In today’s edition of Daily Compliance News:
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 skills does a CCO need to navigate the compliance waters in any company successfully? 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, I am joined by Scott Garland, Managing Director at AMI. Scott came to AMI from the DOJ, where he held the role of Professional Responsibility Officer. As he described, it was akin to a CCO role for the US Attorney’s Office for Massachusetts.
It was at the US Attorney’s Office for the District of Massachusetts where Garland moved into the Professional Responsibility Officer role. In this role, he was the Office’s primary expert on legal ethics, but his remit extended to constitutional issues and DOJ regulations. Some typical issues he dealt with included conflicts of interest, allegations/findings of lawyer misconduct, dealing with represented parties, handling confidential or privileged information, and liaising with oversight agencies.
Resources
Scott Garland’s Profile on AMI
Welcome to another episode of The Corruption Files!
Tom Fox and Michael DeBernardis explore their biggest takeaways from the appeal of the conviction of former Terra Telecommunications Corp. executive Joel Esquenazi. He and other involved parties were proven to pay bribes to Haitian government officials in a grand scheme. The case remains an example of a significant conclusion from a defense involving the FCPA.
▶️ The Instrumentality Ruling of United States v. Esquenazi with Tom Fox and Michael DeBernardis
Key points discussed in the episode:
✔️ The Esquenazi decision is vital in providing clear guidance for businesses to design robust compliance programs to address corruption, avoid making grease payments to foreign government officials, and remove the temptation to cull business favors and advantages for their company.
✔️ Companies doing business abroad should never forget the learnings from the Esquenazi decision in 2014. Following the conclusion of the Court of Appeals was identifying ownership and financial control to decipher the “instrumentalities” of foreign governments and to correctly identify that there were no red flags for FCPA compliance.
✔️ The 11th Circuit Court of Appeals’ opinion clarifies how a two-part test is crucial in determining the “instrumentality” of an employee, officer, agency, or department as an entity of foreign governments. The elements of “control” and “function” served as the two prongs that the US Court of Appeals for the Eleventh Circuit made in its decision for Esquenazi and the others involved in the case.
✔️ A key indicia of a governmental entity is it doesn’t have to make a profit. Think about the United States Postal Service — today; it still stands as a government service. Everyone uses it — and we don’t want it to go away even if it doesn’t make a profit. Indeed, non-earning can be the biggest indicator if you assess what constitutes any employee, officer, agency, or department as an “instrumentality” of foreign governments where clients are conducting business.
✔️ United States v. Esquenazi is a well-settled FCPA case that didn’t go to the U.S. Supreme Court. The Esquenazi decision is a significant case law that came out of a defense trial with the defendant paying heavily and sentenced to prison for 15 years — a landmark decision that remains relevant today.
✔️ Key lessons learned from United States v. Esquenazi:
1. Ownership/Financial Control – There is no percentage amount listed, but the inclusion of financial control would indicate that anything over 50% would be a significant factor.
2. Actual control is key in all three court decisions. In Lindsey and Esquenazi, it is characterized as the government’s right to appoint key officers and directors. In Carson, it is called government control. But this means that if the government exercises actual control, it may trump the 50% guidance stated above.
3. Privileges and Obligations are also mentioned in all three. Does the entity have the right to control its functions?
4. Financing – Is the entity a for-profit entity financed through its revenues, or does it depend on financing by its government?
5. Perception is Reality – André Agassi’s immortal words appear again. If it is widely perceived as providing an official function, it is an instrumentality under the FCPA.
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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.
Tom Fox asks Stephen Shapiro what makes him so passionate about innovation. He replies, “It is the key for economic growth for companies, for individuals and society.” Twenty-five years ago, Stephen launched a successful innovation practice at Accenture that focused on value creation and growth. He left Accenture in 2001, but his ongoing work is still all about innovation. Tom Fox welcomes him to this week’s show to discuss his patented FAST innovation process.
FAST Innovation
Tom asks Stephen to describe his FAST innovation approach. Processes need to be repeatable and predictable, Stephen says. FAST stands for Focus, Ask, Shift and Test. People usually think of the mass production of ideas and suggestions when they think about innovation. However, true innovation requires you to determine where to focus your limited energy and resources on what is most important. Then, ask more goal-specific questions that would enable you to deliver better solutions. Finally, test these solutions to bring them to market. Tom remarks that every CCO needs to learn this approach because it’s exactly what must be done in a compliance innovation process. “A good process should help you do something important more efficiently and be able to scale that throughout the organization,” he comments.
Culture of Innovation
How do you build a culture of innovation, Tom asks Stephen. How did you build it in a massive company like Accenture? Culture is important because that becomes the norms, beliefs, and behaviors that people take on, Stephen replies. Most companies are on one of three levels: they see innovation either as an event, a process, or a system. A culture of innovation allows employees to work more flexibly as they know the rules and how to execute them seamlessly.
This is how they built a culture of innovation at Accenture. Stephen states that innovation is about relevance and ensuring that the right products and services are being offered to the right consumers. He sees this as the senior leaders’ mandate. He and Tom discuss the role of the board of directors in creating a culture of innovation.
Asking Better Questions
“Innovation isn’t about the idea, it’s not about the solution; it’s actually about the value it ultimately creates,” Stephen tells listeners. He is passionate about creating something of value and then selling it in a way that people become excited about it. He tells Tom about the books he authored and highlights key takeaways from his recent book Invisible Solutions. The book is based on a tool that Stephen developed; “its purpose is to help people stop looking for answers and to look for better questions,” he remarks. The process of reframing allows you to look at the problem from a different angle. Better questions lead to better solutions. Tom asks why framing the question correctly is so important in the innovation process. Stephen says that our past decisions and experiences influence how we approach innovation. We have to overcome these biases because they limit our ability to see a new and better future. Reframing questions allows us to access new answers.
Talent Acquisition and Retention
Stephen’s white paper, How We Created a 20,000-Person Culture of Innovation at Accenture… and You Can Do It Too, advocates training masters and having them push the innovation message throughout the organization. Innovation -and compliance- has to be for people by people, Tom and Stephen agree. Hiring strategy is part and parcel of this. Hire for divergent thinking, Stephen advises. “People have different perspectives, different experiences, different personalities and when we embrace that and appreciate what each person brings to the table, then we can create a powerful culture of innovation.” If your company creates a culture of innovation with strong values, you’ll attract and keep top-level talent. People prefer to work at companies where it feels like their work matters and their individual, unique talents are recognized and appreciated. They want to work for companies where they are evaluated based on their skill set and are rewarded appropriately.
Resources
Stephen Shapiro | LinkedIn | Twitter
Website | Personality Poker | Invisible Solutions
White Paper: How We Created a 20,000-Person Culture of Innovation at Accenture… and You Can Do It Too
In today’s edition of Daily Compliance News:
In this episode of The Ethics Experts, Nick welcomes Hemma Lomax. Hemma Lomax, Phd, is the Senior Corporate Counsel, Integrity & Compliance at Snap Inc. A qualified attorney with a Phd in international law, she is skilled in the subjects of: investigations, anti-corruption, human rights, modern slavery, financial regulation and US Securities law, global trade compliance, trail advocacy, ESG policy and disclosure, corporate social responsibility, global regulatory policy, culture and compliance, compliance training, and more.
In this episode of Career Can Do, Mary Ann Faremouth chats with Christopher Saye. Chris is Managing Director of MarcWhittaker, a CPA firm dedicated to providing highly personalized, strategic guidance and support to entrepreneurs in their business, personal and family lives. Chris shares insights for living your best life he has gleaned from his recent journey.
Chris spent the last year visiting the blue zones – geographic regions that are home to some of the world’s oldest people. He picked up three life lessons common in each area that contributed to the longevity of its inhabitants: God, beans, and finding your ‘why’.
Religion, spirituality, and community were part of their cultural identity – it seemed less about specific beliefs and more about the religious institutions providing a regular place for gathering and building relationships. In addition, each culture had plant-based diets, of which beans were an integral part. Finally, they lived life very purposefully. In Costa Rica, there’s a phrase called plan de vida, which translates to ‘plan of the day.’ Everyone wakes up in the morning with an idea of their purpose for the day.
Resources
Chris Saye on LinkedIn
Welcome to the GalloCast. You have heard of the Manningcast in football. Now we have the GalloCast in compliance. The two top brothers in compliance, Nick and Gio Gallo, come together for a free-form exploration of compliance topics. It is a great insight on compliance brought to you by the co-CEOs of ComplianceLine. Fun, witty, and insightful with a dash of the two brothers throughout. It’s like listening to the Brothers Gallo talk compliance at the dinner table. Hosted by Tom Fox, the Voice of Compliance. Topics in this episode include:
Resources
Nick Gallo on LinkedIn
Gio Gallo on LinkedIn
Tom Fox welcomes Will Robinson to the ESG Report. Will, a former investment banker, now serves as the CEO at Encapture, a 20-year-old document management services company that pivoted into a SaaS product company in 2019. In this week’s episode, he and Tom talk about how Encapture helps its clients comply in the changing world of ESG.
Intelligent Document Processing
Encapture is a software company with a unique process called “intelligent document processing”. Will explains that this process makes it easy for organizations of varying sizes to collect incoming documents as a part of a business process. “Encapture’s machine learning can read the document and discern what type of document it is, then the system can extract data out of these documents and utilize the data for a variety of purposes,” he says. It can transfer data to another system as well as compare data across multiple documents. “We can automate a bunch of reporting on the compliance front,” he adds.
ESG: An Incremental Change
Banks are more reactive instead of proactive when it comes to ESG, Will tells Tom. Most of the ESG changes being implemented are incremental; using a proven process and appropriate technology like Encapture, complying with new regulations can be a seamless process which can often happen within a few days. This directly benefits compliance leaders who need a dynamic platform that evolves with the ever-changing real world, Will points out. Tom comments that banks usually already have the information they need to comply, but it’s siloed. Encapture is “a very powerful tool” that can help them utilize the information to respond more nimbly and a lot more quickly. “We feel like everybody is better served if we can solve this compliance issue and solve it efficiently,” Will remarks.
Resources
Will Robinson | LinkedIn | Encapture
In this episode of the FCPA Compliance Report, I am joined by Ty Francis, Chief Advisory Officer at LRN. We dive deeply into a recently released LNR/Tapestry Networks Report on Assessing Corporate Culture: A Practical Guide to Improving Board Oversight. Some of the highlights include:
Resources
Ty Francis on LinkedIn
Assessing Corporate Culture: A Practical Guide to Improving Board Oversight
