The Department of Justice (DOJ) and Securities and Exchange Commission (SEC) announced a Foreign Corrupt Practices Act (FCPA) enforcement action. To say that the respondent company, Stericycle, Inc. (Stericycle) had a culture of non-compliance throughout its entire Latin American (LATAM) business unit belies those companies which only have a dysfunctional culture. Stericycle 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, Stericycle also demonstrated how a company can 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 criminal penalty reflects a 25% reduction off the bottom of the applicable US Sentencing Guidelines fine range.
The Stericycle enforcement action also provides insights into how the DOJ will implement the remarks made by Lisa Monaco last October on their new approach to FCPA enforcement. Finally, Stericycle agreed to a two-year corporate monitor under both the DOJ and SEC settlements. In short, there is much to unpack from this enforcement action which I will do so over the next few blog posts.
According to the Information and Deferred Prosecution Agreement (DPA), Stericycle entered into a three-year DPA. Stericycle agreed to a criminal Information, which charged the company with two counts of conspiracy to violate (1) the anti-bribery provision of the FCPA, and (2) the FCPA’s books and records provision. Stericycle agreed to a criminal penalty of $52.5 million. According to the DOJ Press Release, the DOJ agreed to credit up to one-third of the criminal penalty against fines the company pays to authorities in Brazil in related proceedings, including an amount of approximately $9.3 million to resolve investigations by the Controladoria-Geral da União (CGU) and the Advocacia-Geral de União (Attorney General’s Office). According to the SEC Press Release, Stericycle consented to the SEC’s cease-and-desist order that it violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA, and agreed to pay approximately $28.2 million in disgorgement and prejudgment interest. The SEC’s order provides for an offset of up to approximately $4.2 million of any disgorgement paid to Brazilian authorities.
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division said in the DOJ Press Release, “Stericycle today accepted responsibility for its corrupt business practices in paying millions of dollars in bribes to foreign officials in multiple countries. The company also maintained false books and records to conceal corrupt and improper payments made by its subsidiaries in Brazil, Mexico, and Argentina. Today’s resolution demonstrates the Department of Justice’s continuing commitment to combating corruption and protecting the international marketplace.”
Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division said, “Today’s resolution with Stericycle shows that the FBI and our international law enforcement partners will not allow corruption to permeate domestic or international markets. The consequences of violating the FCPA are clear: Companies that bribe foreign officials for business advantage will be held accountable.” Finally, Eric I. Bustillo, Director of the SEC’s Miami Regional Office, said in the SEC Press Release, “Stericycle rapidly expanded in Latin America without any meaningful oversight or compliance measures, as evidenced by widespread bribery schemes lasting for many years in most of its Latin America operations. Companies in pursuit of global expansion cannot disregard the need for appropriate controls.” Damning words all but they had lessons for the compliance professional from this matter.
As part of the DPA, Stericycle has agreed to continue to cooperate with the department in any ongoing or future criminal investigations relating to this conduct. This could well mean additional criminal charges may be brought against any number of individuals known to the DOJ, as identified in the Information. In Brazil, the following persons, Stericycle LATAM Executives 1 & 2, Stericycle Brazilian Executives 1-3, and Stericycle Argentina Executive 1 were named in the Information. Also interesting was the active assistance of sister anti-corruption enforcement groups in Brazil and Mexico, which were both identified by the DOJ and SEC as helping.
It was also interesting to note that under the DOJ Press Release, it noted that while “Stericycle has taken extensive remedial measures, it has not fully implemented or tested its enhanced compliance program, necessitating the imposition of an independent compliance monitor for a term of two years. Stericycle agreed to continue to enhance its compliance program and to retain an independent compliance monitor for two years, followed by self-reporting to the department for the remainder of the term.”
Regarding the final settlements with the DOJ and SEC; they both agreed to their respective resolutions with Stericycle based on several factors, including, among others, the company’s failure to voluntarily and timely disclose the conduct that triggered the investigation and the nature, seriousness, and pervasiveness of the offense. Although Stericycle did not self-disclose their illegal conduct to the DOJ or SEC, they did receive full credit for cooperation with both the agency investigations and engaged in extensive remedial measures. As noted above, this led to a 25% discount off the range suggested under the Sentencing Guidelines, saving Stericycle between $25 million to $30 million from their final criminal fine.
Finally, the Stericycle FCPA enforcement action is notable for the company’s use of code words to discuss bribery in its routine emails and other business correspondence. While chocolates and incentive payments (IPs) have been used before by other companies, cookies are now added to the bribery lexicon as a moniker for payment bribes.
Join us in our next blog where we consider the bribery schemes.
Author: admin
What do you do when the outside world looks like everything is fine, but inside, your world is falling apart?
Perhaps you’ve climbed the corporate ladder only to look around and think, “WTF” I put my ladder on the wrong building or climbed the wrong mountain. Perhaps you find yourself on the hamster wheel of life where you are emotionally eating, drinking, buying, and realize those distracting behaviors don’t provide you with the satisfaction you are looking for. They just numb and distract you from what you want and need to fix in your life.
You are not alone. Most people experience this, as you will discover in this #jammingwithjason #podcast episode with Lynn Louise Larson. Learn from Lynn Louise’s 10-year journey of trial and error on what works and what doesn’t work to get you from where you are to where you want to be in your life.
Connect with Lynn Louise by joining her “Badass Business Building for High Vibe Cosmic Warriors” Facebook Group at: https://www.facebook.com/groups/1289100734858474 and through her website: www.thecosmicvalkyrie.com
She also has a podcast, so check it out and subscribe to “The Cosmic Valkyrie Podcast” at: https://podcasts.apple.com/us/podcast/the-cosmic-valkyrie-with-lynn-louise/id1502394230
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Welcome to The Hill Country Podcast. The Texas Hill Country is one of the most beautiful places on earth. In this podcast, recent Hill Country resident Tom Fox visits the people and organizations that make this a unique area of Texas. Join Tom as he explores the people, places, and activities of the Texas Hill Country. In this episode, I visit Harry Anthony, a retired business executive who talks about uranium mining in the state of Texas. Some of the highlights include:
- What is uranium mining, and how is it done in Texas?
- How is uranium used?
- How and why did the US uranium mining market drop off?
- How have recent international events demonstrated the need for a robust US uranium mining industry?
- Why is uranium mining a national security issue?
- How can the US government begin to change and move from reactive to proactive? What should the industry do?
- Why is uranium a key spoken in ESG?
Welcome to the Greetings and Felicitations, a podcast where I explore topics which might not seem to be directly related to compliance but clearly influence our profession. In this episode, I visit with AJ Churchill, one-third of a triumvirate of friends who conceived of the fiction podcast, Earth Eclipsed and the Apollo app. Highlights include:
- Awards and honors for Earth Eclipsed.
- Public response to Earth Eclipsed.
- Season 2 of Earth Eclipsed coming in December 2022.
- The Apollo App.
- The power of a fiction podcast.
- What is an immersive audio podcast experience like in fiction.
- What’s next for the team.
Resources
Earth Eclipsed
Apollo App
Welcome to the Great Women in Compliance Podcast, co-hosted by Lisa Fine and Mary Shirley.
One of the interesting things about ethics & compliance as a field is that we look at ethical decision-making and policies and working to be innovative and approachable. In today’s episode Lisa speaks with Hemma Ramrattan Lomax, Senior Corporate Counsel, Integrity and Compliance at Snap, Inc. As you may have heard last week with Nicole Diaz, Snap is doing exactly with their Code of Conduct and how they center so many things around their core value of kindness. Hemma elaborates on this and the career she has built through the art of integrity.
When she was younger, Hemma’s goal was to be the first female Secretary General of the UN (which still has not happened), and Hemma talks about how this brought her into law as she grew up in the UK, to deciding to come to the US to work for the SEC, and eventually to Snap. She mentions how her work now relates to her earlier goals, and that radical curiosity is what keeps her career and interests evolving.
To Hemma, the “art of integrity” has guided her career interests, and how we can all do that to make impactful changes, whether it is in our communities, in DEI, or in other ways.
The Great Women in Compliance Podcast is on the Compliance Podcast Network with a selection of other Compliance related offerings to listen in to. If you are enjoying this episode, please rate it on your preferred podcast player to help other likeminded Ethics and Compliance professionals find it. You can also find the GWIC podcast on Corporate Compliance Insights where Lisa and Mary have a landing page with additional information about them and the story of the podcast. Corporate Compliance Insights is a much appreciated sponsor and supporter of GWIC, including affiliate organization CCI Press publishing the related book; “Sending the Elevator Back Down, What We’ve Learned from Great Women in Compliance” (CCI Press, 2020).
You can subscribe to the Great Women in Compliance podcast on any podcast player by searching for it and we welcome new subscribers to our podcast.
Join the Great Women in Compliance community on LinkedIn here.
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. This week, Matt and Tom are joined by Karen Woody and Jonathan Marks to consider the SEC’s recent proposed rules for disclosure of cyber breaches. Highlights include:
· What was in the proposals? The 60-day comment period is running.
· The 4-day disclosure requirement for material breaches.
· The corporate governance issues around Board reporting.
· What is the SEC trying to accomplish?
· Should your company have a cyber-risk committee? If so, who should be on it.
In today’s edition of Daily Compliance News:
· Advocating for a corp digital transformation. (WSJ)
· Tools and resources to fight corruption. (Council of Europe)
· Indonesia announces investigation into corruption around palm oil industry. (Reuters)
· Is there a Scope 3 in your future? (Reuters)
The Compliance Life details the journey to and in the role of a Chief Compliance Officer. How does one come to sit in the CCO chair? What are some of the skills a CCO needs to success navigate the compliance waters in any company? What are some of the top challenges CCOs have faced and how did they meet them? These questions and many others will be explored in this new podcast series. Over four episodes each month on The Compliance Life, I visit with one current or former CCO to explore their journey to the CCO chair. This month, my guest is Susan Divers, currently Director of Thought Leadership at LRN.
In 2009, Susan moved into the CECO chair at AECOM. She became the Senior Corporate Vice President, Chief Ethics and Compliance Officer & Associate General at AECOM. In this role she built out a compliance program across the globe for an international infrastructure construction company and built out her compliance team. She learned that to engage employees in compliance and ethics you often needed to explain the ‘why’ of compliance. She talked about the values of senior leadership and how that helped infuse compliance throughout the organization. She was particularly proud of the company receiving a World’s Most Ethical designation early in her tenure and then for five consecutive years.
Resources
Susan Divers LinkedIn Profile
Welcome to Everything Compliance Shout Outs and Rants.
1. Jay Rosen shouts out to Rachael Smith, Gilnet Sainvil and High-Five Man which reminded Rosen of Johnny Bank from his childhood
2. Matt Kelly gives a ‘mild’ rant to the SEC for proposing companies should have to disclose with 4 days after a cyber breach even if law enforcement asks a company not to do so.
3. Jonathan Armstrong goes on his most epic rant ever using 2 funerals and a birthday party to excoriate Tory Politicians to not simply talk the talk but follow the rules when it comes to Covid-19 protocols.
4. Karen Woody rants about the recent Declination with Disgorgement given to a MarshMac subsidiary in the UK, the Jardine Group Holdings and says this is simply a NPA and should be monikered as such.
5. Jonathan Marks shouts out to Phillies 3rd baseman Alec Bohm who went from Phillies’ fan goat to hero with a mea culpa and SF Giants assistant coach Alyssa Nakken, who became the first female to take the field and coach in the history of MLB.
6. Tom Fox shouts out to author Margaret Atwood and in her book The Handmaiden’s Tale, which is not a dystopian novel but a prophecy of current Texas in 2022.
The members of the Everything Compliance are:
• Jay Rosen– Jay is Vice President, Business Development Corporate Monitoring at Affiliated Monitors. Rosen can be reached at JRosen@affiliatedmonitors.com
• Karen Woody – One of the top academic experts on the SEC. Woody can be reached at kwoody@wlu.edu
• Matt Kelly – Founder and CEO of Radical Compliance. Kelly can be reached at mkelly@radicalcompliance.com
• Jonathan Armstrong –is our UK colleague, who is an experienced data privacy/data protection lawyer with Cordery in London. Armstrong can be reached at jonathan.armstrong@corderycompliance.com
• Jonathan Marks is Partner, Firm Practice Leader – Global Forensic, Compliance & Integrity Services at Baker Tilly. Marks can be reached at jonathan.marks@bakertilly.com
The host and producer, ranter (and sometime panelist) of Everything Compliance is Tom Fox the Voice of Compliance. He can be reached at tfox@tfoxlaw.com. Everything Compliance is a part of the Compliance Podcast Network.
Gatekeepers of third parties have to handle evolving new questions that ensure ESG initiatives align with the company’s values, providing for the welfare of the employees, communities, and the environment. Erika Peters, Managing Director and Global Head of Third Party and Supply Chain Risk management at Exiger, chats with Thomas Fox on The ESG Compliance Podcast on the importance of these third parties as an extension of the company and how to hold them accountable.
Watch ▶️ The ESG Standards with Thomas Fox & Erika Peters
✔️ Admittingly, the risk is all around a company’s entire ecosystem. Peters says that no third party is more critical and may have a higher risk than another. From an ESG perspective, companies must look at all parties involved that can potentially hurt their brand and reputation.
✔️ On an ESG framework that doesn’t exist. Many companies around ESG have been asking for government guidance, regulation, or other government signals on standards they should follow. The first step is to see what they already have and the existing data and bring it to one place.
✔️ Technology is the only way to go in 2022 to assess the criticality of a third party. Many companies are still not using technology to bring data together to map their supply chain and then understand the effects of the inherent downstream risks.
✔️ Transparency is vital for supply chain and third-party risk management solutions provider Exiger. With the launch of the platform Supply Chain Explorer, companies can instantly look into any entity in the world’s supply chain.
✔️ Supply chain and third parties are more than just your direct counterparties. Tom Fox and Erika Peters explore how companies should know third parties more than simply their direct counterparties and have direct contact with the fourth, fifth, and perhaps even sixth party down the line.
✔️ Erika cites how leadership is an important component of everything in ESG. More information is necessary for those companies in terms of biographical information to start layering on the risk question and set the framework for creating that compliance picture.
Erika Peters is the Managing Director and Global Head of Third Party and Supply Chain Risk management at Exiger. Exiger is the global leader in AI-powered supply chain and third-party risk management solutions. Visit https://www.exiger.com/ and get the early free trial of Supply Chain Explorer in May 2022.
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Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.