Day: October 23, 2023

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The Ethics Experts

Episode 163 – Joey Coleman

In this episode of The Ethics Experts, Nick welcomes Joey Coleman. Joey Coleman helps companies keep their customers and employees. As an award-winning speaker, he shares his First 100 Days® methodology for improving customer and employee retention with organizations around the world (e.g., Whirlpool, Volkswagen Australia, and Zappos). His Wall Street Journal #2 best-selling book, Never Lose a Customer Again, shows how to turn any sale into a lifelong customer, and his upcoming book, Never Lose an Employee Again, details a framework companies around the world can use to reduce turnover and increase employee engagement.

Connect with Joey: https://www.linkedin.com/in/joeycoleman1/
Never Lose a Customer Again: https://amzn.to/3WHOTME

Categories
Corruption, Crime and Compliance

The Albemarle DOJ and SEC FCPA Settlement

Albemarle, a prominent specialty chemicals company, recently settled a case for $218 million, unraveling a web of bribery payments across Vietnam, Indonesia, and India. The repercussions of this case extend beyond the financial penalty, encompassing a three-year non-prosecution agreement and the application of the Compensation, Incentives, and Clawbacks pilot program. In this episode of Corruption, Crime and Compliance, Michael Volkov shares details of Albemarle’s FCPA settlement with the DOJ and SEC, exploring Albemarle’s voluntary disclosure, extensive remediation efforts, and a transformative shift in its business model.

You’ll hear Michael talk about:

  • Albemarle agreed to pay over $218 million to settle investigations conducted by the DOJ and the SEC. This substantial financial penalty is a consequence of alleged bribery payments made by the company in multiple countries.
  • The investigations focused on bribery payments related to various business transactions and dealings made by Albemarle in Vietnam, Indonesia, and India. 
  • As part of the settlement, Albemarle entered into a three-year non-prosecution agreement. While the company acknowledges certain wrongdoing, it avoids facing formal prosecution during the specified period if it complies with the agreed-upon terms and conditions.
  • The settlement includes the application of the Compensation, Incentives, and Clawbacks pilot program. This program outlines mechanisms to ensure that executives and employees involved in wrongdoing face appropriate consequences, including clawing back certain incentives and compensation. 
  • Albemarle voluntarily disclosed information related to the potential FCPA violations. This proactive step is often a mitigating factor in settlements and reflects a willingness to cooperate with authorities.
  • Albemarle undertook extensive remediation efforts in response to the allegations. This included disciplining employees involved in the wrongdoing, strengthening its anti-corruption program, and making significant changes to its business model and risk management processes.
  • The investigations highlighted Albemarle’s use of sales agents in Vietnam, Indonesia, and India. Control deficiencies with third parties in China and the United Arab Emirates (UAE) were also noted, raising concerns about the oversight and due diligence processes related to these external entities.
  • Michael shares details about specific bribery schemes involving state-owned entities such as Petro Vietnam in Vietnam, Pertamina in Indonesia, and IOCL in India. These schemes included practices like modifying tender requirements, providing nonpublic information, and directing agents not to include details in invoices concerning tips to foreign officials.
  • The case underscores the risks of relying on third-party agents to secure contracts, particularly through the example of Albemarle’s failure to conduct due diligence on an agent in the UAE. The agent’s close ties to the UAE government and royal family contradicted representations made during the due diligence process.

 

KEY QUOTES

“And in this case, they rewarded Albemarle with an NPA as opposed to a deferred prosecution agreement. So it’s a three-year non-prosecution agreement, and doesn’t get filed with the court. There’s no information that’s filed. And they agreed to pay a penalty of approximately $98.2 million and an administrative forfeiture of $98.5 million. Also, this is the first FCPA settlement where  we applied the Compensation, Incentives, and Clawbacks pilot program, which the DOJ had announced in March of 2023.” – Michael Volkov

 

“With respect to remediation efforts, the DOJ cited Albemarle’s extensive remedial measures, including that they started the remediation prior to the beginning of the DOJ’s investigation. In other words, they started to remediate quickly upon starting their own internal investigation.”  – Michael Volkov

 

“Even after the third party intermediary had informed Albemarle that it was necessary to pay bribes to Pertamina officials to obtain business, the Indonesia sales agent paid bribes to foreign officials to obtain the contracts and also get nonpublic information concerning tenders and competitors products.” – Michael Volkov

 

Resources

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group

Categories
Daily Compliance News

Daily Compliance News: October 23, 2023 – The More Trouble in China 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:

  • WPP execs are detained in China. (FT)
  • A former Albanian PM was arrested for corruption.  (AP)
  • Crypto mixers are under greater scrutiny. (WSJ)
  • US sides with Tesla on direct-to-consumer sales in LA. (Reuters)
Categories
Adventures in Compliance

The Memoirs of Sherlock Holmes – The Adventure of the Yellow Face

Welcome to a review of all the Sherlock Holmes stories collected in the work “The Memoirs of Sherlock Holmes.” They appeared in the Strand Magazine from December 1892 to December 1893. Over the next 12 episodes, I will review each story and mine them for leadership, compliance, and ethical lessons. In this, we look at the story The Adventure of the Yellow Face. 

The Adventures of Sherlock Holmes, written by Arthur Conan Doyle, is a collection of thrilling detective stories that have captivated readers for over a century. These stories provide an engaging reading experience and valuable insights into ethical principles and leadership qualities. In this article, we will explore the key factors that impact ethical principles in Sherlock Holmes stories and the importance of considering their impact.

“The Memoirs of Sherlock Holmes” is a collection of short stories showcasing Sherlock Holmes’ exceptional detective skills and delving into the societal issues prevalent during the Victorian era. One particular story, “The Adventure of the Yellowface,” tackles the sensitive topic of racism and mixed-race marriage, which was considered taboo at the time. This story offers valuable leadership lessons, such as humility, patience, avoiding hasty judgments, maintaining confidentiality, understanding societal norms, and promoting acceptance.

The podcast episode “Leadership Lessons from Sherlock Holmes,” hosted by Tom Fox, explores these lessons further. The episode emphasizes the importance of acknowledging mistakes, practicing empathetic listening, making decisions based on thorough analysis, exercising discretion, and fostering an inclusive culture. Through the analysis of “The Adventure of the Yellowface,” the episode highlights the tradeoffs involved in balancing different factors and the challenges associated with different approaches.

One of the key takeaways from the episode is the significance of accepting that even the best leaders can make mistakes. Sherlock Holmes, known for his deductive reasoning and sharp intellect, demonstrates humility by taking his misjudgment in the story. This is a valuable lesson in humility and adaptability for leaders in any field.

Another important lesson highlighted in the episode is patience and empathetic listening. Holmes carefully listens to the concerns of Mr. Monroe, the client in the story, providing him with the space to voice his worries. Effective leadership often involves empathetic listening taking the time to understand the perspectives of those being led.

The episode also emphasizes the importance of avoiding jumping to conclusions. Holmes incorrectly assumes that Effie, Mr. Monroe’s wife, is being blackmailed, which stems from making assumptions without having all the necessary information. This serves as a reminder for leaders to avoid snap judgments and to make decisions based on thorough analysis and understanding.

Confidentiality and trust are also highlighted as crucial leadership qualities. Holmes becomes the keeper of Mr. Monroe’s secrets and concerns, demonstrating the importance of discretion in leadership. Leaders must be trustworthy and maintain confidentiality to foster an environment of trust and open communication.

Another key lesson is understanding the nuances of the environment in which leaders operate. “The Adventure of the Yellowface” revolves around the societal norms and prejudices of the Victorian era. Effective leaders know the broader societal and cultural context in which they operate and use this knowledge to inform their decisions. This is particularly relevant for compliance officers in multinational corporations, who must understand the cultural and societal context in which their businesses operate.

Lastly, the episode highlights the importance of encouraging openness and acceptance. Although not explicitly a lesson from Holmes himself, the story’s ending, where Mr. Monroe wholeheartedly accepts Effie’s mixed-race daughter, can endorse leadership qualities such as openness, understanding, and acceptance. Leaders should strive to foster a culture of acceptance and inclusivity within their organizations.

“The Adventure of the Yellowface” and the insights shared in the podcast episode demonstrate that even in a story where Sherlock Holmes fails, valuable lessons must be learned. The way Conan Doyle portrays the story, with its surprise ending and the characters’ reactions, provides instructive insights into leadership and societal issues.

In conclusion, the Sherlock Holmes stories, including “The Adventure of the Yellowface,” offer valuable leadership lessons and shed light on societal issues of the Victorian era. The podcast episode “Leadership Lessons from Sherlock Holmes” further explores these lessons, emphasizing the importance of humility, patience, avoiding hasty judgments, maintaining confidentiality, understanding societal norms, and promoting acceptance. By considering the impact on leadership and societal issues, leaders can make more informed decisions and create a positive and inclusive environment.

Resource:

The New Annotated Sherlock Holmes

Categories
FCPA Compliance Report

FCPA Compliance Report – Chip Jones on Record Keeping Requirements for Messaging Compliance

Welcome to the award-winning FCPA Compliance Report, the longest-running podcast in compliance. In this episode, Tom Fox welcomes Chip Jones to discuss the recent spate of enforcement actions in the messaging compliance arena.

Chip Jones, the Executive Vice President of Compliance at Global Relay, is an expert in e-communications archiving and compliance solutions for the financial services industry, focusing on instant messaging compliance and enforcement actions related to off-channel communications. Chip believes technology plays a vital role in regulating off-channel communications in financial services, emphasizing the importance of capturing and supervising all communications, including those on personal devices, to ensure compliance with SEC record-keeping requirements. He acknowledges that using personal devices for communication has been prevalent for years, but the pandemic has accelerated this trend. Chip suggests that technological solutions, such as the Global Relay app, can help financial professionals communicate compliantly, and he emphasizes the importance of education and tone from the top in promoting compliance. Join Tom Fox and Chip Jones on this FCPA Compliance Report podcast episode to delve deeper into this topic.

Key Highlights:

  • Compliant Communication Solutions for Financial Firms
  • Regulatory Enforcement of Off-Channel Communications
  • Failure Factors: Violation of Record-Keeping Requirements
  • Proactive Compliance and Cooperative Remediation in Financial Firms

Resources:

Chip Jones on LinkedIn

Global Relay

Tom Fox

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Facebook

YouTube

Twitter

LinkedIn

Categories
Blog

Data Driven Compliance: Current Trends and Innovations

Data-driven compliance strategies have become a game-changer in risk management and fraud prevention. I recently had the opportunity to participate in a KonaAi-sponsored webinar entitled “Data Driven Compliance: Current Trends and Innovations.” The event was hosted by Vince Walden and featured Rayne Towns, the Global Head of Risk and Monitoring at Nokia.

I view data-driven compliance strategies in risk management and fraud prevention as an evolution of the compliance profession. It can be seen in the importance of data analytics in improving the effectiveness of compliance programs. There is and will always be the need for human interpretation and utilization of the data. Towns see data-driven compliance strategies as a way to strengthen and improve the compliance program’s effectiveness, using data analytics to identify and address gaps in the compliance program. She also emphasizes the importance of prioritizing and starting with solving specific problems when implementing data analytics. Vince Walden joined in with his perspective on data-driven compliance strategies in risk management and fraud prevention.

Data driven compliance is one more in the evolution of the compliance profession, one more step. Fortunately, we have evolved from when compliance was very much legal driven by lawyers. And over time, most compliance professionals (and equally importantly, the DOJ and SEC) began to view compliance as a business process. As a business process, it can be measured, it can be studied, it can be monitored, and it can be approved based on that information.

We began with the importance of data analytics in compliance programs. The shift towards data-driven compliance has transformed the profession from solely legal-driven to a measurable and improvable business process. This shift has been recognized by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). The SEC first called out the use of data analytics, as it did in the Order concluding the Key Energy FCPA enforcement action. Most recently, the Albemarle FCPA resolution specifically called out the company’s use of data analytics in its remediation program, which occurred during the pendency of its FCPA resolution process.

In 2016, the Securities and Exchange Commission called out data analytics in an enforcement action for the first time. It was the Key Energy FCPA enforcement action, where they suggested data analytics would have shown or demonstrated a range of values outside the norm for certain gifts, travel, and entertainment for the company. This demonstrated that regulatory thinking evolved as well. Now, data analytics has become a critical element to improve the business process of compliance. Data driven compliance allows you to measure it, monitor it, and improve it all in a documented fashion so that if a regulator ever comes knocking, you can demonstrate to them not only the effectiveness of your compliance program but also how you are moving your compliance regime forward based on solid data and analysis.

AB InBev was one of the first companies to successfully implement data-driven compliance strategies, moving from detection to prevention of issues. This shift has resulted in cost savings and improved risk management for the company. Equally significant was the company’s public discussion of the BrewRight program and how it evolved into a broader business process tool.

The DOJ always telegraphs what is important to them. Starting 2020 with the 2020 Update to the Evaluation of Corporate Compliance Programs, they said the CCO must have access to all data across an organization. You may have data silos, but a CCO must be able to punch through all of those data silos. It is a natural progression from 2020 to this Albemarle FCPA enforcement action, where the DOJ clearly stated that the company’s data analytics program allowed them to move forward with the remediation.

Moreover, the critical part was that Albemarle was not required to have a monitor. To avoid having a monitor required under the resolution required two things. One, an effective compliance program, but two, testing of it. And the DOJ has made very clear those requirements. Albemarle had an effective compliance program, but more importantly, they have monitored it and tested it through their data analytics program. Their compliance function’s actions saved the company millions. And it tells the rest of us what the DOJ will look for in a compliance program going forward.

Data analytics plays a crucial role in various aspects of compliance, including M&A due diligence and risk assessment. By leveraging external data sources, compliance professionals can gain valuable insights into potential risks associated with vendors, customers, and employees. This information allows them to make informed decisions and mitigate risks effectively.

Compliance professionals must be aware of the importance of data-driven compliance strategies’ impact on decision-making. Using data analytics, compliance professionals can measure, monitor, and improve compliance programs in a documented fashion. This demonstrates the compliance program’s effectiveness and enables organizations to adjust and adapt more quickly to changing regulatory requirements.

However, implementing data-driven compliance strategies comes with its own challenges. Balancing the tradeoffs between automation and manual processes is one such challenge. While automation can streamline compliance processes and identify gaps, manual touches are sometimes necessary. Data analytics can help identify these gaps and drive accountability and training efforts.

There is great potential for new technologies like generative AI and machine learning to enhance compliance programs. These technologies can make compliance processes more efficient and enable better decision-making. For example, generative AI can guide users through dashboards and provide valuable insights, making compliance tasks easier and more effective.

Budget approvals are another crucial consideration for organizations when implementing data-driven compliance strategies. CFOs prioritize keeping the business out of legal risks and fines, fraud prevention and recoveries, and improved internal controls. Data analytics is not just a “nice-to-have” but a “must-have” for organizations. Those that do not embrace data analytics or fail to move towards it are at risk.

In conclusion, data-driven compliance strategies have revolutionized the compliance profession. Organizations can measure, monitor, and improve compliance programs by leveraging data analytics, resulting in cost savings, improved risk management, and better decision-making. While there are challenges associated with implementing data-driven compliance strategies, the benefits far outweigh the tradeoffs. Compliance professionals must embrace data analytics as a critical element of their compliance programs to stay ahead in an ever-evolving regulatory landscape.