Lear's FoolI conclude my week honoring the 400th anniversary of the death of Shakespeare by using my favorite character in all his work to introduce today’s post. He is The Fool from King Lear. Of Shakespeare’s many theatrical innovations, his transformation of The Fool from the Renaissance Court Jester of songs, music, storytelling, medieval satire and physical comedy to commentator is right up there for me. The Fool became closer to the Greek Chorus. Shakespeare brought the Chorus commentary function back. As noted in Wikipedia, “Where the jester often regaled his audience with various skills aimed to amuse, Shakespeare’s fool, consistent with Shakespeare’s revolutionary ideas about theater, became a complex character who could highlight more important issues. Like Shakespeare’s other characters, the fool began to speak outside of the narrow confines of exemplary morality. Shakespeare’s fools address themes of love, psychic turmoil, personal identity, and many other innumerable themes that arise in Shakespeare”.

While Lear’s Fool was actually a font of wisdom and commentary, the same cannot always be said for the corporate fools who put evidence of bribery and corruption in emails, excel spreadsheets and PowerPoint slide deck presentations. In Foreign Corrupt Practices Act (FCPA) training I always remind attendees that if you put your bribery scheme in emails, it will be uncovered. Further, if you put together an excel spreadsheet tying your nefarious acts, such as hiring the family member of a foreign official or state owned enterprise employee to the award of a contract, it will be uncovered. Now I find I must supplement my training to add the following admonition: do not put your fraudulent scheme in a PowerPoint slide deck for presentation to senior management.

The issue previously arose with our friends at GlaxoSmithKline PLC (GSK) who put together such a presentation in 2013 for targeted bribery campaign code named “Vasily” borrowing its name from Vasily Zaytsev, a noted Russian sniper during World War II. According to Wall Street Journal (WSJ) reporter Laurie Burkitt the campaign “targeted 48 doctors and planned to reward them with either a percentage of the cash value of the prescription or educational credits, based on the number of prescriptions the doctors made.” While Burkitt did note “A Glaxo spokesman has said the company probed the ‘Vasily’ program and [the] investigation has found that while the proposal didn’t contain anything untoward, the program was never implemented.” But, from my experience, if you have a bribery scheme that has its own code name enshrined in a PowerPoint slide deck presentation, even if you never implemented that scheme, it probably means that the propensity for such is pervasive throughout the system.

Yet now we have more and greater evidence of corporate tomfoolery from the Volkswagen (VW) emissions-testing scandal. In an article in the New York Times (NYT), entitled “VW Presentation in ’06 Showed How to Foil Emissions Tests”, Jack Ewing reported that a top technology executive at VW prepared a PowerPoint presentation for management in 2006, laying out in detail how the automaker could cheat on emissions tests in the United States. Ewing wrote, “It provides the most direct link yet to the genesis of the deception at Volkswagen, which admitted late last year that 11 million vehicles worldwide were equipped with software to cheat on tests that measured pollution in emissions.”

The article noted, “It is not known how widely the presentation was distributed at Volkswagen. But its existence, and the proposal it made to install the software, highlight a series of flawed decisions at the embattled carmaker surrounding the emissions problem.” Moreover, “As the PowerPoint underscored, people inside Volkswagen were aware that its diesel engines were polluting significantly more than allowed. Yet company executives repeatedly rejected proposals to improve the emissions equipment, according to two Volkswagen employees present at meetings where the proposals were discussed.”

As more and more of the internal investigation dribbles out, VW’s claim that its emission-testing defeat device was the creation of a small group of ‘rogue engineers’ is rightly dying a death of 1000 cuts. The company began to understand that “The pattern of those [regulatory] tests, the presentation said, was entirely predictable. And a piece of code embedded in the software that controlled the engine could recognize that pattern, activating equipment to reduce emissions just for testing purposes.” This language demonstrates not only the reason behind the defeat device but the requisite mens rea to prove intent to deceive.

But VW did not stop at this aha moment of realization. The company made the defeat device better over the years. The article reported that the defeat device had been enhanced over the years. The software that allowed VW cars to appreciate when the car was being tested, differentiated from when the car was in use on the road. It measured such criteria as determining whether the steering wheel was in use and “During regulators’ tests, the engine software would turn up the pollution controls. When it was on the road, equipment designed to neutralize harmful nitrogen oxides would turned down, resulting in emissions that were up to 40 times the legal limit.” In tech terms, the software was upgraded from defeat device 1.0 to 2.0 and beyond to “detect other telltale signs of a regulatory test.”

The rogue employee defense was never going to work. To have software in place for over 10 years designed to defraud a regulatory scheme, requires a wide swath of knowledge in any organization. But not only within the organization, those vendors in the supply chain, which supplied component parts or products had to be in on the entire scheme as well. Moreover, the very top of the company has been shown to have been aware of these issues. Ewing said, “The management board led by Martin Winterkorn, the chief executive who resigned in September after the admission of cheating, repeatedly rebuffed lower-ranking employees who submitted technical proposals for upgrading the emissions controls, according to the two people who attended meetings where the proposals were discussed. The management board rejected the proposals because of cost”.

You might think only idiots would put into emails, spreadsheets and PowerPoint presentations not only intent to violate laws but also their plans. As bad as all of this is, it points to an even greater insight relevant to FCPA enforcement, that being the Myth of the Rogue Employee. Davide Torsello and Alison Taylor, in a post in the FCPA Blog, detailed some of the major reasons why the myth is just that, a myth. The VW PowerPoint adds yet another spike in its coffin. If your corporate culture is such that you not only communicate internally about illegal conduct but also record those communications, it speaks to a culture that supports and embraces skirting the rules. Commentators who claim that companies should not be punished by the actions of a small group of employees miss this greater truth; these employees would not engage in illegal conduct if their company, either through compensation, succession or other remuneration, did not reward them for engaging in such conduct.

That is the greater truth that Lear’s Fool would impart to corporate management.

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, 2016

Much Ado About NothingHow does Shakespeare portend social media in the 21st century? I would submit that one only need look at Much Ado About Nothing to see how it should all play out. As with all Shakespeare’s plays there is quite a bit going on but the play centers around the action and dialogue of Benedick and Beatrice who go after each other in a manner which shames modern NBA trash-talkers. Apparently everyone else in the play understands the two are meant for each other so they engage in a very social media style of communication to put the two together. Of course, as this is a comedy, everyone ends up married so Beatrice and Benedick, prompted by their friends’ interference, finally, and publicly, confess their love for each other.

Yesterday I wrote about ways to think through using social media in your Foreign Corrupt Practices Act (FCPA) anti-corruption compliance program. Today I want to explore how one company and one Chief Compliance Officer (CCO) actively uses social media to make more effective the company’s compliance regime. The company is the venerable Dun & Bradstreet (D&B) and its CCO, Louis Sapirman, whom I visited with about his company’s integration of social media into compliance.

Initially Sapirman emphasized the tech savvy nature of the company’s work force. It is not simply about having a younger work force. If your company is in the services business it probably means an employee base using technological tools to deliver solutions. He also pointed to the data driven nature of the D&B business so using technological tools to deliver products and solutions is something the company has been doing for quite a while. This use of technological tools led the company to consider how such techniques could be used internally in disciplines which may not have incorporated them into their repertories previously.

Not surprisingly, with most any successful corporate initiative, Sapirman said it began at the top of the organization, literally with the company’s Chief Executive Officer (CEO), Robert Carrigan. Sapirman noted that the CEO saw the advantage of using social media internally and challenged many in his organization to take a new look at the manner in which their functions were using social media. From there Sapirman and his team saw the advantages of using social media for facilitating a two-way communication. Moreover, Sapirman comprehended the possibility for use of social media for compliance with those external to the company as well.

Internally Sapirman pointed to a tool called Chatter, which he uses similarly to those in Twitter engaging in a Tweet-up. He has created an internal company brand in the compliance space, using the moniker #dotherightthing, which trends in the company’s Chatter environment. He also uses this hashtag when he facilitates a Chatter Jam, which is a real-time social media discussion. He puts his compliance team into the event and they hold it at various times during the day so it can accessed by D&B employees anywhere in the world.

He said that he ‘seeds’ Chatter Jam so that employees are aware of the expectations and to engage in the discussion respectfully of others. When they began these sessions he also reminded employees that if they had specific or individual concerns they should bring them to Sapirman directly or through the hotline. However he does not have to make this admonition any more, as everyone seems to understand the ground rules. Now this seeding only relates to the topics that each Chatter Jam begins with going forward.

One of the concerns lawyers tend to have about the use of social media is with general and specific topics coming up on social media and the ill it may cause the organization. Sapirman believes that while such untoward situations can arise, if you make clear the ground rules about such discussions, these types of issues do not usually arise. That has certainly been the D&B experience.

Each employee uses their own names during these Chatter Jams so there is employee accountability and transparency as well. Sapirman said they further define each communication through a hashtag so that it can not only immediately be defined but also searched in the archives going forward. He provided the examples of specific regulatory issues and privacy. This branding also enhances the process going forward.

I asked Sapirman if he could point to any specific compliance initiatives that arose during or from these Chatter Jams. Sapirman emphasized that these events allow employees the opportunity to express their opinions about the compliance function and what compliance means to them in their organization. One of these discussions was around the company’s Code of Conduct. He said that employees wanted to see the words “Do The Right Thing” as the name of the Code of Conduct.

I inquired about D&B’s use of social media in connection with their third parties. Sapirman said that the company allows some of them access to its internal Chatter tools to facilitate direct communications. Further, these external contractors can connect with both Sapirman and the company through Twitter. He said that he is consistently communicating to the greater body of customers about the compliance initiatives or compliance reminders on what the D&B compliance function is doing and how it is going about doing them. He believes it is an important communications tool to make sure that he and his team are getting their compliance messages out there.

Sapirman also described using Chatter in a manner that sounded almost like Facebook and its new live video function. He said they can deliver short video vignettes about compliance to employees. The compliance function or the employee base can develop these.

All of the initiatives Sapirman described drove home to me three key insights. The first is how compliance, like society, is evolving, in many ways ever faster. As more millennials move into the workforce, the more your employee base will have used social media all their lives. Once upon a time, email was a revelatory innovation. Now if you are not communicating, you are falling behind the 8-ball. Employees expect their employers to act like and treat them as if this is the present day, not 1994 or even 2004.

The second is that these tools can go a long way towards enhancing your compliance program going forward. Recall the declination to prosecute that Morgan Stanley received from the Department of Justice (DOJ), back in 2012, when one of its Managing Directors had engaged in FCPA violations? One of the reasons cited by the DOJ was 35 email compliance reminders sent over 7 years, which served to bolster the annual FCPA training the recalcitrant Managing Director received. You can use your archived social media communications as evidence that you have continually communicated your company’s expectations around compliance. It is equally important that these expectations are documented (Read – Document, Document, and Document).

Finally, never forget the social part of social media. Social media is a two-way communication. Not only are you setting out expectations but also these tools allow you receive back communications from your employees. The D&B experience around the name change for its Code of Conduct is but one example. You can also see that if you have several concerns expressed it could alert you earlier to begin some detection and move towards prevention in your compliance program.

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, 2016

ShakespeareApril 23 is the 400th anniversary of the death of William Shakespeare. Coincidently, April 23 is also the assumed birth date of Shakespeare, who had the theatrical good sense to die on the same date he was born. In an essay in The New York Review of Books, Stephen Blatt wrote, “Shakespeare’s death on April 23, 1616, went largely unremarked by all but a few of his immediate contemporaries. There was no global shudder when his mortal remains were laid to rest in Holy Trinity Church in Stratford. No one proposed that he be interred in Westminster Abbey near Chaucer …No notice of Shakespeare’s passing was taken in the diplomatic correspondence of the time or in the newsletters that circulated on the Continent; …no tributes were paid to his genius by his distinguished European contemporaries. Shakespeare’s passing was an entirely local English event, and even locally it seems scarcely to have been noted.”

We all take notice now.

To honor the Bard, next week I will do something I have wanted to do for sometime; mining Shakespeare’s plays for lessons applicable to the modern day compliance practitioner in a best practices Foreign Corrupt Practices Act (FCPA) compliance program; with a week long series of blog posts dedicated to Shakespeare. I hope you will check out next week’s posts to see what I come up with to apply to you in the 21st century.

However, this week I am back from my annual trek to Social Media Marketing World’s annual conference. I try to attend such events that might appear to be as far from compliance as one can get to hear about new and different ideas that I can use or adapt for the compliance professional. The key over-riding theme of this year’s conference was the use of live video, what we used to call video streaming. I have decided to embrace this technology in my role as the Compliance Evangelist. I have now done three Periscope sessions to announce my daily blog post that I post on Twitter each morning.

I am extremely pleased to announce I will start later this morning a new Blab posting, entitled “This Week in FCPA”. Today’s show will be at 10:30 AM CDT but it will move to 9AM CDT going forward. My co-host for this 30-minute show will be Mr. Translations himself, Jay Rosen. We will review the week’s happenings in compliance in a live show format. It will be only 30 minutes so you will be able to digest happenings quickly and, hopefully, with some fun and light-heartedness.

You may recall, I co-hosted a podcast with Howard Sklar a few years ago with the same name. We lost Howard to the corporate world so I lost my co-host. Now I am back with Mr. Translations in a live format. You can find us on the Blab site, blab.im, and the link to the show can be found by clicking here. Please note that Blab is NOT supported by Safari so you will need Chrome or Internet Explorer to log in and watch or listen.

I am also pleased to announce my next FCPA Master Class, which will be held in Chicago on Monday June 13 and Tuesday June 14. This is the top nuts and bolts FCPA class around and I have intentionally set the price at a very affordable $1195.

Highlights of the class include:

  • Understanding the underlying legal basis for the law, what is required for a violation and how that information should be baked into your compliance program;
  • What are the best practices of an effective compliance program;
  • Why internal controls are the compliance practitioners best friend;
  • How you can use transaction monitoring to not only make your compliance program more robust but as a self-funding mechanism;
  • Your ethical requirements as a compliance practitioner;
  • How to document what you have accomplished;
  • Risk assessments – what they are and how you can perform one each year.

You will be able to walk away from the FCPA Master Class with a clear understanding of what the FCPA is and what it requires; an overview of international corruption initiatives and how they all relate to FCPA compliance; how to deal with third parties, from initial introduction through contracting and managing the relationship, what should be included in your gifts, travel, entertainment and hospitality policies; the conundrum of facilitation payments; charitable donations and political contributions, and trends in compliance. You will also learn about the importance of internal controls and how to meet the strict liability burden present around this requirement of FCPA compliance.

The FCPA Master Class will be based around my book, Doing Compliance: Design, Create, and Implement an Effective Anti-Corruption Compliance Program, which focuses on the creation, implementation and enhancement of a best practices compliance program. Each participant will receive a copy of my book, as well as all training materials to keep and use for reference purposes going forward.

The FCPA Master Class will be held on June 13 & 14, 2016 at the offices of Drinker, Biddle and Reath, 191 North Wacker, Suite 3700, Chicago, IL. A Certificate of Completion will be provided to all who attend in addition to the continuing education credits that each state approves. The cost to attend is $1,195 per person. Breakfast, lunch and refreshments will be provided both days. For more information or a copy of the agenda, or to register, information is available on my website, Advanced Compliance Solutions.

I hope that you can join Mr. Translations and myself for our first venture in FCPA Live Video. I look forward to you joining me at my next FCPA Master Class. And finally, I hope that you will help me to honor William Shakespeare by tuning in next week for my exploration of Shakespeare and compliance.

 

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, 2016