Day: April 10, 2023

Categories
All Things Investigations

All Things Investigations: Episode 25 – Can Congress Investigate Manhattan DA? with Kevin Carroll and Kenyen Brown

Can Congress investigate a local prosecutor’s ongoing investigation and prosecution? This is the question that has been sparked by the purported potential congressional investigation of Manhattan District Attorney Alvin Bragg. In this episode of All Things Investigations, hosted by Tom Fox, guests Kevin Carroll and Kenyen Brown share their thoughts on the unprecedented matter and discuss the potential constitutional and legal issues that may arise.

Kevin Carroll and Kenyen Brown are partners at Hughes Hubbard & Reed. Kevin is a professor, and former Assistant Attorney General for the U.S. Department of Justice. He has also served as a senior counsel to the House Homeland Security Committee. Kenyen is a former federal prosecutor and currently serves as the President of the National Bar Association.

 

You’ll hear Tom, Kenyen and Kevin discuss:

  • Congress has never before tried to use its subpoena power or investigative powers to interfere with an ongoing investigation and prosecution by a state or local prosecutor. 
  • There are many potential problems with congressional subpoenas of an ongoing criminal investigation and prosecution by a state or local prosecutor. False accusations, grand jury confidentiality, and potentially ruining a meritorious criminal investigation are just a few examples.
  • The congressional committee’s request for grand jury material is unlikely to be successful and would be very unpopular due to the privacy of individuals and the sacrosanct nature of the grand jury.
  • Members of Congress weighing in on local prosecutions could unduly destroy the separation between the different branches of government and the respective functions of the executive and judicial branches. This could also be a recipe for disaster in terms of creating political investigations that are subject to the whims of different constituencies.
  • Prosecutors’ offices regularly receive false allegations about prominent people, especially politicians, and potential investigations should remain within the confidences of that office or committee. There is potential for people to be slimed by the revelation under oath of false accusations.
  • The Manhattan DA’s office is a first-class operation, staffed by some of the brightest legal minds in the country. They have responded appropriately to the congressional committee’s request by citing relevant law and their area of authority.
  • Public theater is likely driving much of the debate around congressional oversight of the Manhattan DA’s investigation. The Republicans may attempt to use this issue to score political points with their base, even though the legal basis for such oversight is questionable at best.
  • Alvin Bragg, the Manhattan DA, is acting properly by refusing to comply with any congressional subpoenas. He should continue to resist any attempts by Congress to interfere with his ongoing investigations.
  • There may be interesting news in the coming weeks and months regarding this issue, and it is worth keeping an eye on as it unfolds.

 

KEY QUOTES

“Congress has never before tried to use its subpoena power or investigative powers generally to get in the weeds of an ongoing investigation and now prosecution by a state or local prosecutor.” – Kevin Carroll

 

“Why should Congress decide how a local prosecutor spends his resources or what the policy is on a local level? I just think that excuse is paper thin.” – Kenyen Brown

 

“Once you sit back and peel back the layers, I think there are generally problems with that. I think if Congress, led by the Republicans, stops to think about it, that’s probably a path they don’t want to go down. ” – Kenyen Brown

 

“One thing I think is in Bragg’s favor is that the Manhattan DA’s office is a really first class operation. The brightest of my law school classmates at Fordham Law School went to the Manhattan DA’s office because it offers really unique opportunities for people to get trial experience on sophisticated cases, including sophisticated financial cases, pretty early in their careers.” – Kevin Carroll

 

Resources:

Hughes Hubbard & Reed website

Kevin Carroll on LinkedIn

Kenyen Brown on LinkedIn

Categories
31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program for 3rd Parties – Levels of Due Diligence With Candice Tal

Today, I am joined by Candice Tal, founder of Infortal, to explain the 3 levels of due diligence. Due diligence is generally recognized in Level I, Level II, and Level III. Each level is appropriate for a different level of corruption risk. The key is to develop a mechanism to determine the appropriate level of due diligence and then implement that going forward.

The question becomes how you use the information you obtained in the business justification and the questionnaire to determine an appropriate level of due diligence for the next step in the five-step process of third-party management. A three-step approach of varying levels of due diligence is the appropriate analysis to take going forward.
There are many different approaches to the specifics of due diligence. By laying out some of the approaches, you can craft the relevant portions of your program. The Level I, II, and III trichotomy appear to have the greatest favor and one that you should be able to implement straightforwardly. But the key is to assess your company’s risk and then manage that risk. If you need to perform additional due diligence to answer questions or clear red flags, you should do so. And do not forget to “Document, Document, and Document” all your due diligence.

Three key takeaways:

  1. Level I due diligence should only be used where there is a low risk of corruption.
  2. A Level II due diligence is sufficient in a high-risk jurisdiction if there are no red flags to be cleared.
  3. Level III due diligence is deep dive, boots-on-the-ground investigation.
Categories
Corruption, Crime and Compliance

Deep Dive Into Wells Fargo’s $30 Million OFAC Settlement

Wells Fargo has settled with OFAC for $30 million for sanctions violations that occurred during a seven-year period from 2008 to 2015. The violations stemmed from its acquisition of Wachovia Bank, which had a trade relationship with a European bank that conducted transactions involving sanctioned entities and individuals. Despite concerns raised internally, Wells Fargo failed to exercise caution or care in identifying and preventing such transactions. The case serves as a reminder of the importance of corporate culture of ethics and compliance. In this episode of Corruption, Crime, and Compliance, Michael Volkov takes a deeper dive into the issue and outlines the missteps that occurred; he also gives practical advice for companies to avoid the same mistakes. 

You’ll hear him discuss these key ideas in this episode:

  • Wells Fargo has a lengthy record of misconduct and failures to remediate. Its latest enforcement action involves a $30 million settlement with OFAC for sanctions violations that occurred from 2008 to 2015. These violations include three separate OFAC sanctions involving Iran, Sudan, and Syria.
  • Wells Fargo provided the European bank with trade finance software that was customized and used to conduct transactions that involved sanctioned entities and individuals, despite concerns raised internally on several occasions.
  • OFAC found that “Wells Fargo demonstrated reckless disregard for US sanctions requirements …and failed to exercise a minimal degree of caution or care in failing to identify and prevent such transactions for seven years after it acquired Wachovia…”
  • Wells Fargo’s conduct highlights the importance of corporate culture of ethics and compliance.
  • Companies must have proper oversight when pursuing new business opportunities or preserving existing business relationships, and must promptly investigate and address sanctions compliance risks when raised internally, even in non-core business lines.
  • Comprehensive due diligence regarding potential sanctions risks is necessary when one entity acquires another through merger or acquisition.
  • Aside from this part of Wells Fargo’s operations, the overall bank had a strong sanctions compliance program.
  • If Wells Fargo had invested in a culture of compliance, it could have turned around its organization with wholesale change and a real commitment to embedding, monitoring, and remediating its culture as needed.
  • The case serves as a reminder that companies must have a speak-up culture and respond to concerns as they are raised, as well as the importance of corporate culture, ethics, and compliance.

 

KEY QUOTES:

“If Wells Fargo had reduced its outside legal consulting and professional expenditures by half and took the money to invest and implement a culture of compliance, you can rest assured that Wells Fargo would be able to turn around its organization.” – Michael Volkov

 

“Moreover, when sanctions compliance risks are raised internally, including concerns arising from smaller, non-core business lines, companies should promptly seek to thoroughly investigate and address those risks.” – Michael Volkov

 

“Wells Fargo’s conduct here, when exposed and considered, is not just inexplicable, but reminds all of us on the importance of corporate culture of ethics and compliance.” – Michael Volkov

 

Resources:

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group

Categories
FCPA Compliance Report

Ethics Madness 2023

Welcome to the award-winning FCPA Compliance Report, the longest-running podcast in compliance. This episode was recorded during March Madness, the return of Jason Meyer and Tom For Ethics Madness. In Ethics Madness, dive into the ethical questions surrounding the University of Alabama basketball team and their missteps in handling incidents involving their players. In this exciting podcast, the hosts discuss the possibility of redemption for individuals who have committed past indiscretions and how companies must vet their employees for a better work environment. They also cover topics such as mental health, the importance of diversity, equity, and inclusion in the workplace, and how companies should embrace ESG for a better business process. You’ll also hear insightful interviews with professionals on compliance and ethics education and enjoy fun segments like the Compliance Anthem of the Week. Don’t miss out on this amazing podcast that will inspire and educate compliance and ethics professionals. 

Key Highlights

·      Ethics in Sports: University of Alabama Basketball

·      Can you love art but not artists?

·      Redemption for unethical behavior in sports

·      The Power of Forgiveness & Reputation Management in Sports

·      Mental health in the compliance profession

·      Political Pressure on DEI Programs in the Southern States

·      Fostering DEI in Organizations

·      Core values and politics in universities & ESG betting

·      ESG in Energy Business Processes

·      Ivy League success in March Madness

·      Professional skepticism and NCAA tournament predictions

 Notable Quotes

“Should I feel guilty that I put the tide in my bracket?”

“Even energy companies are doing ESG. Why? Because they see it in their self-interest.”

“Spending more time and more attention now helping organizations with including and engaging with the neurodivergent people in their workforces and trying to involve those workers in ethics compliance, and that’s been fascinating work as well.”

“And to me, Tom, this debate feels like a debate at the core of ethics and compliance because this is an example of some core values.”

Resources

Jason Meyer on LinkedIn

The Eight Mindsets Podcast on Spotify

Tom Fox

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LinkedIn

Categories
Blog

2022-The Year in FCPA

2022 saw a relatively slow year in Foreign Corrupt Practices Act (FCPA) enforcement actions. Yet, as usual, the cases themselves were packed with much for the compliance professional to digest. Moreover, 2022 was a very significant year for every compliance practitioner and compliance program. My latest book, 2022 – The Year in FCPA – FCPA Enforcement Actions, DOJ Commentary and Key Lessons for Compliance from 2022 reviews the corporate FCPA enforcement actions from the past year and mine them for lessons which can be garnered by the compliance practitioner.

The cases themselves ranged in fine and penalty values from $1.1 billion (Glencore International A.G.) down to $6.3 million (KT Corporation). The Department of Justice (DOJ) FCPA prosecutions involved the following entities: Stericycle Inc. (Stericycle), with an overall fine of $84 million; Glencore, with an overall fine of $1.1 Billion; GOL Linhas Aéreas Inteligentes S.A. (GOL), with an overall fine of $41 million; ABB Ltd. (ABB) with an overall fine of $315 million and, concluding the year, Honeywell UOP, with an overall fine of $160 million. From the Securities and Exchange Commission (SEC) we saw enforcement actions involving the following entities: KT Corp, with a penalty of $6.3 million; Tenaris S.A., with a penalty of $78 million; Oracle Corporation (Oracle), with a penalty of $23 million, and Stericycle, GOL, ABB and Honeywell, with the fine amounts noted above. Finally, Glencore was also fined by the Commodity Futures Trading Commission (CFTC).

The total fines and penalties were $1.396 billion. Under the new monitorship policy, announced in October 2021 and put into practice through the Monaco Memo, there were two cases which  included appointments of Corporate Monitors (Glencore and Stericycle). From the DOJ there were two Declinations. The first involved the French entity Safran S.A. and included a $17 million disgorgement. The second involved the UK entity Jardine Lloyd Thompson Group Holdings Ltd. (JLT) and included a $29 million disgorgement. 2022 saw one individual FCPA trial involving former Goldman Sachs Group Inc. Managing Director Roger Ng, who was convicted for criminally circumventing the firm’s internal controls. The Swedish telecom company Telefonaktiebolaget LM Ericsson (Ericsson) had its monitorship extended for 1 year amidst ongoing investigation they breached the Deferred Prosecution Agreement (DPA) and, finally, the Russian entity Mobile TeleSystems PJSC (MTS) also had its monitorship extended for 1 year.

In the realm of individuals prosecuted there were 24 individual criminal prosecutions and it appeared that individual criminal prosecutions continued at aggressive pace. With the formalization of the Monaco Memo, the DOJ will be targeting more individuals for prosecutions in 2023 so the pace of individual prosecutions will continue and probably increase. In 2022, the majority of the individual prosecution stemmed from prior FCPA actions involving a small number of companies; most notably Petróleos de Venezuela S.A. (PDVSA), Vitol Inc., Odebrecht S.A. and Sargeant Marine Inc. It is significant that the DOJ has continued its use of anti-money laundering (AML) charges, which have a 20-year maximum sentence together with FCPA charges, which have a five-year maximum sentence.

However, 2022 was a very significant year for every compliance practitioner and compliance program. While there was a paucity of corporate FCPA enforcement actions, three actions were significant, with multiple lessons for the compliance professional. In ABB, we learned about the costs of a corrupt culture and recidivism. In Glencore, we saw what happens to a company that engages in worldwide systemic bribery and corruption. Finally, in Stericycle, the company had a culture of corruption burned into the DNA of the LATAM business unit, which was so thorough that it was documented via bribery spreadsheets and analysis of revenue based on payments of bribes in LATAM. Yet even with this corrupt culture, the Stericycle enforcement action demonstrated how a company could take advantage of the discounts available under the FCPA Corporate Enforcement Policy by extensive cooperation and remediation during the pendency of the FCPA investigation, as the company obtained a 25% reduction off the bottom of the applicable US Sentencing Guidelines fine range.

September saw the announcement of a significant refinement of DOJ enforcement policies on the FCPA enforcement and corporate compliance programs. It was encapsulated in the Monaco Memo and a speech by Deputy Attorney General Lisa Monaco announcing the Monaco Doctrine. There was additional commentary by Principal Associate Deputy Attorney General Marshall Miller in a speech and by Assistant Attorney General Kenneth A. Polite. Every compliance professional should know them in detail as they significantly turn the heat up on corporate compliance programs. The Monaco Memo is further clarification and guidance for line prosecutors when considering whether to put a monitor in place. While we have seen these factors in a disparate manner, in disparate places, here they are in writing. Perhaps the greatest significance is that the Memo sets down all these matters in writing, which leads to a blueprint for DOJ thinking and a roadmap for anyone who finds themselves in an FCPA investigation or enforcement action. Finally, the Monaco Memo cemented the new DOJ requirement for CCO certification of compliance programs at the end of a resolution.

The final key event for compliance in 2022 was very much under the radar. The DOJ hired Matt Galvan to help develop data analytics expertise and capability for the FCPA Unit and the Fraud Section. Galvan was most recently the CCO at AB InBev and perhaps the top compliance professional in data analytics for a corporate compliance program. It will be most interesting to see where Galvan and the DOJ take this initiative, but it does portend the increasing use of data analytics in FCPA enforcement and compliance.

What did the year 2022 in FCPA mean for you. Check out 2022-The Year in FCPA now available on Amazon.com.

Categories
Daily Compliance News

April 10, 2023 – The Normalizing Corruption 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:

·       OCC drops case against Rabobank ex-CCO. (WSJ)

·       Trump now, Clarence Thomas normalizes corruption. (MSNCBC)

·       It’s a new world in corporate layoffs. (NYT)

·       Barclays fallout out from Jes Staley continues. (Reuters)