In today’s edition of Daily Compliance News:
- Clyde & Co in the crosshairs? (The Guardian)
- Planning for the real apocalypse. (FT)
- Can the oil patch lead climate change? (Hosuton Chronicle)
- Will Trump’s corruption lead to his defeat? (WaPo)
Internal audit reports have been written the same for decades, and honestly are usually very boring and don’t meet our organization’s needs. In this episode I talk with Tracie Marquart about action oriented recommendations, improving report writing to consider the end of the value chain, seeing the big picture, linking our work to assurance over key objectives, and how to make our reporting more collaborative.
Listen in at: http://www.jasonmefford.com/jammingwithjason/
Tracie Marquardt is Europes leading audit communication consultant, and I am so honored to have her on #jammingwithjason #internalauditpodcast.
Learn more about Tracie at https://www.traciemarquardt.com/ and https://qacommunication.com/ or email her at: tracie@qacommunication.com
#internalaudit
Welcome to this month’s offer of 31 Days to a More Effective Compliance Program. This month I will focus on the Board of Directors and its role in an effective compliance program. At the end of August, you will not only have a good summary of the basics of a best practices compliance program for a Board of Directors but information that you can incorporate into your compliance regime.
Case law. As to the specific role of best practices in the area of general compliance and ethics, one can look to Delaware corporate law for guidance. The case of In Re Caremark International Inc., 698 A.2d 959, (Del. SCt. 1996) was the first case to hold that a Board’s obligation “includes a duty to attempt in good faith to assure that a corporate information and reporting system, which the board concludes is adequate, exists, and that failure to do so under some circumstances may, in theory at least, render a director liable for losses caused by non-compliance with applicable legal standards.”
2020 FCPA Resource Guide, 2nd edition and U.S. Sentencing Guidelines. A Board’s duty under the FCPA is well-known. In the FCPA Resource Guide, 2nd edition, there are two specific references to the obligations of a Board. The first, in Hallmark No. 1, states: “Within a business organization, compliance begins with the board of directors and senior executives setting the proper tone for the rest of the company.” The second is found under Hallmark No. 3 and notes that the CCO should have “direct access to an organization’s governing authority, such as the board of directors and committees of the board of directors (e.g., the audit committee).” Further, under the U.S. Sentencing Guidelines, the Board must exercise reasonable oversight on the effectiveness of a company’s compliance program. The DOJ’s Prosecution Standards posed the following queries: 1) Do the Directors exercise independent review of a company’s compliance program? and 2) Are Directors provided information sufficient to enable the exercise of independent judgment?
From the Delaware cases, a Board must not only have a corporate compliance program in place but actively oversee that function. Further, if a company’s business plan includes a high-risk proposition, there should be additional oversight. In other words, there is an affirmative duty to ask the tough questions. The specific obligations set out regarding the FCPA drive home these general legal obligations down to the specific level of the statute.
Three key takeaways:
- The Delaware courts have led the way with the In Re Caremark and Stone v. Ritter decisions.
- Note the obligations of the Board under the Ten Hallmarks of an Effective Compliance Program.
- The U.S. Sentencing Guidelines also require Board involvement and oversight.
A special thanks to this month’s sponsor, Affiliated Monitors, Inc.
In the Episode, I am joined by Mike DeBernardis, Counsel at Hughes Hubbard, in the firm’s Washington office and a member of the firm’s Anti-Corruption and Internal Investigations and White Collar & Regulatory Defense practice groups. He represents corporate and individual clients in criminal, civil and administrative enforcement matters, including matters involving the Foreign Corrupt Practices Act and securities and accounting fraud. In this episode we take a deep dive into the DOJ’s 2020 Update to the Evaluation of Corporate Compliance Programs and DOJ and SEC FCPA Resource Guide, 2nd edition.
Some of the highlights include:
- What were the top changes DeBernardis observed in 2020 Update to Evaluation of Corporate Compliance Programs?
- What were the top changes for you in FCPA Resource Guide, 2nd edition?
- How should one read the Resource Guide, 2nd with the 2020 Update? In conjunction, separately or in some other way?
- Is there any significance to the two documents being released so close together in time?
- Should you advise clients to do anything different because of these documents?
In today’s edition of Sunday Book Review:
- Elliott Ness and the Mad Butcher By Max Allan Collins and A. Brad Schwartz
- How Ike Lead by Susan Eisenhower
- Caste-The Lies That Divide Us by Isabel Wilkerson
- Western Europe’s Democratic Age by Martin Conway
In this final episode for the month of July on 31 Days to a More Effective Compliance Program, I review the past month’s offerings and preview the month of August where I take up the topic of Boards of Directors and Compliance.
We have been getting accountability all wrong in the compliance profession. It’s not a set of tasks – it’s a way of thinking and it has to come from the heart as well as the head. On Accountability: The Heart of Compliance Tom Fox and Sam Silverstein dig into what accountability means to the corporate compliance function and business organizations and most significantly, how to make it an integral part of your culture. In this episode Sam and I, talk about a recent example of accountability by Microsoft. Some of the highlights include:
- Accountability can start with a written statement.
- Accountability must be followed up with actions.
- If you do not make decisions which align with your stated values, they are really not your stated values.
For more information on Sam Silverstein and his work on accountability, click here.
See Sam’s blog post, Corporate Culture: Accountability Means Acting on What You Stand For
As the international fight against corruption took two small steps forward this week in the 1MDB case, Tom and Jay brave the surge in Covid cases by staying safe at home. They are back to look at top compliance articles and stories which caught their eye this week.
- Goldman Sachs settles with Malaysia for nearly $4bn. Ben Otto and Chester Tay report in the WSJ. Former Malaysia PM convicted in 1MDB scandal, Harry Cassin reports in the FCPA Blog.
- Mike Volkov reports on two big enforcement actions in Pharma. Indivior and illegal marketing of opioid products. Taro Pharma and price-fixing.
- What are the shared elements in a best practices compliance program? Jaclyn Jaeger explores in Compliance Week. (sub req’d)
- How can you test your hotline? Matt Kelly explores on Radical Compliance.
- Why is Germany soft of corporate crime? Dick Cassin considers in the FCPA Blog.
- Whistleblower management in the EU. Frank Staelens in CCI.
- How can you audit AI? James Bone explores in CCI.
- What should be the goal of effective internal controls? Alex Movchan interviews Edmund Sanders in Risk and Compliance Platform Europe.
- This month on The Compliance Life, I am joined by Scott Sullivan, Chief Integrity and Compliance Officer at Newport Mining. In Part 1, we discussed the need for empathy in a CCO. In Part 2, we looked at reading the tea leaves and staying ahead of the (corp) wolf pack. In Part 3, we considered who a CCO needs on their compliance team. In this concluding Part 4, we look at the CCO and compliance function down the road.
- AMI week on Compliance and Coronavirus as Jerry Coyne discusses telemedicine and Covid-19, Don Stern on how Covid-19 will impact federal prosecutors and Mikhail Reider-Gordon compliance issues during the business reopenings.
- On the Compliance Podcast Network, Tom concludes the topic of 3rd party risk management. This week saw the following offerings: Monday-freight forwarders; Tuesday– risk ranking in the Supply Chain; Wednesday-data and 3rd party risk management (Vin DiCianni as guest); Thursday-enforcement actions; and Friday-wrap up. The month of July is being sponsored by Affiliated Monitors. Note 31 Days to a More Effective Compliance Program now has its own iTunes channel. If you want to binge out and listen to only these episodes, click here. Join us in August for the role of the Board of Directors.
- Upcoming Webinars:
K2-FIN, Windward, and C4ADS Webinar—New Sanctions Developments in the Maritime Sector: UK Sanctions Shipping Guidance and Venezuelan Shipping in Focus, August 5, 2020 at 10:45 to 11:45 AM EST; with Juan Zarate and Eric Lorber. Registration and Information here.
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.