Tag: compliance

Winnie the Pooh Explains Compliance: Part 5 – Winnie the Pooh as CECO (Think, Think, Think)

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Post date August 5, 2022
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This week I have explored compliance through a five-part podcast series, as seen through the lens of Winnie the Pooh and the characters living in the Hundred Acre Woods. I want to conclude my series by looking at Winnie the Pooh himself through the lens of the Chief Ethics and Compliance Officer (CECO).

Pooh may be a bit naive and slow-witted, but he is also friendly, thoughtful and steadfast. Although he and his friends agree that he is “a bear of very little brain”, Pooh is occasionally acknowledged to have a clever idea, usually driven by common sense. Pooh is also a talented poet; his poems and “hums frequently punctuate the stories”. Although he is humble about his slow-wittedness, he is comfortable with his creative gifts. When Owl’s house blows down in a windstorm, trapping Pooh, Piglet and Owl inside, Pooh encourages Piglet (the only one small enough to do so) to escape and rescue them all by promising that “a respectful Pooh song” will be written about Piglet’s feat. Later, Pooh muses about the creative process as he composes the song.

Pooh is very social. Christopher Robin is his closest friend, Piglet, and often chooses to spend his time with one or both of them. But he also habitually visits the other animals, often looking for a snack or an audience for his poetry as much as for companionship. His kind-heartedness means he goes out of his way to be friendly to Eeyore, visiting him, bringing him a birthday present, and building him a house, despite receiving mostly disdain from Eeyore.

We need to recall that the DOJ started from the position that the role of compliance and ethics in an organization was co-equal. Winnie the Pooh reminds us of that foundational building block. Pooh also reminds us that a CECO is a social animal. Just as he is friends with all the animals and characters we have visited this week, you as a compliance professional should make friends with all the corporate functions they represented this week: sales, HR, finance and legal. If you find you run out of hunny to pass around, you can always resort to the Russ Berland strategy of pizza.

Even though this is the final offering in this week’s blog post on Compliance in the Hundred Acre Woods, do not feel blue. We will have another week of Pooh later this summer for more compliance lessons. And if you do feel blue in the interim, check out this YouTube clip of the Pooh theme song. And always remember, when all else fails;

“Think, Think, Think”

Tags CCO, CECO, compliance, Think Think Think, Winnie the Pooh

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Winnie the Pooh Explains Compliance: Part 4 – Piglet and Finance

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Post date August 4, 2022
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This week I am exploring a five-part series on compliance as seen through the lens of Winnie the Pooh and the characters who live in the Hundred Acre Woods. Today I discuss Pooh’s best friend, Piglet, and use Piglet to consider the role of finance in a compliance program.

Piglet has some great adventures (or sometimes misadventures), such as giving Eeyore a birthday balloon that pops or getting lost in the Hundred Acre Wood mist and helping to rescue Pooh and Owl after they are trapped in Owl’s fallen house. My favorite Piglet tale is when Eeyore mistakenly offers Piglet’s house as a new home for Owl after his house has blown down. Piglet nobly agrees to let Owl have the house, at which point Pooh asks Piglet to live with him, and Piglet accepts. This poignant story shows the true meaning of friendship and any Pooh story I know.

I cannot think of any character more able to illustrate the role of finance in compliance than Piglet. He is obsessed with keeping things neat and tidy and sometimes has an inferiority complex, although his friends think highly of him. Sort of like finance.

Finance has roles in the prevention, detection and remediates prongs of any compliance program. In the prevent prong, this is most particularly true around offshore payments, generally defined as payments made to a location other than the home domicile of the payee or the location where the services were delivered. If a Tunisian agent who performs services in Dubai asks for payment in a location other than Dubai or Tunisia, that will qualify as an offshore payment. If you train people in finance on this issue, they may well pick up the phone and notify compliance when they see a request for payment in a geographic location separate from one of the two standard payment venues. When properly documented, those types of communications demonstrate that your compliance program is operationalized into the fabric of the organization.

The bottom line is that not only can finance be one of the compliance function’s strongest corporate allies but that the role of finance, by its nature, works to operationalize compliance. This is because to implement the appropriate internal controls around compliance, finance must know the specific requirements of compliance know what kinds of issues are likely to come up that might create a risk of bribery and corruption, all leading to an understanding of the appropriate compliance internal controls to implement around payments.

Join me tomorrow when I conclude with Winnie the Pooh and his influence on the Chief Ethics and Compliance Officer (CECO) role.

Tags CCO, CECO, compliance, Corporate Finance, Piglet, Winnie the Pooh

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Would You Buy a New Car From Them? Part 2 – Lessons for Compliance

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Post date August 4, 2022
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Over this series, I am reviewing the corruption enforcement action Involving the company formerly known as Chrysler Group LLC, now FCA US LLC (Chrysler or the company herein) which was criminally sentenced to pay a fine of over $96 million and a forfeiture money judgment over $203 million. These amounts were above a previous civil penalty of $310 million. All of this was for designing a vehicle emissions system for the company’s Jeep Grand Cherokee and Ram 1500 that would evade federal emissions standards for diesel vehicles and then lying about it to federal authorities. It was a different type of corruption from a Foreign Corrupt Practices Act (FCPA) enforcement action but corruption, nonetheless. Today, I want to consider some of the lessons for the anti-corruption compliance professional.

The actions by the company are instructive for what not to do in any corruption investigation. The Plea Agreement specified that the company did not receive credit for self-disclosure as it did not self-disclose its criminal conduct or fraud. The company did receive some cooperation credit for cooperating during the scope of the investigation but did not receive any credit for failures in both taking timely remedial action and for failing to discipline senior executives who were involved in or had knowledge of the criminal action and fraud. (Recall that one executive involved directly in the fraud was with the company until 2020.)

All these actions were very costly to the company in terms of how it was evaluated under the US Sentencing Guidelines. Under Section 8(C)2.5(g)(2) a company can receive credit of up to five (5) points for cooperating in the investigation and affirmatively accepting responsibility for it’s conduct. The company only received a two (2) point discount. Since the Plea Agreement specified the company did cooperate in the investigation, it clearly did not accept responsibility for its conduct. The lack of those three points in discount cost the company somewhere in the estimated range of $20 to $30 million in additional fines and penalties.

The Plea Agreement also specified for the first time the Monaco Doctrine of evaluating past conduct as a part of the overall evaluation of the company. The Plea Agreement detailed that the company had a prior criminal conviction for bribery and corruption under the National Labor Relations Act (NLRA) for bribing union officials. However, it is not clear how that worked into the overall fine and penalty except to note that the company paid the maximum under the US Sentencing Guidelines, after credit for the civil penalty.

Additionally, while there is no requirement for a monitor in this resolution of the criminal action, there was a such a requirement in the Consent Decree from the civil action. It mandated an Independent Compliance Auditor for a period of three years from the resolution of the civil matter, which was May 2019.

Lessons Learned

There are multiple lessons for the anti-corruption compliance professional from this enforcement action. Obviously, the need to engage in robust remediation for the matter at issue and your compliance program is critical. Moreover, and once again the Department of Justice (DOJ) criticized a company for tardiness in disciplining those who were involved in the fraud or those who were aware of it. As I noted in Part 1, multiple former company employees were criminally indicted for their conduct in this sordid affair. Yet some of them were with the company until 2019 and 2020 and not all were terminated, some left the company in voluntary separations, which sounds suspiciously like retirements. Such actions could save your organization literally millions of dollars.

One of the clearest, which was not stated in any of the resolution documents, was that every Chief Compliance Officer (CCO) needs to read the newspapers and stay abreast of current events in their industry. It was September 2015 that the Volkswagen (VW) emissions-testing scandal became public. It was by far the largest scandal in emissions-testing and cost VW billions in investigative and remediation costs, fines, penalties, buy-backs, market share loss and reputational damages. To say that anyone at the company was not aware of it is to simply defy belief.

Beyond just the CCO, every Board member was no doubt aware of the VW emissions-testing scandal. Under the current state of the Caremark Doctrine, there may well be a duty to make an inquiry by the Board of auto manufacturers to senior management to investigate if they have been involved in similar conduct. Here we do not know how the scandal got to the attention of the DOJ, but it was clear from the Plea Agreement, it was not from self-disclosure. CCOs and Boards need to be much more proactive when competitors get into trouble about investigating similar products or services which could lead to criminal and civil fines and penalties.

This matter warrants consideration by every CCO in every US public and private company. Every CCO can also use the case as instruction and training for both senior management and their company Board of Directors.

Resources

DOJ Press Release

Information

Plea Agreement

Consent Decree from the civil action

Tags compliance, DOJ, FCA LLS USA, FCPA, lessons learned, US Sentencing Guidelnes

Trekking Through Compliance

Episode 54 – Bread and Circuses

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Post date August 3, 2022
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In this episode of Trekking Through Compliance, we consider the episode Bread and Circuses, which aired on March 15, 1968, and occurred on Star Date 4040.7.

On a routine patrol, the Enterprise happens upon space debris from the S.S. Beagle. This survey ship disappeared 6 years ago, commanded by Captain R.M. Merrik, an academy associate of Kirk. When Spock projects the path of the wreckage back in time, he discovers a civilization of modern-day Romans on Planet 4 of the 892 System. The extreme similarity of the 892 System’s civilization to the Roman Earth is apparently a coincidence, demonstrating, according to Kirk, the validity of Hodgekin’s Law of Parallel Planet Development.

Scott prepares to disrupt power to the entire planet from the Enterprise just as Kirk is about to be executed on live Roman TV. Scotty beams up the away team just before their cell is crisscrossed with machine gun fire. Back aboard the Enterprise, Uhura discovers that the escaped slaves were not sun worshippers but worshippers of a different “son”: the Son of God.

Compliance Takeaways:

1. Being a CCO or compliance professional requires many soft skills.

2. Do you translate your compliance documents into the local language?

3. Does your compliance program enhance and enrich cultural diversity in your organization or acerbate the differences?

Resources

Excruciatingly Detailed Plot Summary by Eric W. Weisstein

MissionLogPodcast.com

Memory Alpha

Tags Bread and Circuses, compliance, Leadership, Star Trek, Star Trek TOS, TOS

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Winnie the Pooh Explains Compliance: Part 3 – Eeyore, Compliance & Legal

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Post date August 3, 2022
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This week I am exploring a five-part series on compliance as seen through the lens of Winnie the Pooh and the characters who live in the Hundred Acre Wood. In this Part 3, we consider perhaps the most beloved character (other than Pooh himself) Eeyore and use him to explore the differences in compliance and corporate legal.

Eeyore is described as an “old grey donkey”. Eeyore has a poor opinion of most of the other animals in the Forest, describing them as having “No brain at all, some of them” and “only grey fluff that’s blown into their heads by mistake” (from chapter 1 of The House at Pooh Corner). Eeyore’s favorite food is thistles. He lives in the southeast corner of the Hundred Acre Wood, in an area labeled “Eeyore’s Gloomy Place: Rather Boggy and Sad” on the map in the Winnie-the-Pooh book. He has a stick house therein called The House at Pooh Corner. Pooh and Piglet built it for him after accidentally mistaking the original house that Eeyore built for a pile of sticks. On Eeyore’s birthday, he is given an empty honey jar from Pooh for keeping things in, a popped red balloon from Piglet to keep in the pot, and a note from Owl. (Eeyore’s birthday was originally celebrated by University of Texas students in Austin and is now a worldwide phenomenon.)

Eeyore expects misfortune to fall upon him, accepts it when it does, and rarely even tries to prevent it. He is known for saying “Thanks for noticin’ me” and “Ohhh-kayyy”. His grumpiness is best shown in an encounter with Piglet, who cheerfully bade him, “Good morning!” Eeyore responded, “Well, I suppose it is…for some.” Yet, Eeyore is capable of great compassion. Most interestingly, he has a great friendship with Tigger.

I use Eeyore as an introduction to the differences in the compliance function and the legal department in the corporate world. When I initially went in-house, it was made clear to me that the role of the in-house department in the company I worked for was to protect the company. When I became a General Counsel (GC), I took that role to heart and felt like I was the company’s lawyer (even if the Chief Executive Officer (CEO) felt like I was his lawyer). But as Donna Boehme pointed out, there are distinct differences in approaches to compliance from practicing law. She said, “one thing is clear – the two functions have very different mindsets, mandates and priorities.” She notes that the legal department’s mandate is to “advise and protect the company.” The compliance mandate is much broader.

The bottom line is that while you may want an Eeyore in the corporate legal department, just saying no; that is not something you want in compliance. The job of compliance is not to protect the company at all costs. Instead, it is to prevent, detect and remediate any compliance issues that arise. You cannot do that by simply saying No. Yet, just like Eeyore, the corporate legal department can be a valuable adjunct to the compliance function if an internal investigation occurs and you want to maintain your corporate privilege.

Join me tomorrow when I take a look at Piglet and the role of payroll in compliance.

Tags compliance, Corporate Legal, Eeyore, Winnie the Pooh

Great Women in Compliance

Sarah Powell – Remember the Why

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Post date August 3, 2022
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Welcome to the Great Women in Compliance Podcast, co-hosted by Lisa Fine and Mary Shirley.

Today’s guest is Sarah Powell. Sarah is the kind of person who makes everyone around her stronger. Her work in ethics and Compliance is directly related to her commitment to social justice and making a positive impact through anti-bribery and anti-corruption work. Lisa can vouch for that as she works with Sarah as Global Compliance Counsel, Director, Third-Party ABC Compliance at Pearson.

Sarah returned to her home in South Africa from London at the beginning of the pandemic and had her daughter. She discussed how both of these events had impacted her. In particular, she talks about some of her experiences during quarantine, how they showed the resilience in South Africa and how the pandemic could also breed corruption.

She also shares her views on what those of us outside South Africa can learn from their experiences, particularly how they talk about the past and issues. This episode is a great reminder of why we do this work and how we can directly influence society as a whole.

Are you planning on heading to the SCCE CEI in Phoenix in October? Check out Lisa and Mary’s speaking sessions on the agenda and sign up! We invite you to say hello and introduce yourself during the conference it’s going to be a great time.

The Great Women in Compliance Podcast is on the Compliance Podcast Network with a selection of other Compliance-related offerings to listen to. If you enjoy this episode, please rate it on your preferred podcast player to help other like-minded Ethics and Compliance professionals find it. You can also find the GWIC podcast on Corporate Compliance Insights, where Lisa and Mary have a landing page with additional information about them and the podcast’s story. Corporate Compliance Insights is a much-appreciated sponsor and supporter of GWIC, including affiliate organization CCI Press publishing the related book” “Sending the Elevator Back Down, What We’ve Learned from Great Women in Compliance” (CCI Press, 2020).

You can subscribe to the Great Women in Compliance podcast on any podcast player by searching for it, and we welcome new subscribers to our podcast.

Join the Great Women in Compliance community on LinkedIn here.

Tags compliance, ethics, Integrity, Sarah Powell, South Africa

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Winnie the Pooh Explains Compliance: Part 2 – Kanga, Roo and the Compliance Ombudsman

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Post date August 2, 2022
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This week I am exploring a five-part series on compliance as seen through the lens of Winnie the Pooh and the characters who live in the Hundred Acre Woods: Pooh, Eeyore, Tigger, Kanga & Roo, and Piglet. Winnie-the-Pooh, also called Pooh Bear and Pooh was created by English author A. A. Milne. Yesterday, we introduced Tigger and the sales function’s role in compliance. In this episode, we focus on Kanga and her son, Roo, and the Corporate Ombudsman’s role in compliance.

Kanga is a female kangaroo and the doting mother of Roo. They live near the Sandy Pit in the northwestern part of the Hundred Acre Wood. Kanga is the only female character to appear in the books. Kanga is kind-hearted, calm, patient, sensible and down to earth. She likes to keep things clean and organized and offers motherly advice and food to anyone who asks her. She is protective over Roo and treats him with kind words and gentle discipline. She also has a sense of humor, as revealed in chapter seven of Winnie-the-Pooh when Rabbit connives to kidnap Roo, leaving Piglet in his place; Kanga pretends not to notice that Piglet is not Roo and proceeds to give him Roo’s usual bath, much to Piglet’s dismay.

Roo is Kanga’s cheerful, playful, energetic son, who moved to the Hundred Acre Wood with her. His best friends are Tigger and a young Heffalump named Lumpy, who loves to play with him. Roo is the youngest of the main characters. When Kanga and Roo first come to the Hundred Acre Wood, everyone thinks Kanga is a fierce animal, but discover this untrue and become friends with her. In the book, when Tigger comes to the forest, she welcomes him into her home, attempts to find him food he likes and allows him to live with her and Roo. After this, Kanga treats him like she does her son. I want to use Kanga and Roo to consider another role in compliance. It is the creation of an ombudsman for employees to help facilitate compliance.

Kanga is the most trusted soul in the Hundred Acre Woods. She would be an ideal ombudsman and an example that the “success of these programs depends partly on getting the right person for the role. A good ombudsman is a superb listener who establishes trust in people at all levels.” They need to have the skills to think through solutions to problems. Kanga certainly has such skills. A great example is the arrival of Tigger in the Hundred Acre Woods. While Tigger claims to like everything to eat for breakfast, it is quickly proven he does not like honey, acorns, thistles, or most of the contents of Kanga’s larder. However, he discovers what Tigger likes best is the extract of malt, which Kanga has on hand because she gives it to Roo as “strengthening medicine”. This is another key trait of an ombudsman; the person must also respect senior executives and be comfortable taking issues to the Chief Executive Officer (CEO) or the Board if necessary. Understanding the corporate culture and who has influence is also important – which is why many capable people in this role are promoted from inside the company. The same can be said for Kanga in the Hundred Acre Wood.

Join me tomorrow when I consider Eeyore and the role of corporate legal in compliance.

Tags CCO, compliance, Compliance Ombudsman, HR, Hundred Acre Woods, Kanga and Roo, Winnie the Pooh

Innovation in Compliance

The Accelerated Transformation of Compliance with Samantha Regan

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Post date August 2, 2022
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Accenture provides top-notch services in strategy & consulting, and operations for its clients. Samantha Regan is Managing Director and Global Lead for the Regulatory Remediation & Compliance Transformation group within Accenture’s Finance & Risk practice. Tom Fox welcomes her to this week’s show to talk about the Accenture Compliance Risk Study Report.

Accenture’s Compliance Risk Study

Tom asks Samantha about the origin of the report. Samantha responds that each year, the team at Accenture gets together to observe and record what’s happening in the world of compliance. They seek to discover the key issues and concerns for compliance officers across various organizations. Developing a framework, conducting a survey and collating the data are the next steps. This is followed by “synthesizing those results and looking for the insights from the information that’s been provided and then developing the report off the back of that,” Samantha tells Tom.

Primary Compliance Risks In 2022

Tom asks Samantha to discuss the primary risks that they identified through the study. She replies that the biggest area of focus for compliance folk in 2022 is cybersecurity, ESG, and privacy. Tom asks her to identify some challenges compliance professionals face when responding to and managing these risks. New pressures are constantly being placed on compliance professionals, Samantha explains. “Compliance functions continue to evolve at a speed and scale and force the compliance function to change from being reactive to what was going on in the environment, to needing to be more proactive, building a function that is able to adapt.” She believes that by using data, compliance officers can “build a future-ready and risk-proof compliance function”.

Looking Ahead

Tom asks Samantha how she thinks compliance professionals should respond to risks in 2025. Would the trends highlighted in the study be accelerated? “I think the warp speed at which companies are operating is going to require compliance functions to have accurate and complete visibility into risks and mitigating controls across the business,” she comments. Data from the study suggests that most of the issues compliance officials have can be attributed to the lack of data; there needs to be enough information available to assess risk exposure. She mentions that there is increasing concern surrounding third-party risk. Samantha believes that with the increasing speed and evolution of risks, “the compressed transformation of organizations and industries is just going to put increasing pressure on compliance functions to continue the transition.”

Resources

Samantha Regan | LinkedIn

Accenture | Compliance Risk Study – 2022

Tags Accenture, Accenture Compliance Risk Study Report, Accenture’s Finance & Risk practice, compliance, Samantha Regan

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Winnie the Pooh Explains Compliance: Part 1 – Tigger and Sales

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Post date August 1, 2022
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This week I begin a five-part series on compliance as seen through the lens of Winnie the Pooh and the characters who live in the Hundred Acre Woods: Pooh, Eeyore, Tigger, Kanga & Roo, and Piglet. This episode begins with Tigger and the sales function’s role in compliance.

Tigger first appears in the House at Pooh Corner when he arrives at Pooh’s doorstep in the middle of the night. Tigger takes up residence with Kanga and Roo. He becomes great friends with Roo, and Kanga treats him like she does her son. Tigger seems to have boundless energy, often too much energy for some of the other denizens of the Hundred Acre Wood. Rabbit, who is constantly exasperated by Tigger’s constant bouncing; Eeyore, who is once bounced into the river by Tigger; and, finally, there is Pooh’s good friend Piglet, who always seems a little nervous about the new, large, bouncy animal in the Hundred Acre Wood.

Tigger seems like the epitome of a top salesperson. He is very confident, has quite an ego, and has a high opinion of himself. He always seems to have great energy and optimism, and though always well-meaning, he can also be mischievous, and his actions have sometimes led to chaos and trouble for himself and his friends. Tigger often undertakes tasks with gusto, only to realize they are not as easy as he had originally imagined. Tigger, unique as ever, refers to himself not as a tiger but as a “Tigger”, and when he introduces himself, he announces the proper way to spell his name, and that is “T-I-double-Guh-Er”, which spells “Tigger”.

Tigger seems like a great way to think about sales incentives from the compliance perspective. Much like Tigger, most sales folks have their hearts in the right place, even if their actions cause trouble for themselves and others.

At the end of the day, Tigger is good-hearted, even if his over-exuberance can sometimes lead to misadventures. If you properly incentivize your sales team, you will hopefully keep their over-exuberance into being simply good-hearted as well.

Join me tomorrow when I consider Kanga, Roo and the Compliance Ombudsman.