Author: admin

Welcome to a special five-part blog series, entitled Corporate Case Management in the Era of the DoJ’s Monaco Memo, sponsored by i-Sight Software Solutions (i-Sight). Over this series, Jakub Ficner, Director of Partnership Development, and I consider how the Monaco Doctrine and Monaco Memo have impacted compliance in several key areas. We not only detail the changes wrought by the Monaco Memo but how compliance professionals can respond to these new challenges. In Part 1, we look at the role of a speak up culture in responding to the Department of Justice (DOJ) changes set out in the Monaco Memo.

There have been some significant announcements from the DOJ over the past year, which have really re-emphasized what I think many thought were the nuts and bolts of compliance. It started a year ago when Deputy Attorney General Lisa Monaco gave a speech where, for the first time, the DOJ talked about corporate culture as a key indicia that the Department would evaluate if a company was under investigation, leading to corporate culture being evaluated in enforcement actions over the past 12 months.

That led to the now formalized Monaco Doctrine, as memorialized in the Monaco Memo. Corporate culture is now a key assessment the DOJ will make in Foreign Corrupt Practices Act (FCPA) investigations or enforcement actions. How does an organization create and maintain an ethical culture? Key questions include how do you produce a culture? How do you assess that culture? How do you monitor that culture? How do you continuously improve your culture? How is a speak up culture so critical to a good corporate culture? How should a company think through responding to these new developments?

Ficner said the first step for any organization should be “how do we encourage and foster a speak up culture?” He said you should begin with differentiating between a whistleblower hotline and whistleblower program versus a speak up culture. “By focusing on a speak up culture, a company is moving away from potentially the negative connotation associated to the word whistleblower, to one of really fostering and encouraging your employees to speak up and voice any concerns if they encounter them. There is a difference because a speak up culture can help to foster a community.” There can be multiple different channels where an employee can voice their concerns and they will be heard by the organization. Ficner believes it is a “two-step process of building a multi-channel approach to voice concerns and then having a process in place to have a consistent approach to dealing with a concern once it has been voiced.”

There are additional steps beyond simply providing the mechanism to allow employees to speak up. Ficner said, “setting expectations is another key. An organization should desire to set expectations for the employees that have come forward in terms of next steps and roughly the process that we’ll follow from there. Once the employees have taken the active step of coming forward with a concern, they need to know that their voice has been heard, and that there will be a process followed. They should be given a rough expectation of what that process will be going forward.”

The ability to actively keep a reporter who has submitted a complaint or concern up to date as the process moves forward and then having rules in place to keep that process moving forward is also critical. After an organization receives the information, it should keep the person up to date and informed on the various steps or milestones as it transitions through the process. One great example is it starts with a two-way portal. The ability for an initiator to submit their concern, actively be able to look up the status of their concern and potentially add additional information to their concern, enabling them to either remain anonymous or choose to be named and associated to that concern or allegation should be maintained throughout the process. Unfortunately, many organizations fall down on these steps. This failure can have a very negative impact on a speak up ethos and an overall culture of ethics and compliance in an organization.

Ficner concluded by noting, once an organization has such information, it can then start to use it to improve any compliance program deficiencies. It can be shared with various stakeholders, from executive leadership to the Board of Directors, on the effects of a good compliance program and the effects of a bad compliance program. He noted, “that is where the investment starts to come in as organizations see that having a strong ethical program in place that encourages first culture speak up and then a structured process that gives us the data that we need to reinforce it is a benefit to the organization.”

Join us for Part 2, where we consider the importance of strategic triage.

We conclude our celebration of the Houston Astros winning the 2022 World Series and how this world series may have helped the Astros in the one area they struggled with since the sign stealing scandal broke in 2019; their reputation and why that area has become so critical for the compliance profession. All baseball fans know the story, as related by Tom Verducci in SI.com, “The Astros won the 2017 title with the help of stealing signs off a live video feed and relaying them to the batter with a system of banging on a trash can. Crane fired manager Hinch and general manager Jeff Luhnow after MLB in ’20 imposed a one-year ban on them and bench coach Alex Cora, who by then was managing the Red Sox.”

The Astros became the most hated team in baseball after the cheating scandal broke. They were already disliked for their blatant tanking leading to three years of 100-loss seasons from 2011-2013 and their holier than thou attitude since Luhnow took over as General Manager (GM). In other words, there was much the Astros had to both answer for and overcome.

Up until the sign-stealing scandal broke, the Astros winning the 2017 World Series was the highlight of my professional sports-watching career. But then it became sullied and although much like a wayward relative, I finally forgave them, that taint will always be associated with that first World Series title. Even if, as some claim they did not cheat in the World Series, everyone on the team admitted they cheated during the season. My ennui was felt by players on the team as well. Verducci quoted San Diego Padres “pitcher Joe Musgrove, who pitched on that ’17 Astros team and won a game in that World Series, and who said, “I still don’t feel great about wearing that ring around or telling people that I was a World Series champion on that team. I want one that feels earned and that was a true championship. It was a powerful admission. This was not the media, fans or opponents referring to that 2017 title as less than genuine.” Even Astros pitcher, Lance McCullers Jr., who played on the 2017 title team and still pitches for the Astros said, “I understand the negative attention to it and why people feel the way they do.”

To overcome all this a change started at the top when owner Jim Crane brought in Dusty Baker to run the club as manager. Verducci said, “the Astros owner who needed someone not just to manage his team in 2020 after he fired A.J. Hinch in the wake of the team’s sign-stealing scandal, but also to manage the choppy waters around it. Crane could not change the taint associated with the ’17 team—that’s here to stay—but he needed a championship that moved the franchise forward.” Baker was the manager to do so. Bradford Doolittle writing in ESPN said, “Dusty Baker arrived, then, too, and the beloved manager’s very presence restored a measure of integrity to the Astros when they badly needed it.”

James Click did the same from the GM side of things. Doolittle said of new GM, “the soft-spoken, analytics-savvy executive, took over one of the most proficient front offices in the game, and under his management, the Astros haven’t missed a beat. In some ways, they’ve even iterated into a higher form, especially given the pitching depth that is the envy of the majors.” Moreover, “through those additions and plenty more, the Astros have remained at the forefront of the baseball world because of excellence in scouting, development and analytic innovation.” Of course, the players had to perform, and they did so magnificently.

Compliance Lessons

What are the compliance lessons from this story? The first lesson is that you can always come back from the abyss. I once worked for a company which, in 2007, had the largest Foreign Corrupt Practices Act (FCPA) fine in the history of the world ever. The Board of Directors made a clean sweep of senior management and brought in a new management team, and we were charged with implementing the best compliance program that we could put in place. It was light years ahead of the 2007 version of a best practices compliance program and had strategies that are still seen as cutting edge today in areas such as Supply Chain anti-corruption risk management.

What it takes to do so is a commitment from the very top. From my company it was the Board of Directors; from the Astros it was owner Jim Crane. Once that commitment is made, it must be executed upon by senior management and then cascaded down through the organization. It takes long hard work. Sometimes you have to put your head down and just plod along. Name any major, as in billion dollar or above anti-bribery/anti-corruption scandal of the past few years and in response, you will see a company fully committed to remedying their errors and moving forward in a different path.

In his piece, Doolittle asked, “Does this championship allow the Astros to completely turn the page on the scandal?” I only partly agree with his answer of, “The truth is, they don’t have to, because that happened a long time ago. All of the Astros, those who were there and those who were not, have heard it all over the past few years. It no longer really matters.” Ryan Pressly, the Astros lights out closer, said, “We don’t really care what the fans think. Everywhere we go, we get booed. It’s Houston versus y’all.”

I will leave the final word to my friend, colleague and longtime LA Dodgers fan Adam Turteltaub who has razzed me unmercifully since the cheating scandal broke (and rightly so). On the day after the Astros beat Philadelphia, he emailed me the following, “This win was legit (at least we think so as of now).” That line about sums up what the rest of the world thinks and will always think about the Astros.