics see the following:

  1. Another Front in Retaliation Risk: Front Pay
  2. Ideas on Auditing Organizational Culture
  3. What Goes on a Compliance Dashboard?

Rants will return next week.

The members of the Everything Compliance panel include:

  • Jay Rosen (Mr. Translations) – Jay is Vice President of Legal & Corporate Language Solutions at United Language Group. Rosen can be reached at rosen@ulgroup.com.
  • Mike Volkov – One of the top FCPA commentators and practitioners around and is the Chief Executive Officer (CEO) and owner of The Volkov Law Group, LLC. Volkov can be reached at mvolkov@volkovlawgroup.com.
  • Matt Kelly – Founder and CEO of Radical Compliance, is the former Editor of the noted Compliance Week Kelly can be reached at mkelly@radicalcompliance.com
  • Jonathan Armstrong – Rounding out is our UK colleague, who is an experienced lawyer with Cordery in London. Armstrong can be reached at armstrong@corderycompliance.com.

 

In this episode Matt Kelly and I take a deep dive into a couple of recent SEC enforcement actions. The first involved L-3 Technologies and accounting irregularities. The second involves BlackRock and the continued issues around pre-taliation. We connect these enforcement actions to broader issues involving the COSO 2013 Framework, the DOJ mandated expertise in compliance, a speak-up culture and remedial actions. For additional information, check out Matt’s blog posts on these topics:

  1. Lessons Galore in New SEC Internal Controls Case; and
  2. SEC Dings BlackRock for Pre-Taliation Clauses.

It is time to give a shout out to one of Houston’s hometown hero’s, the Houston Rockets. Until the Houston Dynamos came along, they were the only professional sports franchise to bring a championship to Houston. They brought two actually, winning the National Basketball League (NBA) crown in 1994 and 1995. Since that time it is has been a dry hole, with the Rockets only once advancing to the Western Conference finals.

However, this year the Rockets have the best record in the NBA since December 1, with a sterling 17-2. This includes road wins over the Spurs, Thunder and Warriors. Not too bad a trifecta. They are led again by a much rejuvenated James Hardin (Fear the Beard) as point guard who is in the conversation for league Most Valuable Player (MVP). This all began with the hiring of offensive guru Mike D’Antoni as coach. While I, like many others, was skeptical, it has turned out so far as an inspired choice by General Manager (GM) Daryl Morey. Morey was one of the first NBA GM’s who focused on saber metrics and is fearless in trying out new concepts, new ideas, new players or coaches who may not seem to fit the traditional NBA profile. Morey keeps the big picture goal of bringing a title back to ‘Clutch City’ yet again.

I thought about Morey, the Rockets and a best practices compliance program when I read a recent article in the New York Times (NYT) Corner Office column by Adam Bryant, where he profiled Mike Tuchen, Chief Executive Officer (CEO) of the software vendor Talend, in a piece entitled “Watch the Road, Not the Wipers. I found the article had some very interesting implications for any Chief Compliance Officer (CCO) or compliance practitioner.

An early lesson for Tuchen was to focus on what he could control, not what he could not. He learned this lesson in college crew, he was undersized both in weight and height from his teammates. He said, “I had to figure out how I could make myself as efficient as possible, pound-for-pound. I had to make sure that every ounce I had was going to be as effective as I could be. So I asked, what could I do to make my diet as effective as possible? What could I do from a training perspective to work harder than the other guys?… That approach, focused on results with incredibly detailed measurement and course correction when needed, is so transferable to a work environment.”

As a CCO you are required to use the tools at hand. If you do not have enough head count or budget (and who does) use what you can more effectively. You may even be able to outsource more mundane compliance tasks to vendors which supply such services at a cost much reduced from your employee cost. As usual, you are only limited by your imagination.

Another key lesson Tuchen learned from crew was to stay focused and stay calm. He said that “When you’re on the water, you’ve got waves, wind and whatever else is going on. You can choose to either focus on that and use it as an excuse later on or ignore it.” His rowing coach phrased it another way, “When you’re driving and rain is pouring down, with the windshield wipers going, you can either watch the windshield wiper or you watch the road. Which is going to be more successful? That was just a fabulous reminder about staying focused and calm.”

Tuchen had an approach to leadership which resonated with me and I think every CCO should consider. He believes there are three basic components to leadership. First “is getting the right team together and having it really be a team, who have shared cultural values and who work together and support each other. It’s not just about having the right people.” For any CCO, this is critical with the disparate elements you need to have in every effective compliance program. These elements can be from Human Resources (HR) to IT to Internal Audit, to Accounting and Finance, to Internal Controls, to Legal and beyond.

The second is to “have a strategy of how you’re going to win. This is the chess match part of being a” business leader. Every CCO should have a one, three and five-year strategic plan going forward, all based upon ongoing risk assessments. As your company matures, grows and expands, your compliance program should do so as well. It also leads to the documentation being ready if or when the regulators coming knocking and a road map in annual budgetary requests.

Finally, is execution. As Baker Hughes Inc. (BHI) CCO Jay Martin says, execution is not only where the rubber meets the road in compliance but it is what distinguishes an effective compliance program from a paper program. Tuchen said it’s “about having a clear set of goals, with everyone aligned around them. And we have a scorecard that we share with the board and the whole company each quarter, and it shows red, green and yellow for our progress on each of the goals.” Execution can tie into your strategic plan but you must execute on that plan for your compliance program to be effective.

As a CCO you will probably be asked to assist in hiring employees for your compliance department or interviewing potential senior management candidates from the compliance perspective. In this regard I thought Tuchen’s thoughts on hiring were pertinent. When he interviews he noted, “The first questions are always going to be about management and leadership style. And I’ll ask a number of open-ended questions about what’s important to get right as a leader. Some people will talk about the people on the team and the best way to motivate them. The answers that kind of scare me are from candidates who talk about people as if they’re something on a spreadsheet. Leadership and management are all about people.” Clearly for Tuchen, leadership is about people and this should be so for any CCO who is interviewing as well.

Next Tuchen said he wants “to make sure that you’re resilient, because things don’t always go the way you want them to. So I’ll ask questions like, what’s the hardest problem you’ve ever solved? Why was it hard? What did you do uniquely well that someone else wouldn’t have been able to do, and why?” This is clearly appropriate for any CCO to inquire into for a new hire.

I found Tuchen’s thoughts on leadership very useful for any CCO to consider and remember to always keep your eyes on the road not the wipers.

 

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 Jay Rosen and I take a dive into the General Cable FCPA enforcement action, consider the ‘Invisible Hand’ of  Justice Department Compliance Counsel Hui Chen and greater regulatory enforcement, corporate response and innovation. We explain how these three factors combine in an ‘Invisible Hand’ to form a continuous improvement loop of compliance program innovation. It leads developments from cutting edge to best practices to becoming a routine part of an effective compliance program. We discuss the upcoming NFL divisional round of playoffs and conclude with Jay previewing the Jay Rosen Weekend Report. For more information on the General Cable FCPA enforcement action, check out my three-part blog post series:

Part I-the Bribery Schemes

Part II-the Comeback

Part III-the Denouement