31 Days to a More Effective Compliance Program

The call, email, or tip comes into your office; an employee reports suspicious activity somewhere across the globe. That activity might well turn into an FCPA issue for your company. As the CCO, it will be up to you to begin the process which will determine, in many instances, how the company will respond. This chapter will provide you with the steps you will need to consider going forward. This c...

In an area of inquiry entitled Oversight, the 2023 ECCP asks three basic questions which we have explored throughout this chapter: 1. What compliance expertise has been available on the Board of Directors? 2. Have the Board of Directors held executive or private sessions with the compliance function? 3. What types of information has the Board of Directors examined in their exercise of oversight in...

Where does “tone at the top” start? With any public and most private U.S. companies, it is at the Board of Directors. But what is the role of a company’s Board in compliance? We start with several general statements about the role of a Board in U.S. companies. First, a Board should not engage in management but should engage in oversight of a CEO and senior management. The Board does this through a...

There are three core areas upon which directors should focus their attention regarding to help establish and maintain an effective compliance program: structure, culture, and risk management. Structural questions. This area consists of questions which will aid in determining the fundamental sense of a company’s overall compliance program. The questions should begin with the basics of the program t...

How can a Board work incorporate the compliance function into a long-term business strategy of the organization? The starting point for a Board of Directors is to develop a framework for incorporating compliance into your long-term strategy. To set up the framework for evaluating compliance into your Board’s long-term strategy is a three-step process, which you can use to determine how comprehensi...

The 2023 ECCP mandated a Board of Directors ensure “the sufficiency of the personnel and resources within the compliance function, in particular, whether those responsible for compliance have: (1) sufficient seniority within the organization; (2) sufficient resources, namely, staff to effectively undertake the requisite auditing, documentation, and analysis; and (3) sufficient autonomy from manage...

What is the role of a Board of Directors in hiring senior executives, CCOs and even other board members? I explored this issue with Candice Tal, who began by noting, that bad senior executive hires can cost a company much more than simply dollars. She related, the “financial costs in day-to-day operations easily can quadruple that of a regular employee, but it can also impact the company’s corpora...

The Administration’s trade war with China has highlighted the risks of both doing business in China and investing the Chinese companies which come to America to raise capital. Yet this has been a long-known and outstanding problem in the anti-corruption enforcement world. The 2014 bribery and corruption case of GlaxoSmithKline PLC (GSK), which resulted in a $490 million fine for the firm, resonate...

Today, consider a couple of landmark failures at the Board level around bribery and corruption. VimpelCom Ltd. In 2015 (now Veon Ltd.), the DOJ alleged that Dutch telecom VimpelCom sought to enter the telecom market through the acquisition of a local player, Unitel, as an entrée into the Uzbekistan market. Unitel made clear to VimpelCom that to have access to, obtain and retain business in the Uzb...

What are metrics for a Board of Directors around compliance? Former Assistant Attorney General Leslie Caldwell laid out some that the Department of Justice (DOJ) would consider in a review of compliance programs. These metrics are: Does the institution ensure that its directors and senior managers provide strong, explicit and visible support for its corporate compliance policies? Does the Board ma...

Many companies have an investigation protocol in place when a potential Foreign Corruption Practices Act (FCPA) or other legal issue arises. However, many Boards of Directors do not have the same rigor when it comes to an investigation, which should be conducted or led by the Board itself. The consequences of this lack of foresight can be problematic because if a Board of Directors does not get an...

Many companies have an investigation protocol in place when a potential Foreign Corruption Practices Act (FCPA) or other legal issue arises? However, many Boards of Directors do not have the same rigor when it comes to an investigation, which should be conducted or led by the Board itself. The consequences of this lack of foresight can be problematic, because if a Board of Directors does not get a...

One of the ongoing questions from members of the Board of Directors is how to resolve the tension between oversight and management. I recently had the opportunity to visit with Joe Howell, former Executive Vice President (EVP) of Workiva, Inc., on this subject. Howell has worked on and with Boards of Directors at various companies, and I wanted to garner his understanding of the role of a Board, s...

Best practices compliance program. The first in Hallmark No. 1 states, “Within a business organization, compliance begins with the board of directors and senior executives setting the proper tone for the rest of the company.” The second is found under Hallmark No. 3, entitled “Oversight, Autonomy and Resources,” which says the Chief Compliance Officer (CCO) should have “direct access to an organiz...

James Doty, former Commissioner of the Public Company Accounting Oversight Board (PCAOB) was once asked if the Board or its sub-committee which handles audits was a part of a company’s internal financial controls. He answered that yes, he believed that was one of the roles of an Audit Committee or full Board. I had never thought of the Board as an internal control but the more I thought about it,...

Where does “tone at the top” start? It is with public and most private U.S. companies at the Board of Directors. But what is the role of a company’s Board in compliance? First, a Board should not engage in management but oversee a CEO and senior management. The Board asks hard questions, risk assessment, and identification. These factors can be easily adapted to compliance and ethics risk manageme...

The OIG white paper “Practical Guidance for Health Care Governing Boards on Compliance Oversight” (OIG Guidance), provides an excellent road map for thinking about how to structure a Compliance Committee for your Board and a Board’s obligations. As an introduction, the OIG Guidance states that a Board must act in good faith around its obligations regarding compliance. This means that there must be...

Every Board of Directors needs a true compliance expert sitting at the table. Almost every Board has a former CFO, former head of Internal Audit, or persons with a similar background, and often these are also the Audit Committee members of the Board. Such a background brings a level of sophistication, training, and SME that can help all companies with their financial reporting and other finance-ba...

Under the U.S. Sentencing Guidelines, the Board must exercise reasonable oversight on the effectiveness of a company’s compliance program. The DOJ Prosecution Standards posed the following queries: 1) Do the directors exercise independent review of a company’s compliance program? and 2) Are directors provided information sufficient to enable the exercise of independent judgment? Moreover, the FCPA...

What are the obligations of a Board member regarding the FCPA? Are the obligations of the Compliance Committee under the FCPA at odds with a director’s “prudent discharge of duties to shareholders”? Do the words prudent discharge even appear anywhere in the FCPA? In the case of Stone v. Ritter, the proposition is found that “a duty to attempt in good faith to assure that a corporate information an...

As to the specific role of best practices in general compliance and ethics, one can look to Delaware corporate law for guidance. The case of In Re Caremark International Inc., 698 A.2d 959 (Del. S. Ct. 1996) was the first case to hold that a Board’s obligation “includes a duty to attempt in good faith to assure that a corporate information and reporting system, which the board concludes is adequat...

If there is one truism from the practices of law which translates to the practice of compliance, it is that your imagination only limits you. Marc Havener, founder, and CEO of Resonate Pictures, Inc., created a series of video shorts for a consulting company on compliance and ethics. Rather than the traditional legal approach of telling employees about the corporate policy on compliance, they want...

Since at least 2017, the DOJ has emphasized the need to determine compliance training effectiveness. In the 2020 Update, it stated under the section entitled “Form/Content/Effectiveness of Training” the following questions, How has the company measured the effectiveness of the training? Have employees been tested on what they have learned? How has the company addressed employees who fail all or a...

What should be your organization’s compliance training frequency? How does the amount of training can positively or negatively impact an overall training strategy? Unfortunately, these questions were not answered by the 2020 Update or the 2020 FCPA Resource Guide. Still every company should have a “well-designed compliance program is appropriately tailored training and communications.” Often compl...

One issue that needs to be considered by compliance professionals around compliance training is compliance training governance. Yet a multinational organization subject to the FCPA faces many legal and regulatory risks, and often many of those risks are “owned” by organizations outside the compliance function. How can your organization create a comprehensive compliance training program covering it...