Tag: Board of Direcctors

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Compliance Tip of the Day

Compliance Tip of the Day: Factors in Board Investigation

Welcome to “Compliance Tip of the Day,” the podcast where we bring you daily insights and practical advice on navigating the ever-evolving landscape of compliance and regulatory requirements.

Whether you’re a seasoned compliance professional or just starting your journey, our aim is to provide you with bite-sized, actionable tips to help you stay on top of your compliance game.

Join us as we explore the latest industry trends, share best practices, and demystify complex compliance issues to keep your organization on the right side of the law.

Tune in daily for your dose of compliance wisdom, and let’s make compliance a little less daunting, one tip at a time.

In this episode, we consider some of the factors which could lead to a successful Board of Director-led investigation.

For more information on the Ethico ROI Calculator and a free White Paper on the ROI of Compliance, click here.

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Compliance Tip of the Day

Compliance Tip of the Day: Board Selection of Investigative Counsel

Welcome to “Compliance Tip of the Day,” the podcast where we bring you daily insights and practical advice on navigating the ever-evolving landscape of compliance and regulatory requirements.

Whether you’re a seasoned compliance professional or just starting your journey, our aim is to provide you with bite-sized, actionable tips to help you stay on top of your compliance game.

Join us as we explore the latest industry trends, share best practices, and demystify complex compliance issues to keep your organization on the right side of the law.

Tune in daily for your dose of compliance wisdom, and let’s make compliance a little less daunting, one tip at a time.

In this episode, we consider some of the factors a Board of Directors should consider when selecting outside counsel to investigate claims or potential compliance violations.

For more information on the Ethico ROI Calculator and a free White Paper on the ROI of Compliance, click here.

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Compliance Tip of the Day

Compliance Tip of the Day: Board Led Investigations

Welcome to “Compliance Tip of the Day,” the podcast where we bring you daily insights and practical advice on navigating the ever-evolving landscape of compliance and regulatory requirements.

Whether you’re a seasoned compliance professional or just starting your journey, our aim is to provide you with bite-sized, actionable tips to help you stay on top of your compliance game.

Join us as we explore the latest industry trends, share best practices, and demystify complex compliance issues to keep your organization on the right side of the law.

Tune in daily for your dose of compliance wisdom, and let’s make compliance a little less daunting, one tip at a time.

In this episode, we review how an organization should think through a Board of Directors-led investigation.

For more information on the Ethico ROI Calculator and a free White Paper on the ROI of Compliance, click here.

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Great Women in Compliance

Great Women in Compliance – Roundtable Discussion on Board of Directors and What They Expect from The Chief Ethics & Compliance Officer with Haydee Olinger and Avril Ussery Sisk

Welcome to the Great Women in Compliance! In this episode, Lisa and Ellen have as guests Haydee Olinger and Avril Ussery Sisk to discuss the Board and Compliance.

The Chief Ethics &Compliance Officer should be reporting regularly to the Board, but how do you know what the Board expects, especially if there are layers between you and the Board?  In this #GWIC episode, Lisa Fine and Ellen Hunt talk with Haydee Olinger and Avril Ussery Sisk, both current board members and ethics experts, about what they expect from the Chief Ethics and Compliance Officer.

You can hear this episode on Corporate Compliance Insights or wherever you hear podcasts. https://lnkd.in/d9VGcfw

Listen in for how these Board members want the Chief Ethics & Compliance Officer to provide pre-reads, meaningful metrics, and focus on the “high hard risks.” Learn about how to build relationships with the Board and ask for resources, as well as how to gain financial knowledge and business acumen. If you are thinking about getting on a board, Haydee and Avril share their journey and thoughts about how you can get started on your journey.  

Resources:

Join the Great Women in Compliance community on LinkedIn here.

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All Things Investigations

All Things Investigations: Episode 38 – CCO Certification – A Better Approach with Kevin Abikoff

In this episode of All Things Investigation, Tom Fox and guest Kevin Abikoff discuss the Department of Justice’s introduction of a CCO certification in the wake of FCPA violations. Kevin offers his unique perspective on this issue; their conversation also explores broader issues of corporate governance and the role of the Board of Directors.

Kevin Abikoff is a Partner and Deputy Chair at Hughes Hubbard & Reed. He is a recognized authority in corporate governance and compliance. 

You’ll hear Tom and Kevin discuss:

  • Kevin questions the necessity of the CCO certification, suggesting it addresses a problem that doesn’t exist, given the absence of complaints from the Department of Justice about dishonesty during monitorships.
  • A more practical approach, Kevin posits, is a certification 12 to 24 months after a monitorship ends to empower CCOs during periods of vulnerability truly.
  • Measuring compliance effectiveness is subjective and may be void of vagueness in a legal context.
  • In the broader realm of corporate governance, the board has a pivotal role in overseeing compliance. Parallels to the Caremark duty and Delaware law are drawn.
  • Kevin raises concerns about the burden on CCOs to assess program effectiveness retrospectively, especially considering the dynamic nature of compliance programs over time.
  • Boards should take responsibility for compliance certifications and should sign off on these certifications, mirroring similar practices in financial reporting.
  • Innovation within compliance may be stymied if CCOs fear that enhancing a program might be used against them in the future, Kevin points out.

KEY QUOTES:

“I’ve just never heard, especially from the context of Chief Compliance Officer, that the DOJ feels like they’re being lied to. If that’s not the problem they’re trying to solve, I think the solution they have paved is, again, a solution in search of a problem that doesn’t exist…” – Kevin Abikoff

“If you’re going to have a certification and you want to empower the chief compliance officer, have the certification twelve months, 24 months after the conclusion of the monitorship and have the CCO certify that they continue to believe that the policies, procedures, things that have been put in place, continue to be in place.” – Kevin Abikoff

“Now what you fail to investigate can kill you.” – Kevin Abikoff

Resources:

Hughes Hubbard & Reed website 

Kevin Abikoff on LinkedIn

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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program with Boards – Board Failures

Next, consider a couple of landmark failures at the Board level around bribery and corruption.

VimpelCom Ltd. In 2015 (now Veon Ltd.), the DOJ alleged that Dutch telecom VimpelCom sought to enter the telecom market through the acquisition of a local player, Unitel, as an entrée into the Uzbekistan market. Unitel made clear to VimpelCom that to have access to, obtain, and retain business in the Uzbeki telecom space, VimpelCom would have to, according to the DPA, “regularly pay Foreign Officials millions of dollars” to Gulnara Karimova, the daughter of the then President of the country. VimpelCom also acquired another entity Butzel, that was at least partially owned by an Uzbeki government official, who hid their interest through a shell company, which was known to VimpelCom. VimpelCom did not articulate a legitimate business reason for the deal and paid $60 million for Buztel.

Ultimately, VimpelCom agreed to pay approximately $800 million in fines for these activities in 2016. 

BizJet. Another FCPA enforcement action involved the Tulsa-based company BizJet International Sales and Support Inc. (BizJet), which had four senior executives convicted for their participation in a bribery scheme. But this case also involved the Board of Directions. In the Criminal Information, it stated that in November 2005:

…at a Board of Directors meeting of the BizJet Board, Executive A, and Executive B discussed with the Board that the decision of where an aircraft is sent for maintenance work is generally made by the potential customer’s director of maintenance or chief pilot, that these individuals are demanding $30,000 to $40,000 in commissions, and that BizJet would pay referral fees in order to gain market share.

In both cases, this is where the rubber hits the road. If a company is willing to commit bribery and engage in corruption to secure business, no amount of doing compliance is going to help. If senior management is ready, willing, and able to lie, cheat and steal, the Board is the final backstop to prevent such conduct. Both the VimpelCom and BizJet Boards sorely failed in their compliance duties.  

Three key takeaways:

  1. Board liability will be severe based upon similar conduct going forward.
  2. Board members must critically challenge management on its conduct.
  3. The Board is the ultimate backstop against bribery and corruption.

For more information, check out The Compliance Handbook, 4th edition, available here.

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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program with Boards – Board Governance and Risk Oversight

One of the ongoing questions from members of the Board of Directors is how to resolve the tension between oversight and management. I recently had the opportunity to visit with Joe Howell, former Executive Vice President (EVP) of Workiva, Inc., on this subject. Howell has worked on and with Boards of Directors at various companies, and I wanted to garner his understanding of the role of a Board, senior management, and a Chief Compliance Officer (CCO). Howell’s short response was an excellent starting point for understanding the role; put sand in management’s shoes.

The key to such a metaphor succeeding is that a Board of Directors, “by continuing to challenge management on these scenarios that management has considered and the stories management is telling itself about what could go wrong,” can “help get management out of its comfort zone by and large executive teams begin to believe themselves when they talk about how well they’re doing. The independent challenge that the board can offer is putting a little bit of sand in the shoe to make sure you’re thinking about things carefully can cause you to step back and focus your resources where they’re needed.”

Howell noted that the role of the Board is not management but oversight, focusing on governance. To do so, an effective Board should challenge senior management not only on what they have planned for but what they may not have considered or may not even know about. He said, “One perfect example is the reputation of those stakeholders involved in the company, and that can be the management team itself, the employees, and the board members themselves.” This is because reputational damage hurts everyone. Howell stated, “It’s essential as we go through some ways the Board can help management in that role. I think the things that make a difference to management is when the Board can be an effective devil’s advocate. Not managing management but helping them in their governing role by helping management to step back and think critically of their underlying assumptions and biases.”

A Board is more than just there to be a rubber stamp for senior management. It must exercise independent judgment, action, and oversight. Further, it is the Board’s role to ask hard, difficult, and probing questions to ensure management is doing its job and has considered other risk possibilities.

Three Key Takeaways:

  1. Boards should force management to open up the company to itself.
  2. Boards should be a grain of sand in the shoe of management.
  3. Boards should ensure senior management is aware of and planning for known and unknown risks.
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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program with Boards – The Board Compliance Committee

Under the U.S. Sentencing Guidelines, the Board must exercise reasonable oversight on the effectiveness of a company’s compliance program. The DOJ 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? Moreover, the  FCPA Resource Guide, 2nd edition required a CCO to have direct access to the Board or an appropriate sub-committee and requires a tangible commitment from the top levels of an organization, starting with the Board of Directors, that the company creates an ethical culture.

This requirement was brought forward in 2017 in the FCPA Corporate Enforcement Policy. Finally, nn the 2020 Update to the Evaluation of Corporate Compliance Programs, under the section entitled Oversight, it posed the following questions What compliance expertise has been available on the board of directors? Have the board of directors and/or external auditors held executive or private sessions with the compliance and control functions?
Today’s regulatory climate and hyper-transparency in social media make a Board Compliance Committee’s task seem Herculean. But more than simply the regulatory climate, shareholders are taking a much more active role in asserting their rights against Boards of Directors. It is incumbent that Boards seek out and obtain sufficient information to fulfill their legal obligations and keep their company off the front page of the New York Times, Wall Street Journal or Financial Times, just to name a few, to prevent serious reputational damage. A Board Compliance Committee is a good place to start.
Three key takeaways:

  1. The Board Compliance Committee exists to provide oversight and assist the CCO, not to substitute its judgment for that of the CCO.
  2. The Board Compliance Committee should work to hold the CCO accountable to hit appropriate metrics.
  3. The Board Compliance Committee is ideal for leading the efforts around strategic planning.

For more information check out The Compliance Handbook, 3rd edition, available from LexisNexis here.

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Compliance Into the Weeds

SVB Failure – Lessons for Compliance

The award winning, 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 and I continue our exploration of the collapse of Silicon Valley Bank (SVB) and take a deeper dive into the compliance angles. Silicon Valley Bank had taken some big risks which led to depositors having a near-death experience, shareholders losing all their money, and taxpayers ultimately supporting the bank’s bailout. Despite the auditors giving an anodyne report on the bank’s risk management, the board, management and regulators all missed the big strategic risks. As a result, the bank collapsed, leaving Matt to question whether stakeholders were given the right assurance on the right things.

Key Highlights

·      What risk management strategies did SVB senior management and Board miss or ignore that could have prevented the financial disaster?

·      Why did SVB’s management decline to pursue improvements to their risk management practices after being warned by BlackRock consultants?

·      Did regulators miss the red flags raised by the San Francisco Fed examiners 18 months before the collapse of SVB?

Notable Quotes:

1.     “We should remember that really, the auditors’ report is going to give assurance on two points: Number one, is there a risk of material misstatement in the financial statements? And number two, does the audit firm have any substantial doubt about the organization’s ability to continue as a going concern for roughly the next twelve months or so? That’s how long it is. But it’s those two things.”

2.     “When you have Elizabeth Warren and conservatives both raising hell at the same time, it’s a valid issue to go and look at then because that does not happen too often.”

3.    “It’s like nobody had thought about this when really once we rolled back DoddFrank protections and supervisory constraints specifically for mid-sized banks, which Republicans pushed through in 2018, once that happened, that became the systemic risk that regulators had to think about.”

4.    “Everybody kind of sort of knew there was a problem, but a whole lot of finger pointing and not enough planning and assurance and communication to the public at large and to investors.”

 Resources

Matt  on LinkedIn

Matt on Radical Compliance

Tom on LinkedIn

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Daily Compliance News

February 28, 2023 – The Biometric Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network. Each day we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

Stories we are following in today’s edition of Daily Compliance News:

  • What happens when there are leaks at the Board level? (FT)
  • Many companies are caught under Illinois biometric law. (WSJ)
  • Corruption entwining Iceland and Namibia. (BBC)
  • Abu Dhabi finally settled with Malaysia over 1MDB. (Reuters)