Day: March 13, 2023

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Principled Podcast

Season 9 Episode 6 – How Autodesk Uses Gamification to Drive Engagement in Compliance Training

What you’ll learn on this podcast episode

How can organizations find ways to engage employees and ensure that compliance training content resonates with them, particularly in fast-paced work environments? In this episode of the Principled Podcast, host Susan Divers talks with Craig Huckelbridge and Lyndsey Conrad from Autodesk, a California-based tech company that is well known for its AutoCad design software as well as regular wins at the Academy Awards for the visual effects it enables for major Hollywood movies. Listen in as Craig and Lyndsey describe how they leverage gamification and gameshow techniques to get their employees’ engines revved up for competition, learning, and collaboration.

Guest: Craig Huckelbridge

Principled-Podcast_Craig-Huckelbridge_Guest

Craig Huckelbridge is the Sr. Director of Legal Compliance & Litigation for Autodesk, Inc. Craig’s team is responsible for all aspects of Autodesk’s compliance and ethics program—including compliance with anti-corruption, conflicts of interest, gifts and entertainment, fair competition, and trade compliance laws and policies. His team also manages commercial and IP litigation matters for Autodesk. Prior to joining Autodesk, Craig was a member of Jones Day’s Antitrust & Competition Law practice group, where he represented companies in merger reviews, government investigations, and antitrust litigation and counseling. Craig began his legal career at Cooley LLP, where his practice focused primarily on antitrust and unfair competition litigation. Craig received a B.A. in economics and political science from Northwestern University and earned his J.D. from the Duke University School of Law.

Guest: Lyndsey Conrad

Principled-Podcast_Lyndsey-Conrad_Guest

Lyndsey Conrad is the Director of Legal Compliance for Autodesk, Inc. and a member of Craig’s team.  She manages Autodesk’s Code of Business Conduct and related trainings, as well as its global anti-corruption, third-party risk, and conflict of interest programs. Before joining Autodesk, Lyndsey was a Partner at Husch Blackwell LLP, where her practice focused on government regulatory litigation, internal investigations, compliance, and white-collar crime. Her dedication to compliance came when she became a member of Husch Blackwell’s pro bono Human Trafficking Legal Clinic, where she represented victims of commercial sex trafficking and forced labor trafficking in cases referred to the firm by law enforcement, prosecutors, and partnering nonprofit agencies. Lyndsey got her legal start as a Law Clerk to the then-Chief of the Tenth Circuit Court of Appeals. She earned a B.S. in Biology from UCLA and her J.D. from UC College of the Law, San Francisco. 

Host: Susan Divers

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Susan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.

Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.

Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.

Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.

She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.

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31 Days to More Effective Compliance Programs

One Month to More Effective Compliance for Business Ventures – Pre-acquisition Risk Assessment

One of the clearest themes from the original 2012 FCPA Resource Guide was the importance of your pre-acquisition work in any M&A on a target company. In the section on Declinations, the 2012 FCPA Resource Guide provided an example of a company that had received a declination in large part because of its pre-acquisition work, which then served as a basis for its post-acquisition remediation. I find it appropriate to think of the process as a straight line, directly from the pre-acquisition phase to closing and then to remediation, integration, and self-reporting in the post-acquisition phase. These same concepts were brought forward in the 2020 FCPA Resource Guide, 2nd edition.

It should all begin with a preliminary pre-acquisition assessment of risk. Such an early assessment will inform the transaction research and evaluation phases. This could include an objective view of the risks faced and the level of risk exposure, such as best/worst-case scenarios. A pre-acquisition risk assessment could also be used as a mechanism through which to view the feasibility of the business strategy and help to value the potential target.

The pre-acquisition risk assessment can be critical in any M&A work for compliance. Use this opportunity to see where the target might stand on compliance. Your risk assessment can evolve as you obtain greater information. Finally, use this pre-acquisition risk assessment as a base document to plan, resource, and budget for your post-acquisition remediation, integration, and reporting.

Three key takeaways: 

  1. One never has enough time to engage in all the pre-acquisition reviews you might want to do, so optimize your time and resources.
  2. Consider what you can review to put together a preliminary risk assessment on the target.
  3. As with most compliance initiatives, you are only limited by your imagination, so if you are limited in time and scope, try something new and different.
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All Things Investigations

All Things Investigations: Episode 23 – Oversight Duties of Corporate Officers with Benjamin Britz

In this episode of All Things Investigations, host Tom Fox talks with Benjamin Britz, partner at Hughes Hubbard, about the recent Delaware Court of Chancery decision regarding the NRA McDonald’s case. Ben explains the court system in Delaware and the background facts of the case involving sexual misconduct and harassment allegations against McDonald’s CEO and his Chief People Officer, David Fairhurst. The court’s decision focuses on whether Fairhurst had an oversight duty as an officer, and Ben and Tom discuss the legal rationale for the duty of oversight and the duty of information and compliance information systems. 

Benjamin Britz is a partner at the law firm Hughes Hubbard and has extensive experience in internal investigations, securities litigation, and white-collar defense. He graduated from Columbia Law School in 2004 and went on to clerk for Judge Jim Carr in the Northern District of Ohio before joining Hughes Hubbard. He has remained with the firm ever since. 

 

You’ll hear Tom and Ben discuss:

  • The Delaware Court of Chancery is a specialized forum for disputes regarding the operations and governance of Delaware corporations, and it has very knowledgeable judges who are confirmed by the Delaware State Senate.
  • The duty of oversight applies to corporate officers and is based on the same fiduciary duties as directors.
  • The duty of oversight includes the duty of information and compliance information systems, as well as the duty of red flag, where officers need to take action if they become aware of misconduct.
  • The court’s decision in this case was based on the duty of red flag and a finding of bad faith due to inaction on the part of Fairhurst, who ignored red flags and was allegedly engaged in misconduct himself.
  • The court’s opinion was comprehensive, possibly to ensure a basis for upholding the decision on appeal, and the duty of oversight applies to the chief compliance officer as well.
  • The court’s decision in the case discussed does not extend beyond corporate officers. The decision does, however, elevate the role of the chief compliance officer to the level of the CEO or CFO in terms of the breadth of their duties.
  • This decision serves as a reminder that courts take the position of the compliance officer very seriously, regardless of their formal designation within the company.
  • While the case may not be appealed, it is important because it sketches out areas where basic tenets of corporate governance law are still undeveloped.
  • The court’s breach of loyalty claim against Fairhurst for committing sexual harassment could open up a can of worms and expand the traditional duty of loyalty into areas where it hasn’t been before.
  • The duty of loyalty claim for engaging in affairs that are against the code of conduct or other policies and procedures could be a backdoor violation of honest services.

 

KEY QUOTES

“What’s called a red flag duty, if you become aware of misconduct that you have to do something about it.” – Ben Britz

 

“If you are the CCO your duties are very broad, because this whole thing is basically your job. Because of that, it does very much put the compliance officer on the level with the CEO or the CFO…” – Ben Britz

 

“The expectations from the board certainly are going to be that whoever holds that position is executing it to the absolute fullest.” – Ben Britz

 

Resources:

Hughes Hubbard & Reed website

Ben Britz on LinkedIn

Categories
Corruption, Crime and Compliance

The Ericsson FCPA DPA Breach Settlement

In this episode of the Crime, Corruption, and Compliance podcast, host Michael Volkov dives into the Ericsson FCPA Deferred Prosecution Agreement breach settlement. The case highlights important issues with conducting internal investigations, corporate culture, and dealing with the Justice Department in the event of a breach. The episode delves into the details of the case, discussing the lessons learned from this massive failure and nightmare scenario with regard to disclosures, and how it serves as a cautionary tale for all investigators, whether conducted by internal staff or outside counsel.

Here are some key ideas discussed in this episode:

  • Ericsson, the Swedish telecom company, breached its 2019 Deferred Prosecution Agreement and agreed to enter a guilty plea to the original charges in the DPA and pay a $206M penalty.
  • The breach was primarily due to Ericsson’s failure to disclose its bribery payments or potential bribery payments to ISIS to facilitate transportation of telecom equipment in Iraq.
  • Ericsson used third-party agents and consultants to pay bribes to government officials in a number of countries to manage slush funds.
  • Ericsson’s failures have undermined the integrity of its corporate commitment to compliance and ethical culture, damaged its reputation, and threatened its relationship with the Justice Department and overall government regulators.
  • The breach prevented the DOJ from bringing criminal charges against certain individuals and harmed the US’s ongoing criminal investigation.
  • Ericsson’s breach presents a laundry list of internal investigation errors, such as a failure to produce responsive documents for many years, omitting key details related to its investigative findings, and a lack of fundamental culture improvements.
  • Ericsson has significantly enhanced its compliance program and internal accounting controls through structural and leadership changes, including hiring a new Chief Legal Officer and Head of Corporate and Government Investigations.
  • The DOJ’s calculation of the criminal penalty was for just over $727,000,000, reflecting the midpoint of the applicable guideline range, and Ericsson will be required to serve a term of probation, which can be revoked for further violations found.
  • Ericsson agreed to continue to enhance its program and to test these enhancements for effectiveness.
  • Ericsson’s violations were pervasive and systemic, reflecting a rotten culture that promoted bribery as a means to make money.
  • Failures to disclose by outside counsel partially reflect failures of senior leadership responsible for oversight and direction of outside counsel.
  • Outside counsel must establish an effective working relationship with transparency, coordination, and full disclosure.
  • Senior executives must engage with outside counsel at each and every step of the investigation to check on the overall process.
  • The failure to produce certain documents underscores the need for a document retention policy.

 

KEY QUOTES:

“This breach really presents a laundry list of internal investigation errors. …It is a cautionary tale for all investigators, whether conducted by internal staff or outside counsel.” – Michael Volkov

 

“The failures to disclose, in my view, partially reflect failures of various actors, including outside counsel, but also senior leadership.” – Michael Volkov

 

“Its culture was rotten, and it promoted bribery as a means to an important end that is just making money.” – Michael Volkov

 

Resources

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group

Categories
FCPA Compliance Report

Sam Tate on New Failure to Prevent Cause of Action

Welcome to the award-winning FCPA Compliance Report, the longest-running podcast in compliance. In this episode, I am joined by Sam Tate, a partner at RPC. Sam co-authors the leading UK anti-corruption compliance textbook “Bribery: a Compliance Handbook.” He works closely with several FTSE 100, international, and privately owned entities and individuals concerning financial crime proceedings, investigations, and practical crime prevention programs. He recently led the settlement on the ground-breaking 11th and 12th UK DPA’s and conducted the independent investigation for the Financial Times of allegations made by Wirecard against its reporters.

In this episode, they discuss the proposed Economic Crime and Corporate Transparency Bill and how it could majorly affect companies not based in the U.K. The bill includes verification for all new and existing registered companies, directors, and persons and provisions making it easier for the National Crime Agency. Sam Tate predicts this will result in more focused prosecutions than Deferred Prosecution Agreements, although it should make settlements easier. This collaboration between the UK and the U.S. will be a lasting legacy of our time.

Key Highlights

Economic Crime Legislation in the UK [00:04:49]

The Potential Impact of a New U.S. Bill on Global Businesses [00:08:40]

The Cost of Increased Business Regulation [00:12:24]

Sharing Information and Improving Access between Regulated Entities and the National Crime Agency [00:16:34]

The Impact of US-UK Relationships on Prosecutions and Deferred Prosecution Agreements [00:20:49]

The Challenges of Settling Issues in the UK [00:24:36]

 Notable Quotes

1.     “So if you have a fraud offense, then a corporate doing probably doing any business in the UK, or having a presence in the business in the UK so that it could be one in the US, it could be one anywhere in the world, anywhere in the world with presence business in the UK, would be corporately criminally liable if it failed to prevent fraud unless it had a series of adequate procedures in place to prevent that.”

2.     “It’s something we call the ‘guidance in mind’ test. They are the brains of the company, and they’ve got to be involved for the corporates to be criminally live criminally liable.”

3.     “Bribery is defined in our legislation as offering something with the intention of causing another person to perform their duties improperly. Fraud takes a few forms; worth essentially is a deceit of one kind or another, sometimes with the abuse of trust or over opposition to trust.”

4.     “It’s not entirely clear what that is because we haven’t had a ton of cases. But it’s a registered office, a large part of your business, or even a smaller part of your business, a trading arm, perhaps doing your accounts here. Probably something a little bit more than trading on the UK stock exchange, but not much more is enough to have a part of your business in the UK.”

 Episode Links

RPC

Sam Tate

Bribery: a Compliance Handbook

Connect with Tom Fox on LinkedIn

Categories
Daily Compliance News

March 13, 2023 – The SFO Punts Again Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network. Each day we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

Stories we are following in today’s edition of Daily Compliance News:

  • SFO drops yet another prosecution. (WSJ)
  • Former SEC Commissioner joins SEC whistleblower firm. (WSJ)
  • Former Blue Bell CEO pleads guilty to a misdemeanor. (WSJ)
  • Foreign company supply chains face more scrutiny. (WSJ)
Categories
Compliance Kitchen

Compliance Kitchen on Unwrapping the Cloaked: How Russian Oligarchs Evade Sanctions with the Help of Enablers

The Compliance Kitchen, hosted by Silvia Surman, dives into detailed and complex topics looking at all sides of the compliance industry. The recent advisory from the repo task force that Silvia discusses reveals the clever evasion tactics used by Russian elites, including the beneficial ownership of legal entities transferred to their children, as well as enablers performing certain functions on their behalf. Russian and other users are able to access sensitive goods and technologies by using freight forwarding businesses in a third country. The Compliance Kitchen is here to provide insight and analysis into these and other compliance topics in an engaging and educational manner.

Key Highlights

Russian Sanctions Evasion Tactics Used by Elites. 00:06

The Use of Enablers to Avoid Sanctions on Russian Oligarchs. 06:13.

Illegal Access to Sensitive Goods and Technologies Through Freight Forwarding Business. 12:18

Notable Quotes

  1. “This is a multilateral effort that has used information sharing and coordination to isolate and pressure sanction Russian individuals and entities.”
  2. “The typologies that they identified in this advisory include the use of family member burs and close associates to ensure continued access and control over assets.”
  3. “The asset transfers it’s being observed that go to family members and close associates sometimes occur immediately before a person is on sanctions list or shortly thereafter. So that indicates sanctions evasion efforts.”
  4. “More specifically, the advisory tells us that sanctioned Russian individuals and entities have used the use of expensive real estate to hold value or to own their illicit proceeds through real estate using complex ownership structures to avoid identification of the ultimate beneficial owner.”