Tag: compliance

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FCPA Compliance Report

FCPA Compliance Report – Jim Walton on LRN’s 2023 Code of Conduct Report

Welcome to the award-winning FCPA Compliance Report, the longest-running podcast in compliance. In this episode, Tom Fox welcomes Jim Walton to discuss LRN’s always great annual Code of Conduct Report.

Jim Walton is a well-known compliance professional with a background in engineering and a passion for assessing and improving corporate codes of conduct effectiveness. His perspective on this topic is shaped by his extensive experience, including his current role as a Director on LRN’s Advisory Services team, where he leads their code of conduct practice. Jim believes a company’s code of conduct should reflect its character, culture, and values, serving as a foundation for its ethical culture. He emphasizes the importance of the code being a useful resource for employees, providing guidance on ethical decision-making and access to detailed information and resources. Jim also acknowledges that there is always room for improvement in corporate codes of conduct, even among some of the largest companies in the world. Join Tom Fox and Jim Walton on this FCPA Compliance Report podcast episode to dive deeply into Codes of Conduct.

Key Highlights:

  • Evaluating the Effectiveness of Company Codes of Conduct
  • Codes of Conduct Evaluation and Best Practices
  • Comprehensive and User-Friendly Code of Conduct
  • Eight Dimensions for an Effective Code of Conduct

Resources:

Jim Walton on LinkedIn

LRN

LRN 2023 Code of Conduct Report

Tom Fox

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Blog

Employment Separation: A Compliance Centric Approach

Welcome back to our blog series on building a more effective compliance program! In today’s episode, we dive into the challenges compliance professionals face when dealing with employment separation, layoffs, and managing whistleblower allegations. We’ll explore practical advice and data-driven insights to help you navigate these complex situations. So, let’s get started! While compliance practitioners may be thinking about these issues, HR professionals may need to be fully aware of their significance. By working together, compliance and HR can ensure that exit interviews are conducted with the necessary guidance and attention to compliance-related matters.

One key aspect is the importance of collaboration between the compliance, legal, and HR departments. By working together, you can identify high-risk employees who may be subject to layoffs. This proactive approach allows you to plan and ensure that all compliance requirements are met during the separation process. To further strengthen your compliance program, consider involving a compliance professional in the exit interview process. This individual can ask detailed questions and emphasize the importance of compliance and ethical conduct. By doing so, you create an opportunity to address any potential concerns or ethical issues before they escalate.

Exit interviews serve as a goldmine of information for improving your compliance program. By asking detailed questions about what works, what doesn’t work, and what the employee would like to see, you gain valuable insights into the organization’s strengths and weaknesses. This unfiltered environment allows departing employees to freely share their thoughts, providing a unique perspective that may not have been voiced during their tenure.

During exit interviews, it is essential to ask probing and insightful questions specifically related to compliance. This helps uncover any compliance issues that may have contributed to the employee’s departure and identifies areas for improvement. By understanding the employee’s role, the structure of their business unit, and their supervisors, you can tailor questions to gather the most relevant and actionable information.

When planning layoffs, it’s crucial to consider the impact on hotlines, whistleblower reports, and retaliation claims. Data mining the hotline for employees who have reported violations and promptly investigating those allegations is essential. By demonstrating that layoffs are part of a consistent and fairly applied employee separation program, you can mitigate the risk of retaliation claims.

Treating departing employees with dignity and respect is not only the right thing to do but also essential for maintaining a positive compliance culture. Rushing employees out the door without consideration can increase the risk of retaliation claims or whistleblowing. Instead, take the time to listen to their concerns, answer their questions, and provide information on employment separation issues and state unemployment law. Offering assistance in finding future employment can also help ease the transition.

Treating departing employees with dignity can also turn them into powerful advocates for your organization. In today’s highly mobilized social media world, compliance ambassadors play a crucial role in defending your organization’s reputation and recommending it to potential employees. These ambassadors can also help communicate with stakeholders, third parties, customers, local communities, board of directors, and shareholders, reinforcing your commitment to compliance.

Compliance ambassadors can be a powerful tool when regulators come knocking. Their firsthand experiences and insights can provide additional resources and support in navigating regulatory challenges. By leveraging the knowledge gained from exit interviews, organizations can better prepare for compliance audits and demonstrate a proactive approach to regulatory compliance.

Separation documents must meet Securities and Exchange Commission (SEC) requirements regarding disclosures on whistleblowing and reporting to authorities. Failure to include language specifying that employees can go to authorities has resulted in major fines against US corporations. Ensure that your separation documents comply with these SEC requirements to protect both the company and the departing employee.

In conclusion, a comprehensive and respectful approach to employment separation and managing whistleblower allegations is crucial for maintaining an effective compliance program. By collaborating with HR, involving compliance professionals in exit interviews, addressing whistleblower reports and retaliation claims, valuing departing employees, and ensuring SEC-compliant separation documents, you can mitigate risks and foster a culture of compliance within your organization. Please plan for this eventuality to avoid the ex-employee being uncooperative with the company or government. By considering the potential value of a laid-off employee, you can better prepare for these situations.

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Blog

The ROI of a Culture of Speak Up

We are now at a place where sufficient data, academic research, and actual use cases from corporations and businesses demonstrate that good ethics and compliance programs are not simply good for business, but when properly used, they lead to greater profitability.

For 15 years, Ethisphere has been collecting data around its World’s Most Ethical Company awards. Companies that receive this designation have been found to outperform their peers on various stock indices. Ethisphere calls this the “Ethics Premium.” Ethisphere Executive Vice President (EVP) Erica Salmon Byrne has noted, “In tracking how the stock prices of publicly traded honorees compare to the U.S. Large Cap Index, we found that listed World’s Most Ethical Companies outperformed the large cap sector.” In 2010, that number was a delta of 4.5%. Yet by 2020, that number had skyrocketed to 13.5%. Ethisphere has been on to something.

Academic research has also shown the efficacy of ethics and compliance programs. George Serafeim and Paul M. Healy demonstrated in their paper, An Analysis of Firm’s Self-Reported Anti-Corruption Efforts that companies with robust compliance programs do better financially in countries prone to corruption than companies with less effective compliance programs. Without a robust compliance program, even with high sales in a high-risk country, the sales will drop, leading to a negative Return on Equity (ROE) of between 24% and 30%.

Dr. Kyle Welch, Assistant Professor at George Washington University (GWU), in his paper, co-authored with Stephen Stubben, Associate Professor from The University of Utah, entitled “Evidence on the Use and Efficacy of Internal Whistleblowing Systems” (Report). In this paper, Welch and Stubben reviewed some 15 years of anonymized data from NAVEX Global, Inc. This data was from the company’s hotline reporting systems. Some of the key findings included that companies with a robust whistleblower and reporting system had greater profitability and workforce productivity as measured by Return on Assets (ROA), there were fewer material lawsuits brought against the company overall, and there were lower settlement costs if a lawsuit did occur. Finally, there were fewer external whistleblower reports to regulatory agencies and other authorities.

All of this leads to the key finding of reducing material litigation costs, and remember, this is not simply civil litigation but all reportable proceedings against a company, including regulatory enforcement actions, criminal sanctions sought by the Department of Justice (DOJ), and all other court proceedings. A material proceeding would have to be 5% of a company’s gross margin so the amount would be pretty high. Companies with robust whistleblower reporting systems also had 4% fewer pending lawsuits the year after increased hotline activity, improving to 6.9% fewer material lawsuits over the next three years. Additionally, overall litigation settlements of non-material matters dropped almost 20% over three years.

But the story does not end with data, numbers, or academic research. The corporate world is full of tales where a compliance solution was delivered, which made compliance more effective and improved business process efficiency and greater profitability. Data and information collected, which initially began as a compliance solution or project, can be used to improve business process efficiency. Delivering a compliance solution can enhance an overall business process. When you consider the compliance data points in every organization, from the Quote To Cash (QTC) sales cycle to the procure-to-pay (P2P) procurement cycle, you see how compliance can improve business efficiency and lead to greater profitability.

The bottom line is that creating a culture of trust that generates loyalty and passion generates productivity. Your employees are engaged and want to give their all. This means they seek opportunities to prove themselves by doing their best. Suppose you have a robust culture of speaking up, as discussed in this blog post. In that case, you will have motivated employees who can communicate business efficiency upgrades and new ideas for greater profitability.

Trust is a vital component of creating a productive and passionate company culture. Disrespect can damage trust and lead to a breakdown in employer-employee relationships. When employees feel trusted, they are empowered and motivated to give their best. This generates loyalty, passion, and productivity, creating a company culture that thrives and excels. Trust is morally right and financially smart, as it reduces worker disengagement and turnover costs. Having a robust ethos of speaking up in your organization will only drive better overall corporate culture.

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Innovation in Compliance

Breaking the Silence: How Speaking Up Enhances Corporate Cultures – Tom Fox on the ROI of a Speak Up Culture

Welcome to a special five-part podcast series on enhancing corporate culture through a great speak-up regime. This podcast series is sponsored by Case IQ. Over this series, Tom Fox will visit with Sharlyn Lauby, Jakub Ficner, Kenneth McCarthy, and Meric Bloch on the different facets of a great speak-up regime and how each of those facets will improve your corporate culture. They will tackle such topics as the indicia of a great corporate culture, the importance of triage and internal investigations in improving corporate culture, non-retaliation and protections for those who speak up, tying your entire system of speaking up to improving culture, and conclude with some thoughts on how an entire system of speaking up drives corporate culture to be better run and, at the end of the day, more profitably. In this concluding Part 5, Tom Fox discusses the ROI of a true culture of speaking up.

Strong reporting systems and a robust corporate culture must be balanced in business efficiency. One great academic paper demonstrates how companies with robust whistleblower and reporting systems enjoy greater profitability, increased workforce productivity, and fewer material lawsuits. Tom has seen firsthand the transformative power of a culture of speaking up. He emphasizes that it’s about having a hotline and an entire system with employee engagement. This culture of ‘SpeakUp’ can provide actionable information to prevent, detect, and remediate issues before they become legal violations and can contribute to a functioning and ethical corporate culture. A culture of trust and empowerment ultimately leads to motivated employees who can contribute to business efficiency and greater profitability. Join Tom Fox on this Breaking the Silence: How Speaking Up Enhances Corporate Culture podcast episode to delve deeper into this fascinating topic.

Key Highlights:

  • Academic research
  • Q2C and P2P
  • Material differences

Resources:

Case IQ

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Blog

Improving Your Compliance Program Through a Culture of Speak Up

I recently concluded a podcast series with Case IQ. Over this series, I visited with Sharlyn Lauby, Jakub Ficner, Kenneth McCarthy, and Meric Bloch on the different facets of a great speak-up regime and how each of those facets will improve your corporate culture. We tackled such topics as the indicia of a great corporate culture, the importance of triage and internal investigations in improving corporate culture, non-retaliation and protections for those who speak up, tying your entire system of speaking up to improving culture, and will conclude with some thoughts on how an entire system of speaking up drives corporate culture to be better run and more profitably. This blog post series will expand on these topics. In Part 4, we will consider how to improve your overall compliance program through a robust culture of speaking up with Meric Bloch.

Meric Bloch is passionate about investigations. Meric created the Winter Method® for conducting workplace investigations, a methodology emphasizing root-cause analysis and business-related guidance. The Winter Method is a framework for investigators to consider the business risks created when misconduct arises. He designed, implemented, and managed workplace-investigations processes globally for three multinational companies and a healthcare system. He has trained thousands of HR, internal audit, legal, and compliance professionals to conduct investigations.

Meric has conducted over 800 internal fraud and serious workplace misconduct investigations globally. He has extensive professional experience counseling business executives on the legal and business issues arising from investigations. He is on the faculty of the Society of Corporate Investigations and Ethics’ Investigations and Ethics Academy, as well as a member of its Board of Directors. Finally, Meric is a Certified Fraud Examiner, a Certified Financial Crime Specialist, a Certified Information Privacy Professional – Europe, a Professional Certified Investigator, and a Certified Compliance and Ethics Professional-Fellow.

Workplace investigations are crucial in maintaining a culture of compliance within organizations. Meric, who specializes in training investigators and improving investigation processes, emphasized the need for organizations to create a culture where employees feel comfortable reporting issues and understand their role. He highlighted the challenge of integrating a culture of speaking up within organizations, stating that it goes beyond just setting up a hotline and establishing policies. Instead, organizations need to understand who is speaking up and why.

One of the key points raised by Meric is the importance of making speaking up meaningful and credible. He pointed out that companies often must communicate what should be reported, leading to employee clarity. To address this, organizations need to go beyond generic statements and provide specific guidance on what constitutes a reportable issue. By doing so, employees will better understand their role and the importance of their contribution to maintaining compliance.

Another challenge highlighted by Meric is the need for follow-up interviews and reporter education. He stressed the need for organizations to engage with reporters and gather additional information to understand better the context and potential gaps in the initial report. This not only helps in conducting thorough investigations but also ensures that reporters feel valued and supported throughout the process.

Meric also discussed the importance of addressing friction points within organizations. He mentioned that employees often hesitate to speak up due to concerns about the involvement of headquarters or fear of retaliation. Organizations must actively address these concerns and create an environment where employees feel safe and supported when reporting issues.

Organizations must move beyond passive measures such as hotlines and policies to create a culture of speaking up. They must actively engage with employees, educate them about their role in the process, and provide clear guidance on what should be reported. By doing so, organizations can foster a culture of compliance where employees feel empowered to speak up and contribute to maintaining ethical standards.

The podcast episode highlighted the importance of workplace investigations and employee compliance culture. It emphasized the need for organizations to go beyond superficial measures and actively engage with employees to create a meaningful and credible reporting system. Organizations can build a culture that values integrity and ethical behavior by addressing the challenges associated with speaking up and maintaining compliance.

Join us tomorrow to discuss how a robust culture of speaking up will make your organization run better and have greater profitability.

Listen to Meric Bloch on Innovation in Compliance here.

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Innovation in Compliance

Breaking the Silence: How Speaking Up Enhances Corporate Cultures – Meric Bloch on How a Speak Up Culture Improves Compliance

Welcome to a special five-part podcast series on enhancing corporate culture through a great speak-up regime. This podcast series is sponsored by Case IQ. Over this series, Tom Fox will visit with Sharlyn Lauby, Jakub Ficner, Kenneth McCarthy, and Meric Bloch on the different facets of a great speak-up regime and how each of those facets will improve your corporate culture. They will tackle such topics as the indicia of a great corporate culture, the importance of triage and internal investigations in improving corporate culture, non-retaliation and protections for those who speak up, tying your entire system of speaking up to improving culture, and conclude with some thoughts on how an entire system of speaking up drives corporate culture to be better run and, at the end of the day, more profitably. In Part 4, Tom Fox visits Meric Bloch on how a robust speak-up culture will improve your compliance program.

Meric Bloch is an expert in workplace investigations with a rich background in helping corporate clients establish effective investigation programs. He is currently serving as an adjunct professor at Fordham University Law School. Meric strongly emphasizes the importance of workplace investigations and fostering a culture of employee compliance. He believes that merely setting up a hotline and establishing policies is insufficient; companies must actively engage with employees to understand their motivations for speaking up or remaining silent. Meric also underscores the need for accountability and a critical evaluation of the effectiveness of compliance programs. His experiences with multinational companies have shaped his understanding of their challenges, particularly the fear of being perceived as incompetent and the difficulties in reporting. Join Tom Fox and Meric Bloch on this episode as they dive deep into improving your compliance program through a speak-up culture.

Key Highlights:

  • Enhancing Corporate Investigations for Compliance and Accountability
  • The Impact of Cooperation on Reporters
  • The Impact of Meaningful Speak Up Culture

Resources:

Meric Bloch on LinkedIn

Winter Investigations

Case IQ

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31 Days to More Effective Compliance Programs

One Month to More Effective Written Standards: Day 18 – Policies on Extortion Payments

The next area for policies is extortion payments, which not are made illegal under the FCPA. Extortion payments are made for any action which threatens or demands payment for life, liberty, or health. These should be exempted out from your facilitation payments and your compliance program through specific language. You need to do this for a variety of reasons. First and foremost, your employees must understand that the company will support them if they are in any way threatened with harm, with arrest or physical detention, their health/safety is threatened. As a compliance professional, you need to make sure they understand they need to do whatever they have to do to get themselves out of such a situation.
 Some of the situations your employees might face are along the lines of the following:

  • Employees are stopped by police, military or paramilitary personnel, or militia (uniformed or not) at designated or other checkpoints or other places and a payment is demanded as a condition of passage of persons or property;
  • Employees are stopped at the airport by customs or passport control personnel or military personnel and a payment is demanded for entry or exit of persons or property; or
  • Employees are asked by persons claiming to be security personnel, immigration control, or health inspectors to pay for an allegedly required inoculation or other similar procedure.

The key though is that it be properly documented. But more than simply the documentation is that you must specifically list extortion payments in your books and records, so you will not be suspected with hiding them by describing them as something else. The key is to train your employees specifically on the actions to take. In your policy, state that if there is a threat to health, safety or liberty, it is not a facilitation payment but an extortion payment. Make sure that they understand what their rights are and what their obligations are to report it when they come back to the corporate office or their office. Always remember, an extortion payment is not a FCPA violation.

Three key takeaways:

  1. Extortion payments are not illegal under the FCPA.
  2. Was the action an extortion or some other type of situation?
  3. “Document, Document, and Document” your extortion payments, both the financial component and a description of the underlying events.

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

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31 Days to More Effective Compliance Programs

One Month to More Effective Written Standards: Day 17 – Policies for Third-Parties

As every compliance practitioner is well aware, third-parties still present the highest risk under the FCPA. The DOJ 2023 ECCP devotes an entire prong to third-party management. It begins with the following: A well-designed compliance program should apply risk-based due diligence to its third-party relationships.  Although the degree of appropriate due diligence may vary based on the size and nature of the company or transaction, prosecutors should assess the extent to which the company has an understanding of the qualifications and associations of third-party partners, including the agents, consultants, and distributors that are commonly used to conceal misconduct, such as the payment of bribes to foreign officials in international business transactions.
This set of queries clearly specifies the DOJ expects an integrated approach that is operationalized throughout the company. This means your compliance program must have a process for the full life cycle of third-party risk management. There are five steps in the life cycle of third-party management: 1) business justification; 2) questionnaire to third-party; 3) due diligence on third-party; 4) compliance terms and conditions, including payment terms; and 5) management and oversight of third parties after contract signing.
I continually give my mantra of compliance, which is “Document, Document, and Document”. Each of the steps you take in the management of your third parties must be documented. Not only must they be documented but they must be stored and managed in a manner that you can retrieve them with relative ease. The management of third parties is absolutely critical in any best practices compliance program.

Three key takeaways:

  1. Use the full five-step process for third-party management.
  2. Make sure you have Business Development involvement and buy-in.
  3. Operationalize all steps going forward by including business unit representatives.

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

Categories
Innovation in Compliance

Breaking the Silence: How Speaking Up Enhances Corporate Cultures – Jakub Ficner on How Triage and Investigations Can Drive a Culture of Speak Up

Welcome to a special five-part podcast series on enhancing corporate culture through a great speak-up regime. This podcast series is sponsored by Case IQ. Over this series, Tom Fox will visit with Sharlyn Lauby, Jakub Ficner, Kenneth McCarthy, and Meric Bloch on the different facets of a great speak-up regime and how each of those facets will improve your corporate culture. They will tackle such topics as the indicia of a great corporate culture, the importance of triage and internal investigations in improving corporate culture, non-retaliation and protections for those who speak up, tying your entire system of speaking up to improving culture, and conclude with some thoughts on how an entire system of speaking up drives corporate culture to be better run and, at the end of the day, more profitably. In Part 3, Tom Fox visits with Jakub Ficner on the importance of your triage protocol and investigative process to foster a culture of speaking up.

Jakub Ficner has over 15 years of experience in the internal investigative space and is currently the Director of Partnership Development at Case IQ. He strongly advocates for the importance of the triage process and technology in organizational compliance. Jakub emphasizes the need for a rigorous reporting, triage, and investigation process, even before receiving a complaint or allegation. He believes that effective means of documenting and tracking investigative processes are crucial for establishing accountability and defensibility in compliance processes. Drawing from his extensive experience, Jakub highlights the significance of having a documented process, especially for multinational companies with compliance officers in various regions. He recommends using technology, such as a case management solution, to ensure accountability, defensibility, and easy information retrieval. Join Tom Fox and Jakub Ficner on this episode as they delve deeper into these topics of triage and investigations.

 Key Highlights:

  • The importance of effective triage
  • Improving Response Time and Setting Expectations
  • Effective Compliance Documentation and Tracking
  • Using Technology to Establish Accountability and Defensibility

Resources:

Jakub Ficner on LinkedIn

Case IQ

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Into the Chair - Tales from Chief Compliance Officers

Into the Chair, Tales from Chief Compliance Officers: Discovering a Passion for Compliance – Mario Chilin’s Journey into the CCO Chair

Welcome to the latest edition to the Compliance Podcast Network: Into the Chair: Tales from Chief Compliance Officers details the journey to and in the role of a Chief Compliance Officer. How does one come to sit in the CCO chair? What are some of the skills a CCO needs to successfully navigate the compliance waters in any company? 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. Into the Chair: Tales from Chief Compliance Officers is a Comply podcast hosted by Tom Fox and is a production of the Compliance Podcast Network. In this episode, I visit with Mario Chilin the Chief Compliance Officer at EP Wealth Advisors.

Mario Chilin is a seasoned professional in the compliance field, boasting a robust background in the financial industry, with degrees from California State University and Pennsylvania State University, and a paralegal certificate from Cerritos College. His perspective on his career in compliance is overwhelmingly positive, having discovered a passion for the field while working at the Bank of Tokyo Mitsubishi. Despite the challenges he faces as a Chief Compliance Officer, such as limited resources and the growing threat of cybersecurity, Chilin remains dedicated to his profession. His experiences, from working in operations during the 2008 financial crisis to his current role at EP Wealth Advisors, have only fueled his belief that others who delve into compliance will find the same passion and excitement. Join Tom Fox and Mario Chilin as they delve deeper into this topic on the next episode of the Into the Chair podcast.

Key Highlights

·      Unexpected Paths to a Successful Compliance Career

·      Navigating the Regulatory Side of Finance

·      Maximizing Resources and Cybersecurity: Compliance Officer Challenges

Resources

Mario Chilin on LinkedIn

EP Wealth Advisors

Comply

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