Tag: compliance

Last week, after having leaked a preliminary opinion, the US Supreme Court struck the 50-year law legalizing abortion, Roe v. Wade in the case of Dobbs v. Jackson Women’s Health. The opinion was a complete mis-statement of US Constitutional law, was intellectually dishonest and was as clear an example of result-oriented legal decision making as you will ever likely see. However, the opinion was widely expected particularly after the leaked draft, but the reality is that all the justices who signed onto the opinion had long ago signaled their collective desire to overturn precedent and throw out Roe. While most Supreme Court decisions usually do not have direct compliance lessons and even broader criminal implications for the compliance profession, this opinion certainly does so I wanted to look at those issues from the compliance perspective.
Due Diligence
If there was ever an example of why you need robust due diligence for senior executives, the overturning of Roe provides the supreme example. All the justices who signed on to overturning Roe had said in their Congressional hearing that they would not vote to overturn Roe, and they would respect the Doctrine ofStare Decisis. As reported by Jacob Shamsian, writing in BusinessInsider.com, said, “When US Senators questioned Samuel Alito at his confirmation hearing in 2006, the now-Supreme Court Justice, author of Friday’s decision to overturn Roe v. Wade, hinted that the landmark 1973 abortion ruling was an “important precedent.” Alito went on to state, “It is a precedent that has now been on the books for several decades. It has been challenged. It has been reaffirmed.” At the same hearing, he talked about the principle of “stare decisis,” where Supreme Court justices respect the precedents set by previous decisions in making their rulings.”
Even Susan Collins, that alleged protector of women’s rights, said she had been “mislead” by now Justice Kavanaugh in a private meeting where the New York Times (NYT) reported that  Kavanaugh told her “Roe is 45 years old, it has been reaffirmed many times, lots of people care about it a great deal, and I’ve tried to demonstrate I understand real-world consequences,” he continued, according to the notes, adding: “I am a don’t-rock-the-boat kind of judge. I believe in stability and in the Team of Nine.” In the same article, Senator Joe Manchin said that his trust had been abused by Kavanagh for private comments made to him.
All this means that people will lie to you during their employment interview. Unfortunately for the people of the United States, the employment interview was for a lifetime tenured position. Are lying to Congress, mis-leading and abusing the trust of Senators impeachable offenses? An open question at this point.
The point of due diligence is to take the information provided to you and investigate further to both verify it and see if there is anything further which might be a red flag. Companies can get into big trouble for failures of due diligence. Witness the Moderna ‘CFO for a Day’ when, as Bloomberg reported, “Moderna Inc.’s chief financial officer [Jorge Gomez] stepped down just one day after starting his new job.” It turned out that his prior employer was investigating accounting fraud which occurred under his watch. It cost Moderna one year’s salary of over $700,000 and a huge black eye in the court of public opinion for this most basic due diligence failure. What do you think Gomez said when asked if there was anything they needed to know about his employment history?
What about the Cleveland Browns and their signing of Deshaun Watson? How much due diligence did Cleveland do before it signed Watson to a fully guaranteed $231 million contract. After signing the contract, the NYT broke the story that Watson had used “at least 66 different women in just the 17 months from fall 2019 through spring 2021” rather than the 40 in five seasons he had previously claimed. Conor Orr, writing in Sports Illustrated, reported that the Browns had engaged in due diligence the team described as an “odyssey” to become “comfortable” with Watson.  He went on to add, “If nothing in the Times report was new information to the Browns, they should come out and admit as much. If much of what surfaced in the Times report is new information to the Browns, they should come out and admit as much.” What do you think Watson told the Browns when they asked ‘Is there anything else we need to know about?”
Criminal Exposure
I do not often have to write about the potential criminal exposure of Chief Compliance Officers (CCOs) but after the eviscerating of Roe, it must be considered. How so, you might ask? The NYT Dealbook has reported, “Local officials in states that restrict abortion are already threatening to punish businesses that help employees gain access to it elsewhere.” If you take the prior Texas example this means every person or entity in the chain who might have provided assistance to a woman who has an abortion in a state where it is legal to do so. Under Texas law that means everyone who played a part in the corporate decision to support such women, including (but certainly not limited to) compliance, legal, human resources, finance, IT and a myriad of other corporate functions.
It would also extend to insurers who provide such coverage, once again even if legal in a state where services were delivered. Think such ideas are beyond the pale? Texas legislators are already considering such legislation, including making it illegal for Texas residents to travel anywhere to receive abortion services. Finally, do not forget that in 2022 one Texas woman, Lizelle Herrera, was charged with felony murder for having a miscarriage, although the charges were later dropped. Yes, this criminalizes the reproductive process.
Think this will end by the overturning of Roe? Alito tried to say that the legal decision only applied to overturning Roe. But the entire world knows about Alito’s inherent flexibility with the truth. Of course, this is just the first step that the MAGA hat wearing court justices want to take to get rid of civil rights. Justice Thomas could not have been clearer in his Concurrence when he said it was not just the right to abortion protected in Roe, but also protections for birth control in Griswold v. Connecticut, same-sex sexual relations in Lawrence v. Texas, same-sex marriage in Obergefell and protections for inter-racial marriage from Loving.
Once again, think that could not happen? The official position of the Texas GOP is that gays are an “abnormal lifestyle choice.” The state of Texas has already moved to criminalize transgender identity for those under 18 by opening investigations to have such children removed from their parents’ care and prosecute their parents for child endangerment. The Texas GOP is simply frothing to bring bills to outlaw same sex marriage, gay lifestyle, ban birth control and outlaw inter-racial marriages and try and make them all criminal conduct. Of course the right to travel freely between states is now in play as well.
Compliance professionals by nature try to get employees to do business ethically and in compliance with laws, rules, regulations and corporate policies. If you have operations in Texas that calculus has now changed. Not just a company headquartered in Texas but if you have any operations in Texas, the state of Texas will use that as an excuse to try and prosecute you. The Dobbs decision was about as bad a decision as the court could have articulated but as the Supreme Court is now formulated, it will only be the first. Every corporation will have to decide if the low tax structure and business friendly confines of the great state of Texas are worth the literal sacrifice of your employee’s health, right to live with and marry whom they please and even have access to birth control.