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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
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Sunday Book Review

Sunday Book Review for January 12, 2020


In today’s edition of Sunday Book Review:

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31 Days to More Effective Compliance Programs

Day 11 | What is Effective Compliance Training?


One of the key goals of any compliance program is to train employees in awareness and understanding of the FCPA; your specific company compliance program; and to create and foster a culture of compliance. While it seems axiomatic that compliance training is a mainstay of any best practices compliance program, the conversation around training has evolved over the years. The 2012 FCPA Guidance started the conversation.
Beginning in the fall of 2016, through the announcement of the FCPA Enforcement Pilot Program, the DOJ began to talk about whether you have determined the effectiveness of your training. This conversation continued with the 2017 Evaluation where it asked, “How has the company measured the effectiveness of the training?” This point has bedeviled many compliance professionals yet is now a key metric for the government in evaluating compliance training. It evolved further in the 2019 Guidance with the mandate that training must be “truly effective”. Finally, the training must be presented in a language in which the employees understand, which means in a local language, if the training is outside the US or other non-English-speaking countries.
Also raised in the 2017 Evaluation was the focus of your training programs, where the DOJ inquired into whether your training was “tailored” for the audience. This added two requirements. The first was to assess your employees for risk to determine the type of training you might need to deliver by risk ranking your employees. Obviously, the sales force would be the highest risk but there may be others who are deserving of high-risk training as well. From this risk ranking, you were required to develop tailored training for the risks those employees will face.
The 2019 Guidance spells this out in greater detail. Not only in the design but who receives it, all coupled with backend determination of effectiveness. Finally, all of this must be documented.
Three key takeaways:

  1. How and why have you tailored your compliance training?
  2. The DOJ has mandated demonstrating the effectiveness of compliance training
  3. How is your training presented: both in languages and media?
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Daily Compliance News

January 11, 2020, the Bring in the Clowns edition


In today’s edition of Daily Compliance News:

  • Did clowns designed the 737 MAX? (WSJ)
  • 20 years later, Andy Fastow admits he was wrong. (Houston Chronicle)
  • Alphabet CLO to resign for having multiple relationships at company. (WSJ)
  • An epic fix required-Boeing. (Washington Post)
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31 Days to More Effective Compliance Programs

Day 10 | The use of social media in compliance

What is the message of compliance inside of a corporation and how it is distributed? In a compliance program, the largest portion of your consumers/customers are your employees. Social media presents some excellent mechanisms to communicate the message of compliance going forward. Many of the applications that we use in our personal communications are free or available at very low cost. Why not take advantage of them and use those same communication tools in your internal compliance marketing efforts going forward?

Why should you do so? Start with the tech-savvy nature of the today’s workforce. It is not simply about having a younger workforce but a workforce whose primary tool for communication is social media. If your company is in the services business, it probably means your employee base is using technological tools to deliver business solutions. Finally, consider the data-driven nature of business today so using technological tools to deliver products and solutions is something your company most probably does now.
Finally, never forget the social part of social media. Social media is a more holistic, multiple-sided communication. Not only are you setting out expectations but also these tools allow you to receive back communications from your employees. You can also see that if you have several concerns expressed it could alert you earlier to begin some detection and move towards prevention in your compliance program.
Three key takeaways:

  1. Incorporation of social media into your compliance communications can pay big dividends.
  2. Focus on the ‘social’ part of social media.
  3. Use internal corporate social media to facilitate a 360-degree conversation.
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This Week in FCPA

Episode 187, week ending January 10, 2020 – the Looking Back and Looking Forward

Jay and I take things in a different direction this week. We consider some of the year end wrap ups and pontifications of the future that recently caught our collective eyes. Jay reflects on the greatest pro football dynasty of alltime, how it got there and where it may be going.

  1. Tom goes all in on looking back and looking forward. DOJ year in review. SEC year in review. Issues for compliance professionals for 2020. Bribery schemes from 2019, and responses to these bribery schemes.
  2. Matt Kelly provides his take on 7 issues for 2020. Tom and Matt go into the weeds for Part 1 on a 2-part podcast series on the veiled land of the future in Compliance into the Weeds.
  3. Mike Volkov does a podcast on the FCPA review in review. He also has three blog post, -1-a record setting year, 2-FCPA Enforcement Highlights and 3-Carnac the Magnificent.
  4. Ten top D&O stories from 2019. Kevin LaCroix on the D&O Diary.
  5. 2020 will see the convergence of ABC and human rights compliance. Allison Taylor in the FCPA Blog.
  6. The year in export trade control (and a look forward).
  7. Dave Lefort weighs in from the EIC perspective. In Complaince Week (sub req’d)
  8. The Gibson Dunn 2019 FCPA Review is out.
  9. On the Compliance Podcast Network, Tom continues his 31 Days to a More Effective Compliance Program series.This week saw the following offerings: Day 6 details the Code of Conduct ; Day 7considers policies and procedures; Day 8 looks at internal controls; Day 9 looks at 360 degrees of compliance communications; Day 10 looks at the use of social media in compliance.
  10. Is the Patriots Dynasty over? Does Jay come to mourn TB12 or to praise him. Our thoughts on the greatest professional football dynasty of all time.

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.

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Daily Compliance News

January 10, 2020, the Used Car edition


In today’s edition of Daily Compliance News:

  • Matthew Miner leaves DOJ. (WSJ)
  • Would you buy a used car from this man? Pete Carroll talks business. (NYT)
  • What happens when you don’t take known risks into account? (WSJ)
  • Trump Administrative vows new Iranian sanctions. (Washington Post)