Welcome to the Day 2 of a five-day podcast series Jay Rosen and I are producing in honor of the latest Star Wars movie The Last Jedi. Each day over this week, Jay and I will review a Star Wars movie and discuss it from the compliance perspective. Today, we consider Episode V, The Empire Strikes Back and due diligence.
This movie is my personal favorite of the initial trilogy. During the climactic battle between Luke Skywalker and Darth Vader, there is the BIG REVEAL where Vadar utters the immortal line, “I AM YOUR FATHER”. In the context of knowing who you are doing business with under the Foreign Corrupt Practices Act or UK Bribery Act. I once heard a company President say he did not need to perform due diligence because he looked a man in the eyes and that was enough to know if he was honest. (I should add, this company President also evaluated the strength of a handshake as an additional level of due diligence.) Hopefully we have moved past this level of sophistication for due diligence and its evaluation thereof.
There are three levels of due diligence and you must make a determination which is appropriate for the entity or person you are investigating. If a red flag appears it must be cleared or a risk management strategy articulated to allow moving forward.
Level I
First level due diligence typically consists of checking individual names and company names through several hundred Global Watch lists comprised of anti-money laundering (AML), anti-bribery, sanctions lists, coupled with other financial corruption and criminal databases. Level I due diligence addresses such basic issues as whether the third party actually exists, the identities of management, officers, directors and shareholders and whether such persons are on regulators’ watch lists. It can also provide some basic information on whether there are politically exposed persons (PEPs) involved in the third party. Finally, if there are any media reports linking the company to corruption.
Level II
Level II due diligence encompasses supplementing Level I due diligence with a deeper screening of international media, typically the major newspapers and periodicals from all countries plus detailed Internet searches. Such inquiries will often reveal other forms of corruption-related information and may expose undisclosed or hidden information about the company, the third party’s key executives and associated parties. Level II can give you information on adverse litigation, any bankruptcy proceedings, overt signs of financial difficulty. More generally it will also provide local online information such as corporate filings, regulatory filings, lawsuits and locally archived materials. You also be able to determine if there were any in-country investigations or sanctions from regulatory entities.
Level III
This level is the deep dive. It will require an in-country ‘boots-on-the-ground’ investigation and is designed to supply your company “with a comprehensive analysis of all available public records data supplemented with detailed field intelligence to identify known and more importantly unknown conditions. Seasoned investigators who know the local language and are familiar with local politics bring an extra layer of depth assessment to an in-country investigation.
Now imagine if Luke had performed a more robust level of due diligence on Darth Vadar? Would he have been able to find out Darth Vadar was his father? Perhaps not but then again, we might not have heard that seminal line “I AM YOUR FATHER”.
Join us tomorrow where we consider Return of the Jedi and effective training.
Author: admin
This week’s guest on the Innovation In Compliance show is Krista Hardwick, General Counsel at Deputy. Deputy brings an innovative solution to managing compliance and legal risk around scheduling. Krista chats with Tom Fox about how her company’s software helps business owners stay compliant with fair wage and hour laws, as well as increase profitability.
Analyzing Shift Work
Deputy recently released a free ebook entitled The United States of Shift Work, based on their study of 1million shift hours over the course of a year. They were able to conclude that there are many similarities among the different generations of shift workers with regard to the hours they worked vs hours they were scheduled. On average, workers were rostered to work just a few hours more than they actually worked. Krista says that this shows that managers and business owners are complying with the fair workweek laws which state that workers should not be required to work more than they are scheduled. It also implies that business leaders do not want workers to work overtime, which would trigger overtime compliance regulations. Tom comments that this relates directly to the key issues of fairness in the workplace and sustainability.
How Deputy Helps Businesses Be Compliant
Krista advises business owners to love their employees. Keeping your employees happy will help your business be more successful in the long run. She discusses the fair workweek laws that are being implemented across the country, which require businesses to post schedule weeks in advance and not change them once posted. Deputy’s tool, she says, help owners stay compliant with these laws, so they can focus on growing their business. Business owners should also be focusing on creating an optimal schedule that minimizes payroll costs for the company, Krista points out. Deputy partners with Widget Brain to do customized labor forecasting for their clients: they help you create an optimal schedule based on your forecasted profits for each hour of the day. This shows that effective compliance can create greater business efficiency, leading to greater profitability, Tom comments. Krista adds that it also minimizes the chance of a wage and hour audit.
Corporations Need To Respond To People
The number of shift workers is increasing and will continue to increase, Krista says. Due to the amendment to the Department of Labor rules, many workers who are now considered salaried employees will be converted to shift workers and paid an hourly rate come January 2020. Krista says that another issue companies should consider is that Gen-Z’ers are working fewer hours than previous generations. Their work preferences are different, added to which, they have choices about where they want to work and the kind of work they want to do. These issues are important when doing scheduling and workforce management. Tom says that this speaks to how corporations need to respond to people, instead of people responding to corporations.
Resources
Deputy.com
The United States of Shift Work
Deputy on Facebook | LinkedIn | Twitter | Instagram
Categories
A New Hope and Risk
Welcome to the first day of a five-day podcast series Jay Rosen and I are releasing in honor of the latest Star Wars movie The Rise of Skywalker. Each day over this week, Jay and I will review a Star Wars movie and discuss it from the compliance perspective. Today, we consider Episode IV, A New Hope and risk.
The full series schedule is:
Monday, December 16, A New Hope and risk.
Tuesday, December 17, The Empire Strikes Back and due diligence.
Wednesday, December 18, Return of the Jedi and effective training.
Thursday, December 19, The Force Awakens and disruptive innovation in compliance.
Friday, December 20, The Last Jedi and the Board’s role in succession.
One of the plotlines is that the Galactic Empire has created a Death Star with enough firepower to destroy a planet. The Rebel Alliance is determined to destroy the Death Star and has blueprints detailing the defensive posture of the Death Star. A computer analysis determines a weakness in the Death Star’s defensive shield. At one point, the Death Star’s commander, Grand Moff Tarkin, played by Peter Cushing, is told there is a ‘risk’ in the Rebel’s plan of attack. Tarkin dismisses this risk as insignificant. Of course, Luke Skywalker then proceeds to exploit this risk and destroy the Death Star.
Tarkin’s incorrect assessment of this risk was lethal. Today I want this part of the story to introduce the subject of how you evaluate compliance risk under the Foreign Corrupt Practices Act (FCPA) or an economic sanctions regime. Failure to appreciate risk can lead to some very serious and perhaps lethal consequences.
Whether you utilize one approach or another, analyzing the results of your risk assessment is as important as doing the risk assessment. With the recent Department of Justice (DOJ) remarks around how they will review the effectiveness of compliance programs during an enforcement action to determine potential credit or even granting a declination, the stakes have never been higher. Of course, for Grand Moff Tarkin, his refusal to analyze the risk assessment presented to him was fatal.
Join us tomorrow where we consider The Empire Strikes Back and due diligence.
In today’s edition of Sunday Book Review:
- Big Wonderful Thing by Stephen Harrington
- Border Land, Border Water by CJ Alverez
- Taking the Land to Make the City by Mary Ryan
- No Way But To Fight by Andrew RM Smith
Ericsson settles a long running FCPA enforcement action, coming at No. 2 on the all-time list. Tom lectures Jay about the need for his Patriots to stop cheating (again). They also other of this week’s top compliance and ethics stories which caught their collective eyes.
- Ericsson settles the second largest FCPA enforcement action of all time.
- Ericsson comes in the FCPA Blog’s all-time Top Ten FCPA Enforcements and also Number 2 on the all-time Disgorgement List.
- Jay Clayton backs off his threat to cap SEC whistleblower awards.
- Director of Treasury’s anti-money-laundering watchdog calls for Congress to pass corporate transparency legislation.
- Jay looks at the birth of the corporate integrity monitor.
- Did they look at petty cash? €84MM goes missing from Football Association of Ireland. Jonathan Rausch.
- Does better corp governance leader to better corporate agility? Kenneth Lehn.
- How and why should you manage your corp culture? Jim DeLoach
- CFIUS report to Congress. Lawyers from Simpson Thatcher.
- How to manage risk when the BOD is overconfident? Matt Kelly.
- Patriots caught cheating again. Do they even care? Max Kellerman.
- On the Compliance Podcast Network, Tom had a five part podcast series on the Hughes Hubbard 2019 FCPA and Anti-Bribery Alert. In Part 1, Kevin Abikoff provides and overview of the Alert and explains this year’s theme; in Part 2, Laura Perkins on the year in FCPA; in Part 3, Bryan Sallaman on developments from France; in Part 4 Mark DeBernardis on MDBs and anti-courrption enforcement and in Part 5, Salim Saud on developments in Brazil.
Tom Fox is the Compliance Evangelist and can be reached at tfox@tfoxlaw.com. Jay Rosen is Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com. For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.
Where does creativity fit into compliance? In more places than you think. Problem-solving, accountability, communication, and connection – they all take creativity. Join Tom Fox and Ronnie Feldman on Creativity and Compliance, part of the Compliance Podcast Network to explore these issues. Today’s episode is about creative ways to improve accessibility of your compliance program. Our guest is Garin Bergman, is the former CCO at IDEX Corp. He is the founder of the PalmTree Compliance Application which is “Compliance in the Palm of Your Hand”.
Some of the highlights include:
- Bergman’s journey from CCO to product innovator.
- How can you improve accessibility of compliance training?
- How can you get training to offline employee populations?
- How can you improve response rates to training?
- Why is it important to deliver training not only in a convenient mechanism but also where employees want to receive it?
- How can compliance communications be proactive?
- What the difference is between an App and being mobile friendly?
Resources:
Garin Bergman
LinkedIn Profile
PalmTree Website
Ronnie Feldman
Ronnie Feldman (LinkedIn)
Learnings & Entertainments (LinkedIn)
Ronnie Feldman (Twitter)
Learnings & Entertainments (Website)
60-Second Communication & Awareness Shorts – A variety of short, customizable, quick-hitter “commercials” including songs & jingles, video shorts, newsletter graphics & Gifs, and more. Promote integrity, compliance, the Code, the helpline and the E&C team as helpful advisors and coaches.
Workplace Tonight Show! Micro-learning – a library of 1-10-minute trainings and communications wrapped in the style of a late-night variety show, that explains corporate risk topics and why employees should care.
Custom Live & Digital Programing – We’ll develop programming that fits your culture and balances the seriousness of the subject matter with a more engaging delivery.
