This week I have used the current Broadway performance by Glenda Jackson as King Learto introduce several compliance topics. Today, I want to discuss the role of The Fool. Initially I should note that the actor who played it, Ruth Wilson, also played Cordelia; which in and off itself is rather amazing. The Fool did well to speak truth to power during the play and Wilson was excellent in both roles.
Wilson’s performance as The Fool added a shading of interpretation that certainly works. It also informs today’s review topic which is who was the fool and who was the criminal in one of the most nortorious acquistions in recent memory, the Hewlett-Packard (HP) acquisition of the UK company Autonomy. The matter is now on trial in London, it being the largest UK civil trial in history with HP claimint some $5 billion in damages. The former Autonomy CEO Mike Lynch is in the dock as he will be in the US when his criminal case goes to trial sometime after the conclusion of this civil action.
The trial began this week and the fireworks have already started, with HP claiming Lynch and his former CFO engaged in massive fraud; the trial judge asking HP what accounting standards they used to evaluate HP and Lynch basically saying HP dropped the ball completely in both the acquition and after closing for a variety of reason. Based upon all of this tomfoolery I thought a review of HP actions was warranted today.
As reported by Ben Worthen and Justin Scheck in the Wall Street Journal (WSJ) article entitled “Inside H-P’s Missed Chance To Avoid a Disastrous Deal”, HP did not follow its own internal protocol for acquisitions during the time that led up to its purchase of the British company Autonomy. Additionally, HP’s actions and decisions before and after the acquisition probably steered the deal in to, at a minimum, a very difficult path to success.
New Leadership
In 2010, HP made the decision to bring in someone, who was little known in Silicon Valley, to run the company, that person being Leo Apotheker, who had headed the German company, SAP. However, little noted at the time was the change in the Board of Directors, where “H-P simultaneously got a new board chairman, also a software specialist: Ray Lane, a venture capitalist and former president of Oracle Corp. Soon after, four H-P board members didn’t stand for re-election, and five new members arrived.” In other words, a majority of the top leadership positions in the company changed in a very short time.
Apotheker immediately made clear his desire to purchase one or more software companies. However, the Board of Director’s “finance committee scotched one, and negotiations to buy the other fell apart over price. A frustrated Mr. Apotheker told Mr. Lane, “I’m running out of software companies,” said a person familiar with the conversation.” This led HP to take a look at Autonomy.
Board Protocol
Another change for HP in the pre-acquisition process regarding the Autonomy deal related to Board of Director oversight. It came about because Apotheker had two major initiatives early in his tenure. One was to divest the company of its PC-manufacturing business. The second was to purchase Autonomy. These initiatives were considered so large and complex that the Board of Directors split itself into two separate groups to evaluate each proposal. So only half the Board was looking into the details of the Autonomy deal. Further, “H-P’s normal procedures require the board’s finance committee to review and approve deal proposals before they reach the full board. That didn’t happen with the proposal to acquire Autonomy, said people familiar with how the board proceeded.” While the split of the Board of Directors provided some ease of coordinating some logistical issues such as scheduling meetings, it provided Apotheker, with “more opportunities to lobby for a deal, said people familiar with the board’s activities.”
Red Flag Raised (or not)
One of the things that HP’s Board of Directors were surprised about during the due diligence process was “how little detail about the target firm’s finances became available. Autonomy allowed a review of financial statements and about 25 sales contracts. H-P also wanted the “working papers,” or original financial material, underlying Autonomy’s audits. Autonomy declined to provide them, citing U.K. corporate-takeover rules that require companies to disclose the same documents to all potential suitors.” While understanding that it is never the case that an acquiring company gets to review everything that it wants to during due diligence, reviewing only 25 sales contracts for a company that you are about to spend over $8 bn on does seem a bit of an under-representation of financial data to review. Moreover, some of the members of the HP due-diligence team “said they were reassured, to some extent, by Autonomy’s being a public company that had been audited for years.” Autonomy’s UK audit firm was Deloitte.
But even Deloitte raised red flags with HP, however weakly. At one point, people from HP and KPMG, HPs audit team in the acquisition of Autonomy, spoke by telephone with the Deloitte team. Someone at Deloitte “mentioned that about a year earlier, an Autonomy finance executive had alleged improper accounting at Autonomy, according to people familiar with the call. Three of these people said Deloitte mentioned the issue briefly and added that a review had found the allegation to be baseless. The H-P team didn’t investigate further, one of the people said, and didn’t share the information with either Mr. Apotheker or H-P’s board.” The articles claims that “Neither Mr. Apotheker nor the directors ever heard such an allegation during negotiations, according to several people either close to the CEO or knowledgeable about the board. Said one: “There were zero red flags raised about this company during the whole process.””
Loss of Steam
The WSJ article referred to the lack of enthusiasm that some members of senior management at HP had over the Autonomy transaction. For instance, “Chief Financial Officer Cathie Lesjak said an acquisition would batter H-P’s balance sheet, using up its cash and incurring debt, said people familiar with the conversations.” Pretty profound when you think about it now. But beyond simply the Autonomy debacle, the Board of Directors was becoming equally uneasy with Apotheker’s desire to cut the heart out of the company by getting rid of the PC-manufacturing business. So just after the Autonomy purchase, the Chairman of the Board Mr. Lane “spoke to senior H-P executives and found a near-universal view that their CEO wasn’t right for the job. In late September, 35 days after the agreement to buy Autonomy and 11 months into Mr. Apotheker’s tenure, the board dismissed him.”
This meant that the person who had shepherded the deal through the company was gone. Apotheker had not only pushed for the deal but said he had plans on how to integrate Autonomy into HP and make it work. He was quoted in the WSJ article as saying, “”We had concrete and ambitious plans on how to integrate and leverage the Autonomy acquisition,” Mr. Apotheker said. “But I was gone by the time the deal closed.”” This led to claims by the head of Autonomy, Mike Lynch to claim that the intention for HP to integrate and sell Autonomy software after the transaction never came to pass. “Within weeks, Mr. Lynch told the new H-P CEO, Ms. Whitman, in an email that when he discussed with H-P’s server unit the idea of selling Autonomy software along with H-P hardware, he received a “very negative response.””
The End
Whitman and other HP executives went to the UK to try and figure out what went wrong with the transaction, the integration or both, and two weeks later Lynch was fired by HP. Within weeks of the Lynch firing, HP said that “the company heard an allegation from an Autonomy executive that Autonomy manipulated its numbers. That set in train the process that led to H-P’s November write-down and allegation of improper accounting by the software firm.” Now the US Department of Justice (DOJ), the Securities and Exchange Commission (SEC) and the UK Serious Fraud Office (SFO) are all investigating the allegations that Autonomy manipulated its books and records.
Perhaps the simple truth is that everyone involved in this matter was a Fool.
I hope you have enjoyed my exploration of this most innovate and unique production of King Learas well as the story of one of Shakespeare’s greatest tragedies to introduce a daily compliance topic this week.
This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.
© Thomas R. Fox, 2019
Author: admin
In this special five-part podcast series, sponsored by Affiliated Monitors, Inc., I visit with AMI Managing Director Jesse Caplan on emerging issues in healthcare compliance and monitoring. In the Episode 3, we discussed how independent monitoring can serve important public policy goals in the healthcare industry. In this Episode 4, we consider examples of independent monitoring involving healthcare organizations or systems.
We consider some of the following issues:
How do healthcare organizations or the agencies that regulate them may use monitoring in connection with significant business transactions – as opposed to law enforcement or disciplinary proceedings.
- Healthcare transactions – like acquisitions, mergers, non-profit conversions, and even capital improvements – are subject to regulatory oversight and scrutiny that may be more intense than in other industries.For example, major capital improvements to hospitals are often subject to a state’s Certificate of Need – CON — or Determination of Need – DON –approval. Not-for-profit hospitals that seek to convert to for-profit – often as part of a merger or acquisition transaction – are likely to face scrutiny and require approval by those agencies that regulate and oversee both their licensing and their charities functions – typically the state department of health and state Attorney General’s Office. A merger or acquisition of a hospital, health insurance company, or even a physician practice can be subject to antitrust scrutiny –by state authorities like the Attorney General’s Offices, and possibly federal review by the Department of Justice or the Federal Trade Commission.
- In each of these healthcare transactions, the government agencies involved are not seeking to address compliance violations or to take disciplinary action. In most of these matters the healthcare organization is not doing anything wrong. But these transactions are likely to impact the structure and dynamics of the local healthcare market, and the regulators – typically state regulators – have both the authority and the objective of ensuring those impacts are a net positive for the local healthcare marketplace. The government’s healthcare regulators and policymakers will want to ensure that the transaction improves the quality of healthcare, increases access to healthcare – particularly for vulnerable and under-served communities, and does so more efficiently. In order to withstand government review, and to get the approvals required, the healthcare organizations entering into the transaction often offer up representations and concessions about actions, investments and improvements they will agree to take and engage in going forward – actions designed to address the state’s concerns and objectives. And the state regulators themselves will often seek to impose additional conditions or requirements on the transacting healthcare organizations to address the state’s public policy objectives.
- Whenever you have conditions being imposed or being offered as a prerequisite of approval of a healthcare transaction, there is a need to have someone monitoring whether those conditions are being effectively implemented and sustained. The government agencies can do the monitoring themselves, but as we previously discussed, that may require resources that are not readily available. We find that a better alternative will often be that the regulators and the healthcare organizations agree to an independent monitoring firm to oversee that the conditions, investments and improvements are being timely and effectively implemented. In these matters, the independent monitor is paid for by the healthcare organization but reports to the government agencies.
What are some examples of where organizations and government regulators have jointly agreed to use an independent firm to monitor implementation and compliance with conditions of a healthcare transactions?
- AMI is currently engaged in monitoring conditions imposed by a state Attorney General’s Office on two separate hospital systems, both of which converted not-for-profit hospitals in the state to for-profit companies as part of major acquisitions. In this state the Attorney General’s Office is charged with regulating public charities registered with the state. When the not-for-profit healthcare organizations sought to convert to for-profit, the Attorney General’s Office imposed conditions to ensure the charitable assets of the original entities were appropriately used for charitable purposes, that there were no impermissible conflicts of interest, that the entities maintained sufficient local representation and control, and that the new entity followed through on capital investments. The state attorney general’s office, the healthcare organizations, and our firm entered into a three-way agreement where our firm provided the monitoring of these conditions, where we reported the status and progress of implementation of those conditions to the attorney general’s office, but where we were paid by the healthcare organization.
- Other areas where regulatory agencies are using independent monitors with healthcare organizations include the US Department of Justice and Federal Trade Commission in their review and approval of mergers requiring divestitures of certain assets. These two agencies are relying on independent monitors to make sure that the divestitures are accomplished consistent with the agreements approving the mergers, and in ways that don’t otherwise compromise competition.
- Related to those examples, we are currently engaged in monitoring a very large multinational corporation in connection with the company’s acquisition of another large company. That acquisition was approved by federal regulators only after the parties agreed to specific conditions meant to ensure continued competition in the industry and enhanced consumer welfare. While this engagement is not in the healthcare field, the value proposition in using an independent monitor to oversee implementation of these conditions in a merger or acquisition transaction would apply in the healthcare context. In this engagement, we hired certain subject matter experts – for example, engineers – to address those conditions that required specialized training and experience.
Join us for our final installment, Episode 5, where we tie it all together by discussing how to use an independent integrity monitor in a proactive approach that can lead to greater business efficiency and profitability.
For more information on Affiliated Monitors, check out their website here.
In this episode, I visit with Jonathan Armstrong consider the increasing business risk around phishing. There have recently been some multi-million-dollar losses around phishing so you need to be prepared. Some of the issues and highlights are:
- What is phishing?
- The largest number of data breach have come through phishing. Why has it become such a business risk?
- What are the requirements a company take against phishing under GDPR?
- What are the three key concepts in data protection?
- Modern phishing attacks are very sophisticated.
- What are some of the most intricate frauds seen in this area?
For more information on Cordery Compliance, go their website here. Also check out the GDPR Navigator, one of the top resources for GDPR Compliance by clicking here.
MARCH 28, 2019 BY TOM FOX
In today’s edition of Daily Compliance News:
- What is your cybersecurity rating? (Wall Street Journal)
- Trump tweets on North Korea sanctions as coverup for incompetence? (Washington Post)
- SFO sued for investigation. (FinancialTimes)
- Russian money laundering scandal spreads to Sweden. (Wall Street Journal)
This past weekend I was lucky enough to catch the performance of King Lear with Glenda Jackson as the mad king. It was a magnificent production and if you have the chance to see, I would certainly urge you to do so. The production had many interesting features and interpretations which seemed to be great entrees into several compliance topics. Therefore, inspired by octogenarian Jackson and her performance, I have used King Lear as a deep dive into several compliance topics this week. Today, I want to discuss how Jackson, starring in the role of King Lear, added a new level of complexity, nuance and interpretation to the entire play.
Jackson is an octogenarian, the oldest person I have ever seen play Lear. Having seen my two parents age, I have some understanding that a person does not gain in stature, power or strength after they cross the 80-birthday mark. In other productions I have seen Lear roared and railed at Cordelia however, Jackson played it understated with nary a raised voice.
Even after the intermission, one of the most powerful scenes is when Lear carries of the lifeless body of Cordelia. Lear is in shock, bereaving and clearly quite mad. Yet to pull this off this scene requires an actress playing Cordelia to be of a size that the actor playing Lear can physically carry. Jackson is far too frail to do so. In this penultimate scene she sat on the stage with Cordelia’s head cradled in her lap, gently stroking her dead daughter’s hair. It was one of the most tender, loving and affectionate presentations I have ever seen in Lear.
Jackson’s performance as Lear added a shading of interpretation that certainly works. It also informs today’s review of the use of an independent integrity monitor not for a regulatory or enforcement purpose, not in connection with significant business transactions but in a proactive manner. This blog post is based upon a five-part podcast series I am presenting this week, with Jesse Caplan, Managing Director at Affiliated Monitors, Inc. (AMI); the sponsor of this week’s podcast series.
In the previous episodes, Caplan explained how healthcare organizations can benefit by having an independent compliance expert, a fresh set of eyes, to evaluate the organization’s compliance program. He has spoken at length about the emerging risks involved in opioid prescribing and how organizations can mitigate that risk by proactively assessing the prescribing practices of their physicians and physician extenders. He further explains how an independent integrity review can be helpful for organizations that may be facing actual or potential compliance issues.
The proactive use of an independent integrity monitor is becoming more pronounced. Caplanexplained that to do so can bring tremendous value to the organization. This is particularly true when a healthcare organization has reason to believe it has a compliance issue, and may be faced with a range of obligations and potential consequences that the organization and their counsel will likely seek to mitigate to the fullest extent possible. Caplan believes that by “using an independent compliance expert to review and assess the organization’s ethics and compliance program, make recommendations for remediation and improvement, and then offering to have that independent expert monitor the organization’s implementation of those remedial measures and improvements can be a useful tool in dealing with the government enforcement agency and convincing that agency to grant the organization some leniency in the sanctions that might otherwise be imposed.”
Moreover,using an independent integrity monitor can help a healthcare organization in dealing with regulators and enforcement agencies. Based upon his professional enforcement background, consistent with guidance from the Department of Justice (DOJ) and Centers for Medicare and Medicaid Services (CMS) Inspector General, he said, “the government expects and even demands, that healthcare organizations self-report certain types of compliance violations.” These include overpayments they may have received and false or fraudulent claims a healthcare organization may have billed to the government and certain types of privacy breaches.
Caplan noted,“The government also wants to see that the violation has been investigated and remediated and, just as importantly, that the violation is not indicative of a systematic failure of the organization’s ethics and compliance program. While the organization can and should investigate compliance violations using internal resources or outside counsel, using an independent compliance expert to assess the ethics and compliance program and culture, make recommendations, and then monitor implementation of those recommendations, provides a level of objectivity and credibility that is more likely to resonate with the government enforcers.”
Caplan provided a couple of examples where he made recommendations for improvement and remediation and monitored an organization’s implementation of those recommendations and remedial measures. By doing so, those healthcare providers (HCPs) and their counsel were able to convince the government enforcement agency that the company’s actions in addressing its deficiencies justified leniency. He stated, “the organization and its lawyers were able to say to the government: “you don’t have to take our word for it; you can rely on the assessment and monitoring of this independent, objective and credible monitoring firm.” In some of these cases, using the independent monitor likely meant the difference between the healthcare organization being permitted to continue to participate in government healthcare programs, as opposed to being excluded or having a license revoked.”
One of the key differences between healthcare regulators and others, such as anti-trust regulators, is that ensuring access to sufficient quality HCPs, whether they be behavioral HCPs or providers serving other vulnerable and under-served populations, is a constant challenge for healthcare policymakers. The bottom line is that excluding an important provider with significant compliance issues may address those compliance concerns, but it may raise a different problem and challenges when it means there are not sufficient accessible healthcare resources. Caplan believes “the better solution is to have healthcare providers with compliance issues remediate their problems and implement a sustainable and effective ethical compliance program so that the healthcare market has the benefit of high-quality, efficient, and transparent providers.” While the government may well be suspicious of healthcare participants who run afoul of their regulatory and compliance obligations, “engaging an independent compliance expert and monitor can provide the government with the tools to temper, if not overcome, those suspicions.”
I hope you have enjoyed my exploration of this most innovate and unique production of King Lear as well as the story of one of Shakespeare’s greatest tragedies to introduce a daily compliance topic this week. Join me tomorrow where conclude the series and consider the portrayal of my favorite character in all of Shakespeare—The Fool.
Join Jesse Caplan and myself for our 5-part exploration of emerging issues in healthcare compliance and monitoring this week. The podcast is available on the FCPA Compliance Report, iTunes, JDSupra, Panoply, YouTube, Spotifyand Corporate Compliance Insights.
This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.
© Thomas R. Fox, 2019
In this special five-part podcast series, sponsored by Affiliated Monitors, Inc., I visit with AMI Managing Director Jesse Caplan on emerging issues in healthcare compliance and monitoring. In this Episode 3, Jesse Caplan discusses how health regulatory agencies are using independent monitoring to serve important public policy goals – specifically to help ensure a ready supply of quality healthcare providers, particularly for government programs like Medicaid and Medicare.
Some of the issues we consider are:
How can independent monitoring can effectively and efficiently extend the ability of government regulators to oversee healthcare providers and organizations?
- As investigative, enforcement, and regulating agencies, the governments’ objectives are to ensure, above all, that patients and health care consumers receive high quality and safe care, that taxpayer money is efficiently and well spent, and that there is a healthcare industry environment and culture of compliance, transparency, and quality.In some cases, there are participants in the healthcare industry that simply cannot and will not meet these standards, and regulators will and should come down hard, including taking action to exclude the business or the individual provider from the industry. But in many cases what the health care company or practitioner really need is remediation. If a healthcare company or practitioner can operate in the future in a manner that meets the government’s objectives – compliance, transparency and high-quality care – that is good for the industry and the patients and clients they serve.
- But the challenge is that the government doesn’t typically have the resources to closely monitor a company or practitioner to ensure that they have satisfactorily remediated their problems, and are continuing to operate at the highest ethical and quality standards. When the government assigns resources to monitor ongoing activities of a company that has had significant compliance problems, that means there are less resources available to investigate new complaints about other healthcare companies, or to take enforcement actions where necessary. Without independent integrity monitoring, the government may feel that the best way to protect the public and the government fisc is to take a very hardline enforcement approach that means exclusion from government healthcare programs, or revocation of an organization’s or practitioner’s healthcare license.
- Independent integrity monitoring can provide an alternative – it offers the ability to have an independent and credible firm closely monitor the healthcare company future and ongoing compliance – thereby protecting the public and public fisc – without having to use government resources to do so.
What is the value to the government of approving a monitoring relationship?
- In all of these cases where monitoring is approved, the regulator, the regulator gets to impose the conditions that will be monitored. The regulator also gets to approve the firm or individual that will conduct the monitoring, and gets unfiltered reporting directly from the monitor. And typically the monitoring is paid for by the healthcare company or practitioner that has had the compliance problems and that engages the monitor. So the value to the regulating agency is pretty clear and significant:
- They get to impose the conditions that the healthcare entity is required to meet;
- They get to choose or approve the independent agency or individual who will be monitoring the conditions;
- They get independent confirmation that the healthcare organization is operating in a safe and effective manner;
- And the regulator doesn’t have to continue expending scarce resources on a settled case, and can instead use those resources on other investigatins or regulatory matters.
What are the benefits to a healthcare organization of an independent monitor?
- The organization may be in a position where agreeing to independent monitoring is their only alternative to having their licenses suspended or being excluded from government programs. So to some organizations they may see independent monitoring as a necessary evil. But in our experience – and we’ve done well over 500 monitorships – the monitoring engagement can be a real positive and benefit for the organization.
- For example, having an experienced third party assess your compliance with conditions – and in particular identify where the organization is meeting or exceeding its requirements as well as the areas where there are gaps in compliance – can be very valuable.Typically – at least in the matters where we serve as the independent monitor – we will communicate to the organization what they are doing well, and what they need to improve on, before reporting to the regulating agency. This will give the organization the opportunity to remediate the areas that need remediation before these gaps are reported to the regulator; or, if they aren’t able to timely remediate the gap, to be prepared with a plan that they can communicate with the regulator on how they intend to address an identified deficiency.
- We like to say that the independent monitor serves as a “Bridge” between the organization and the regulator, and frankly the independent monitor can help the organization navigate its compliance with the required conditions.
What are some recent examples of where healthcare regulators are using independent monitors in different contexts?
- AMI is currently engaged in monitoring conditions imposed by a state Department of Health on two hospital systems. Both these hospital systems encountered significant patient safety issues and risked losing the accreditation status and their Medicare participation. They entered into consent agreements with the state DOH that included a series of remedial measures, working with The Joint Commission, implementing what are called Targeted Solution Tools, reporting to the Boards of Trustees and Quality Oversight Committees of the two systems, and reporting progress to the DOH. In both cases the DOH required the hospital systems to engage an independent monitor to observe, validate, and report on their compliance with all of these conditions. I believe in these instances both the regulatory agency and the healthcare organizations would attest to the benefits of having the independent firm serve as a bridge between them in facilitating their compliance with all the conditions in the Consent Agreements, and in maintaining productive communications.
Join us for Episode 4, where we discuss independent integrity monitoring of healthcare organizations or systems.
For more information on Affiliated Monitors, check out their website 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. In this episode, Matt Kelly (the coolest guy in compliance) and I take a deep dive into Brexit and what it might mean from an operational, regulatory and compliance perspective for a US company.
Some of the highlights include:
- What are the operational risks around Brexit?
- What are the regulatory risks for US companies?
- Why is the SEC so concerned by US companies disclosing Brexit risks?
- What are the disclosure requirements?
- What is key supplier risk?
- What is key customer concentration risks inherent in Brexit?
- What is the role of internal audit in preparing a US company for Brexit?
- What are the lessons for the compliance practitioner?
- What are some examples of adequate and inadequate Brexit disclosure risks?
How can you assert yourself and rise to the top? Marianne Ibrahim is the Director of Global Compliance for Baker Hughes, a GE company, and on this episode, she talks about building your executive presence, traveling internationally as a woman, and her advice for the next generation of female compliance professionals.
Why compliance
For Marianne, building a career where one can drive a culture of ethics and integrity is a dream. Compliance has an impact on human rights, and when senior leaders of major corporations truly believe in it, it affects the communities we operate in.
A strong executive presence
To improve your executive presence and command the room with gravitas, communicate with purpose. Believe in what you do and what you’re saying, look your senior management in the eye, and project your voice. Mind your body language, and don’t be hesitant. A lot of it has to do with how you come across in meetings or day-to-day conversations.
Tips for traveling
When traveling to a country for the first time, read about the culture. Learn not just the business etiquette, but the etiquette and expectations of different genders. Then when you show up, mean business. Own your space, know your subject matter, and be confident so that you’re taken seriously regardless of your gender.
If you’re going to the Middle East, don’t pack a button-down shirt! Be true to your own personal style, but be conservative.
Inspiring the next generation of female compliance officers
Invest in your younger talent. Reach out to them because they’re not going to automatically come to you for advice. Take them out to lunch, ask them how they’re doing, and talk about where they want to go. Many times, they’ll need your advice or direction. Take that initiative, and then constantly check in so it’s not a one-time thing. Not only is it rewarding, but you’re also investing in the future.
Combat the stereotype
Are you assertive… or do they call you bossy instead? To combat this stereotype, Marianne makes sure she’s approachable in everything that she does, and lets her team know she has an open door. They’re all in this together, and improving their culture and their compliance environment is a collectivegoal. The team spirit really counts.
What she wishes she’d known earlier as an investigator
Be yourself. When she was younger, she thought she had to be aggressive and assertive. But it works out much better for her to operate her own way: taking her time to get to know the individual, ask how they’re doing, and witness how they truly open up.
Resources
Marianne Ibrahim
For Marianne, building a career where one can drive a culture of ethics and integrity is a dream. Compliance has an impact on human rights, and when senior leaders of major corporations truly believe in it, it affects the communities we operate in.
A strong executive presence
To improve your executive presence and command the room with gravitas, communicate with purpose. Believe in what you do and what you’re saying, look your senior management in the eye, and project your voice. Mind your body language, and don’t be hesitant. A lot of it has to do with how you come across in meetings or day-to-day conversations.
Tips for traveling
When traveling to a country for the first time, read about the culture. Learn not just the business etiquette, but the etiquette and expectations of different genders. Then when you show up, mean business. Own your space, know your subject matter, and be confident so that you’re taken seriously regardless of your gender.
If you’re going to the Middle East, don’t pack a button-down shirt! Be true to your own personal style, but be conservative.
Inspiring the next generation of female compliance officers
Invest in your younger talent. Reach out to them because they’re not going to automatically come to you for advice. Take them out to lunch, ask them how they’re doing, and talk about where they want to go. Many times, they’ll need your advice or direction. Take that initiative, and then constantly check in so it’s not a one-time thing. Not only is it rewarding, but you’re also investing in the future.
Combat the stereotype
Are you assertive… or do they call you bossy instead? To combat this stereotype, Marianne makes sure she’s approachable in everything that she does, and lets her team know she has an open door. They’re all in this together, and improving their culture and their compliance environment is a collectivegoal. The team spirit really counts.
What she wishes she’d known earlier as an investigator
Be yourself. When she was younger, she thought she had to be aggressive and assertive. But it works out much better for her to operate her own way: taking her time to get to know the individual, ask how they’re doing, and witness how they truly open up.
Resources
Marianne Ibrahim
MARCH 27, 2019 BY TOM FOX
In today’s edition of Daily Compliance News:
- Former Autonomy CEO goes to trial in UK. (The Register)
- Want credit in FCPA sentencing? Engage in random acts of kindness while in jail. (New York Times)
- SEC pays whistleblowers $50MM. (FCPA Blog)
- Stormy Daniels lawyer charged with attempted extortion. (Wall Street Journal)
This past weekend I was lucky enough to catch the performance of King Lear with Glenda Jackson as the mad king. It was a magnificent production and if you have the chance to see, I would certainly urge you to do so. The production had many interesting features and interpretations which seemed to be great entrees into several compliance topics. Therefore, inspired by octogenarian Jackson and her performance, I am using King Lear as a deep dive into several compliance topics this week. Today, I want to discuss how this production changed the focus of the play, away from the madness of the king to the actions of the three daughters.
Perhaps it was my perception of the play or perhaps it was the director’s intention but the focus in the first half of the play was clearly on the daughters and their families. Both Goneril and Regan played much more prominent roles throughout the first scene and their joint liaisons with Edmund, later the Earl of Gloucester, were key components of this production. Moreover, their husbands, the Duke of Cornwall and the Duke of Albany, also played prominent roles. The Duke of Cornwall, for instance his role in this production was more than the traditional highlight for him, which is the blinding of the original Earl of Gloucester. (Even in this production it still elicited gasps from the audience.)
Even after the intermission, where some of the most powerful scenes in all of Shakespeare playout, including the blinded Earl of Gloucester and the mad Lear wandering the moor, this production held a distinct focus on Lear’s daughters and their families, adding in the complexity of Edmund, the new Earl of Gloucester, having an affair with Goneril while secretly pledged to wed Regan.
This change in the focus of the play informs today’s review of the use of an independent integrity monitor not for a regulatory or enforcement purpose, but in connection with significant business transactions. This is based upon a five-part podcast series I am presenting this week, with Jesse Caplan, Managing Director at Affiliated Monitors, Inc. (AMI), the sponsor of the podcast series.
We began by consider a plethora of business activities; acquisitions, mergers, non-profit conversions, and even capital improvements which are subject to regulatory oversight and scrutiny that may be more intense than in other industries. For example, major capital improvements to hospitals are often subject to a state’s Certificate of Need (CON) or a Determination of Need (DON) approval. Additionally, not-for-profit hospitals which seek to convert to for-profit status, often as part of a merger or acquisition (M&A) transaction, are likely to face scrutiny and require approval by those agencies that regulate and oversee both their licensing and charities functions. This oversight is often by two distinct state agencies, most usually a state department of health for healthcare oversight and a state Attorney General’s Office for charitable concerns. M&A of a hospital, health insurance company, or even a physician practice can also be subject to antitrust scrutiny, by state authorities like the Attorney General’s Offices and possibly federal review by the Department of Justice (DOJ) or the Federal Trade Commission (FTC).
Caplan emphasized that in each of these healthcare transactions, the government agencies involved are not seeking to address compliance violations or to take disciplinary action. However, these transactions are likely to impact the structure and dynamics of the local healthcare market, and the state regulators have both the authority and the objective of ensuring those impacts are a net positive for the local healthcare marketplace by ensuring that the transaction improves the quality of and increases access to healthcare, most particularly for vulnerable and under-served communities, and does so more efficiently.
To meet this burden and to get the approvals required, the healthcare organizations entering into the transaction often offer up representations and concessions about actions, investments and improvements they will agree to take and engage in going forward, actions designed to address the state’s concerns and objectives. Moreover, the state regulators themselves will often seek to impose additional conditions or requirements on the transacting healthcare organizations to address the state’s public policy objectives.
Whenever you have conditions being imposed or being offered as a prerequisite of approval of a healthcare transaction, there is a need to have independent monitoring of whether those conditions are being effectively implemented and sustained. It is always possible that the government agencies can do the monitoring themselves, but may require resources that are not readily available. This has led regulators and healthcare organizations to agree to an independent integrity monitoring firm to oversee that the conditions, investments and improvements are being timely and effectively implemented.
We next turned to some examples where organizations and government regulators have jointly agreed to use an independent firm to monitor implementation and compliance with conditions of a healthcare transactions. Caplan provided two examples, both of which converted not-for-profit hospitals to for-profit companies as part of major acquisitions. The state Attorney General’s Office was charged with regulating public charities registered with the state. When the not-for-profit healthcare organizations sought to convert to for-profit, the Attorney General’s Office imposed conditions to ensure the charitable assets of the original entities were appropriately used for charitable purposes; that there were no impermissible conflicts of interest, that the entities maintained sufficient local representation and control, and that the new entity followed through on capital investments. The state Attorney General’s Office, the healthcare organizations and the independent integrity monitor entered into a three-way agreement that provided ongoing monitoring of these conditions. The monitor reported the status and progress of implementation of those conditions to the Attorney General’s Office, but the costs were borne by the healthcare organization.
Caplan also related other areas where regulatory agencies, including the DOJ and FTC, are using independent integrity monitors with healthcare organizations in their review and approval of mergers requiring divestitures of certain assets. These two agencies are relying on independent monitors to make sure that the divestitures are accomplished consistent with the agreements approving the mergers, and in ways which do not otherwise compromise competition.
I hope you will continue to join me this week during my exploration of this most innovate and unique production of King Learas well as the story of one of Shakespeare’s greatest tragedies to introduce a compliance topic each day this week. Join me tomorrow where I consider how Jackson as King Lear added a new level of complexity and nuance to my interpretation of the play.
Join Jesse Caplan and myself for our 5-part exploration of emerging issues in healthcare compliance and monitoring. The podcast will be available on the FCPA Compliance Report, iTunes, JDSupra, Panoply, YouTube, Spotifyand Corporate Compliance Insights.
This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.
© Thomas R. Fox, 2019
