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Compliance Into the Weeds

Compliance Issues in 2020, Part 2

Compliance into the Weeds is the only weekly podcast which takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. Welcome to the first Into the Weeds podcast of the new decade and the new year. In this Part 2 of a two-part podcast series, Matt Kelly and I take a look at ten issues that we think will be significant for the compliance professional in the upcoming year.

Some of the highlights include:

  • The Institutional Shareholder Services lawsuit against the SEC. What will this and other court cases against the Trump Administration’s attempt to gut shareholder protects by the SEC?
  • Effective sanctions compliance programs. Will there be congruity or discrepancies in the interpretation of what constitutes a best practices compliance program by the DOJ and OFAC.
  • Compliance convergence. We are moving to do away with anti-corruption compliance, trade sanction and export control compliance, AML compliance to a role which is simply compliance.
  • Data, data and more data. Regulators now expect data analytics, continuous monitoring and continuous improvement in your compliance program.
  • The ethical edge. How more effective compliance creates more efficient business process equating to greater profitability.

Resources
Matt’s blog post 7 Compliance Items to Watch in 2020 in Radical Compliance.
Tom’s blog post 4 Compliance Insights for 2020 and Beyond in the FCPA Compliance and Ethics Blog.

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Daily Compliance News

January 15, 2020, the Bridge of Sighs edition


In today’s edition of the Daily Compliance News:

  • Businesses take the lead in response to climate change. (NYC)
  • Wells Fargo CEO admits he doesn’t have the answers yet. (Washington Post)
  • Trump Administration orders no discussion of climate change in allowing drilling in national forests. (Houston Chronicle)
  • Will Supreme Court further gut domestic corruption law? (Politico)
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Great Women in Compliance

Kim Yapchai-Transforming Compliance

Welcome to the Great Women in Compliance Podcast, co-hosted by Lisa Fine and Mary Shirley.

In this episode of GWIC, Lisa speaks with Kim Yapchai, who is the Chief Ethics and Compliance Officer for Tenneco.  Kim did not start in the ethics and compliance field by choice – she became responsible for ethics and compliance during the 2008-2009 recession as part of a large staff reduction.
Kim went from an involuntary compliance officer to a leader in the ethics and compliance community by developing a program based on “transformational leadership” – developing a holistic program, working with her team and achieving results in both her prior and current role, both in E&C and in corporate social responsibility.
A great deal of Kim’s career has been in the automotive and manufacturing industries, two  male-dominated industries.  She discusses how she has thrived in these industries as a woman, and a person with a blended heritage.
Kim is also a great supporter of ethics and compliance professionals and discusses how she uses LinkedIn and building her network to help others…and how that is something she enjoys.
Join the Great Women in Compliance community on LinkedIn here.

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31 Days to More Effective Compliance Programs

Day 14 | Risk Assessments

One cannot really say enough about risk assessments in the context of anti-corruption programs. This is because every corporate compliance program should be based upon a risk assessment, to understand your organization’s business from the commercial perspective, how your organization has identified, assessed, and defined its risk profile and, finally, the degree to which the program devotes appropriate scrutiny and resources to this range of risks.

As far back as 1999, in the Metcalf & Eddy enforcement action, the DOJ has said that risk assessments that measure the likelihood and severity of possible FCPA violations should direct your resources to manage these risks. The 2012 FCPA Guidance stated it succinctly when it said, “Assessment of risk is fundamental to developing a strong compliance program and is another factor DOJ and SEC evaluate when assessing a company’s compliance program.”
This language was supplemented in the 2017 FCPA Corporate Enforcement Policy, which stated, “The effectiveness of the company’s risk assessment and the manner in which the company’s compliance program has been tailored based on that risk assessment.”
A risk assessment determines the areas at greatest risk for FCPA violations among all types of international business transactions and operations, the business culture of each country in which these activities occur, and the integrity and reputation of third parties engaged on behalf of the company. The reason is straightforward; one cannot define, plan for, or design an effective compliance program to prevent bribery and corruption unless you can measure the risks you face.
 Three key takeaways:

  1. Since at least 1999, the DOJ has pointed to the risk assessment as the start of an effective compliance program.
  2. The DOJ will now consider both your risk assessment methodology for identifying risks and gathered evidence.
  3. You should base your compliance program on your risk assessment.
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Innovation in Compliance

Getting Employees to Pay Attention with Peter Grossman


Peter Grossman comes from a publishing and entertainment background, having worked at US Weekly and Rolling Stone. Given this background, he and his partner initially targeted the entertainment industry when they co-founded their production company, Labyrinth Training. However, they were offered the opportunity to work with AB InBev to create compliance training that their employees would actually pay attention to. Since that time, Labyrinth has focused on creating training for the compliance industry. Peter joins Tom Fox on this week’s show to talk about the innovative ideas, strategies and techniques in training and communications that his company brings to the compliance space. 

Fixing What’s Wrong With Compliance Training
People love learning, Peter says, but they generally do not like school. The problem with compliance training is that it’s usually built by test takers, with little to no emphasis on engaging learners. Oftentimes you have a situation where compliance training is done in December when employees are the least engaged. That’s not the time to try to shove information down people’s throats, Peter argues. Training should be something that makes a difference, that changes behavior. As such, it should be something people want to do, not just have to do. You need to attach creative and innovative ideas to what you’re trying to convey to grab people’s attention and make it memorable. Essentially, your training should be about engaging your workers year round in a culture change. 
Memorable Storytelling
Whenever you roll out a training, it should feel like a cool office party, Peter says. The goal is to have people talking about it afterwards by attaching your policies to storytelling. Tom asks him how he applied this strategy at AB InBev. Peter shares the attention-grabbing narrative they developed for AB InBev’s compliance training program. It was so memorable and relatable that it became a company inside joke. What’s most important, he says, is that workers now remember what to do in certain moments because of that training. “The idea is that when you create characters that resonates with everybody, that’s what sparks the behavior change and gets people remembering it throughout the year,” Peter comments. He advocates bringing storytelling to everything – from broad topics to the most nuanced – because people will remember it.
A New Podcast
Tom mentions that Peter will be joining the Compliance Podcast Network with his new podcast. He asks him to give listeners a preview of what is to come. Peter says the name of the podcast is In The Lab. It’s going to be a very loose, conversational show. He will bring his storytelling background to the show as the format will be about talking to people and hearing their stories. 
Resources
LabyrinthTraining.com 
peter@gadfly.io 

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Daily Compliance News

January 14, 2020, the Astros Hammered edition


In today’s edition of the Daily Compliance News:

  • MLB lays down unprecedented fines on Houston Astros. (com)
  • Astros owner fired GM and Manager. (Houston Chronicle)
  • Former Astros GM declares “I am not a cheater”. (Houston Chronicle)
  • Does MLB have a technology problem? (ESPN)
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31 Days to More Effective Compliance Programs

Day 13 |Institutional Justice and The Fair Process Doctrine

Companies have finally come to realize that institutional justice and fairness are perhaps the most basic tenet of any successful workplace. If employees believe they will be treated fairly, it will engender a level of trust that can work to not simply motivate employees but lead to a more successful workplace and, at the end of the day, a more profitable company. This encompasses the entire lifecycle of the employment relationship, from hiring through separation. It works in areas as seeming disparate as compensation and incentives, discipline, promotion and internal reporting.

Three key takeaways:

  1. The DOJ and SEC have long called for appropriate and consistent application of both incentives and discipline.
  2. The Fair Process Doctrinewill help set institutional justice as the norm in your organization.
  3. Inconsistent application of discipline will destroy your compliance program credibility.
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FCPA Compliance Report

André H. Paris on the Brazilian Compliance Scene

In the Episode, I visit with André H. Paris, a Brazilian Compliance Consultant and Lawyer. He is a specialist in building a Corporate Culture based on Ethics, Transparency and Respect. Paris has experience in Corporate Risk Analysis and Management, as well as in Protecting Corporate Reputation and Crisis Management. He is also quite enthusiastic on building a more ethical and transparent business environment. Paris is the author of the recently released book Compliance – Ethics and Transparency as the Way Forward.  I met Paris at a compliance conference in Brazil last year. I am always interested in the views on compliance from practitioners outside the US, most particularly those who have written on the subject. He came on to the podcast to discuss his book and the current compliance scene in Brazil. Some of the highlights include:

  • Due to the numerous corruption scandals, many Brazilian companies have experienced an extreme reputation crisis.
  • Companies have suffered substantial reputational bumps, including loss of market value, frequent presence on police pages, destroyed careers and thousands of jobs down the drain, as well as a profound brand disruption.
  • Paris believes that many of these risks should never have been taken, seeking results at any cost.
  • One of the challenges is helping the market to understand the need and value of compliance.
  • Additionally, many companies are trying to catch by creating internal structures focused on this compliance.
  • Compliance needs to be further studied and deepened. Paris believes there is the need for constant updating.
  • While the book deals with the main themes of corporate compliance, Paris both in the podcast and in his book does not shy away from expressing his opinions on topics that are often considered controversial.

Resources
To purchase a copy of  Compliance – Ethics and Transparency as the Way Forward (in Portuguese) click here
André Paris LinkedIn Profile

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Daily Compliance News

January 13, 2020, the First Folio edition


In today’s edition of the Daily Compliance News:

  • Can Big Tech and Law work together? They must opines the FT Editorial Board. (FT)
  • Infosys clears itself. (FT)
  • Should robots pay taxes (and be ethical)? (WSJ)
  • Have some spare time? First Folio go to on market. (WSJ)
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31 Days to More Effective Compliance Programs

Day 12 | Financial Incentives for Compliance

One of the areas that many companies have not paid as much attention to in their compliance programs is compensation. However, the DOJ and SEC have long made clear that they view monetary structure for compensation, rewarding those employees who do business in compliance with their employer’s compliance program, as one of the ways to reinforce the compliance program and the message of compliance. As far back as 2004, then SEC Director of Enforcement Stephen M. Cutler noted that integrity, ethics and compliance needed to be part of promotion, compensation and evaluation processes: “At the end of the day, the most effective way to communicate that “doing the right thing” is a priority, is to reward it.”

The 2012 FCPA Guidance stated the “DOJ and SEC recognize that positive incentives can also drive compliant behavior. These incentives can take many forms such as personnel evaluations and promotions, rewards for improving and developing a company’s compliance program, and rewards for ethics and compliance leadership.”
This same concept around compensation and incentives was brought forward in the 2019 Guidance – Incentives and Disciplinary Measures, which read:
Incentive System – Has the company considered the implications of its incentives and rewards on compliance? How does the company incentivize compliance and ethical behavior? Have there been specific examples of actions taken (e.g., promotions or awards denied) as a result of compliance and ethics considerations? Who determines the compensation, including bonuses, as well as discipline and promotion of compliance personnel?
The first question posed in the 2019 Guidance requires you to start with the basic question of what does your employee compensation consist of? Is it a straight salary? Is it variable? If so, what does the variable component consist of? Is it a discretionary bonus based upon the overall success of the entire business enterprise or some small subset such as a business unit or geographic region? Is it solely personal? Or is it some combination of all of the above?
Three key takeaways:

  1. The DOJ and SEC have long advocated compensation as a way to motivate employees into ethical and compliant behaviors
  2. Keep the compliance aspects of your compensation structure simple and easy for your employees to understand
  3. Have full transparency in the framework of your compensation structure