Tag: compliance

Categories
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.

Categories
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

Categories
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

Connect with Tom Fox

Instagram

Facebook

YouTube

Twitter

LinkedIn

Categories
31 Days to More Effective Compliance Programs

One Month to More Effective Written Standards: Day 16: Policies on Facilitation Payments

From the information provided by the DOJ in Opinion Releases and in enforcement actions, there are several different insights which may be drawn on regarding what should go into your policy on facilitation payments. Do not forget that facilitation payments must be accurately shown on the books and records of your company. In all cases the employee who requested permission to make the facilitation payment must be responsible for obtaining all required approvals and forwarding a copy of the approvals and any other relevant supporting documentation as required, so that the it is recorded as a facilitation expense in the books and records and maintained in a central file. Facilitation payments should not be recorded as consulting fees, entertainment expenses, or other types of expenses that may misrepresent the true nature of the payments.
There may be emergency situations when it will be difficult or impossible for employees to obtain approvals before having to decide whether or not to pay a facilitation payment. If the facilitation payment is made in an emergency, the employee reports the facilitating payment to the compliance department and explains the emergency as soon as practical after making the facilitation payment.

Three key takeaways:

  1. What was the amount of the facilitation payment?
  2. Was the action truly routine?
  3. How high up was the government official who received the facilitation payment? Was his or her decision discretionary?

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

Categories
Innovation in Compliance

Breaking the Silence: How Speaking Up Enhances Corporate Cultures – Kenneth McCarthy on Non-Retaliation and Protections for Those 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 2, Tom Fox visits with Kenneth McCarthy on the importance of non-retaliation and protections for those who speak up.

Kenneth McCarthy is a seasoned professional with a diverse background in government and entrepreneurship and a wealth of experience in handling whistleblowers, including sexual harassment cases. Kenneth’s perspective on addressing sexual harassment retaliation and encouraging reporting in workplaces is rooted in his belief in the importance of non-retaliation protocols and processes. He emphasizes the need to create a safe and supportive environment for individuals to report concerns, particularly in cases of sexual harassment. Drawing from personal experiences, he has seen the damaging effects of retaliation on individuals’ willingness to speak up and the potential legal and reputational implications for employers who fail to protect whistleblowers. Join Tom Fox and Kenneth McCarthy as they delve deeper into this topic in this episode.

 Key Highlights:

  • Systemic Retaliation in Sexual Harassment Cases
  • Creating a Safe Reporting Environment
  • The Crucial Role of Empowered Bystanders
  • Encouraging Bystanders: Protecting and Supporting Witnesses

Resources:

Kenneth McCarthy on LinkedIn

Integrity by McCarthy

Case IQ

Categories
Blog

What is a Speak Up Culture?

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, at the end of the day, more profitably. This blog post series will expand on these topics. In Part 1, I visited with Sharlyn Lauby to learn about the speak-up culture.

Sharlyn is the author of HR Bartender and president of ITM Group Inc., a Florida-based training and human resources consulting firm focused on working with companies to retain and engage talent. She sees human resources as a strategic partner—the marketing department for a company’s internal clients—rather than an administrative one. During her 20+ years in the profession, she earned a reputation for bringing business solutions to reality. Her areas of expertise include organizational development, training, employee relations, and job design. She has a broad knowledge of workplace social media, strategic planning, and recruitment. And I’m skilled in new program design, project management, and human resources compliance.

In this concept of fostering a speak-up culture, we explored the workplace. A speak-up culture is a work environment where open communication is encouraged, fostering trust and innovation. This culture is built on leadership that values listening and employee involvement in problem-solving. One of the key factors in fostering a speaking-up culture is protecting employees from retaliation. Anti-retaliation policies and procedures, training for middle managers, and a consistent, transparent process for investigating concerns are crucial to maintaining this culture. The fair process doctrine, which emphasizes transparency, consistency, and protection from retaliation, plays a significant role in building trust, encouraging engagement, and enhancing the overall organizational culture.

Sharlyn highlighted the importance of addressing negative concerns and encouraging employees to share their ideas with management. When employees feel empowered to contribute their ideas, it can lead to significant positive outcomes for the organization. Sharlyn shared a powerful example of an organization that faced a budget challenge and involved employees in finding solutions. By offering incentives for revenue-raising or cost-saving ideas, the company not only met its budget goals but exceeded them, generating $5 million in savings. This story illustrates the potential for great things when organizations listen to their employees and value their input.

However, fostering a speak-up culture goes beyond just listening. It requires implementing policies and procedures to protect employees who have the courage to speak up. Employees need to feel confident that their concerns will be taken seriously and properly investigated. This is crucial for building trust and ensuring that employees feel comfortable bringing forward their concerns. Retaliation should never be tolerated, and organizations must make it clear that it will not be accepted under any circumstances.

Middle managers play a vital role in fostering a speak-up culture. They need to be trained to listen, accept information, and report it to the appropriate channels. Middle managers should also support employees throughout the process, helping them navigate any challenges they may face. Building relationships with managers is essential, as it encourages open communication and creates an environment where managers feel comfortable seeking guidance when needed.

Consistency and transparency in the investigation process are also key components of a speak-up culture. Organizations must have a clear process in place for investigating concerns, and employees should be aware of this process. When employees know that their concerns will be taken seriously and investigated, it builds confidence in the organization and encourages them to speak up when necessary.

The Department of Justice has emphasized the importance of consistency and transparency in investigations, as they contribute to institutional justice and fairness within a corporation. Organizations must communicate to employees that concerns will be thoroughly investigated, regardless of the number of ongoing investigations at any given time. This ensures that employees feel heard and that their concerns will be addressed appropriately.

In conclusion, fostering a speak-up culture in the workplace is crucial for building trust, encouraging engagement, and enhancing the overall organizational culture. It requires leadership that values listening and employee involvement, as well as policies and procedures to protect employees from retaliation. Middle managers play a vital role in supporting employees and facilitating open communication. Consistency and transparency in the investigation process are essential for building trust and ensuring that employees feel comfortable bringing forward their concerns. By fostering a speak-up culture, organizations can create an environment where employees feel empowered to contribute their ideas and make a positive impact on the workplace.

Join us tomorrow when we take up non-retaliation and protections for those who speak up.

Listen to Sharlyn Lauby on Innovation in Compliance here.

Categories
31 Days to More Effective Compliance Programs

One Month to More Effective Written Standards: Day 15 – Enforcement Actions Featuring Facilitation Payments

One of the more confusing areas of the FCPA is in that of facilitation payments. Facilitation payments are small bribes but make no mistake about it, they are bribes. For that reason, many companies feel they are inconsistent with a company culture of doing business ethically and in compliance with laws prohibiting corruption and bribery. Further, the 2020 FCPA Resource Guide specified, “while the payment may qualify as an exception to the FCPA’s anti-bribery provisions, it may violate other laws, both in Foreign Country and elsewhere. In addition, if the payment is not accurately recorded, it could violate the FCPA’s books and records provision.” Additionally, the 2020 FCPA Resource Guide stated, “Whether a payment falls within the exception is not dependent on the size of the payment, though size can be telling, as a large payment is more suggestive of corrupt intent to influence a non-routine governmental action. But, like the FCPA’s anti-bribery provisions more generally, the facilitating payments exception focuses on the purpose of the payment rather than its value.”
In addition to these clear statements about whether the FCPA should continue to allow said bribes; you should also consider the administrative nightmare for any international company. The U.K. Bribery Act does not have any such exception, exemption or defense along the lines of the FCPA facilitation payment exception. This means that even if your company allows facilitation payments, it must exempt out every U.K. Company or subsidiary from the policy. Further, if your company employs any U.K. citizens, they are subject to the U.K. Bribery Act no matter who they work for and where they may work in the world, so they must also be exempted. Finally, if your U.S. Company does business with a U.K. or other company subject to the U.K. Bribery Act, you may be prevented contractually from making facilitation payments while working under that customer’s contract. As I said, an administrative nightmare.

Three key takeaways:

  1. Do not forget the administrative nightmare of facilitation payments for international organizations.
  2. The Kay decision made clear how narrow the “routine government action” exception is.
  3. Facilitation payments will usually be an add-on as they are symptomatic of an ineffective compliance program.

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

Categories
Blog

The Continuous Improvement of Corporate Culture

Welcome to a special five-part blog series on building a stronger culture of compliance, sponsored by Diligent. Over this series I have visited with Yvette Hollingsworth-Clark, Viktor Cuijak, Jessica Czeczuga; Michael Parker; and today it is Alexander Cotoia. In this series, we considered what is culture, how to assess culture, putting together a strategy to manage culture based upon this assessment, the monitoring of that strategy going forward. We conclude on how to use this information from your monitoring to engage in continuous improvement of your culture.

Many compliance professionals struggle with the ‘softness’ of culture. However, properly viewed culture can be seen as another type of risk for any organization. Viewed through this lens, culture can then be assessed, managed, monitored and improved as any other business risk. This has become even more important since the announcement in October 2021 by Deputy Attorney General Lisa Monaco, that the Department of Justice would assess corporate culture as a part of corporate compliance enforcement action. In this concluding Part 5, we consider how to continuously improve your compliance program with Alexander Cotoia, from the Volkov Law Group.

Alexander Cotoia, a regulatory compliance manager at the Volkov Law Group, has a rich background in commercial litigation and has spent a significant part of his career as a paralegal before transitioning to an in-house role at Virgin Galactic. Cotoia emphasizes the importance of compliance culture in organizations, believing that a culture promoting compliant behavior reduces the likelihood of ethical lapses or legal violations. He argues that creating a culture of compliance is not only ethically sound but also makes good business sense in today’s era where consumers are well-informed, and employees prioritize alignment with organizational values. Cotoia suggests that organizations should reinforce their values and highlight the economic benefits of compliance to gain buy-in and engagement from employees, while also emphasizing the need for continuous improvement, conducting root cause analysis, and involving various stakeholders to address cultural issues effectively.

At its core, compliance culture is about promoting and encouraging behavior that aligns with ethical and legal standards. It goes beyond simply following rules and regulations; it involves fostering an environment where employees understand the importance of compliance and are committed to upholding it. As Cotoia emphasized, creating a culture of compliance makes good business sense in today’s era, where consumers are more informed than ever before and a new generation of employees are demanding that organizations align with their values.

One key aspect highlighted in the podcast episode is the role of leadership, particularly the CEO, in driving and reinforcing a culture of compliance. Cotoia stressed the importance of CEOs being actively involved in the compliance process, emphasizing the organization’s values, and demonstrating how compliance contributes to the overall success of the organization. By doing so, CEOs can set the tone at the top and inspire employees to embrace compliance as an integral part of their work.

To establish and maintain a culture of compliance, organizations need to employ various tools and strategies. Cotoia discussed the importance of conducting root cause analysis, which involves identifying the underlying causes of non-compliance or ethical lapses. This analysis can be facilitated through anonymous surveys that measure employees’ perception of compliance within the organization and the extent to which compliance concerns are integrated into their daily work. By understanding the root causes, organizations can implement targeted remedial measures to address the identified issues.

Collaboration among stakeholders is also crucial in promoting a culture of compliance. Cotoia emphasized the need for involvement from various departments, such as the financial team, legal, and compliance officers, depending on the specific compliance challenges faced by the organization. By working together, these stakeholders can collectively solve problems and ensure that compliance is embedded throughout the organization.

Monitoring the effectiveness of remedial measures is another critical aspect of compliance culture. Organizations should regularly assess whether the implemented measures are achieving the desired outcomes. This can be done through continuous improvement efforts, such as periodic pulse checks and assessments of employee understanding and engagement with compliance initiatives. If the results indicate that the remedial efforts are not effective, organizations should be willing to revisit the root cause analysis and adjust their approach accordingly.

We also discussed the importance of ongoing communication and collaboration for continuous improvement and alignment with compliance standards. Organizations should foster an environment where employees feel comfortable reporting compliance concerns and where open dialogue is encouraged. This not only helps identify potential issues but also demonstrates the organization’s commitment to addressing them.

In conclusion, the importance of compliance culture in organizations cannot be overstated. It not only minimizes ethical and legal risks but also contributes to the overall success and reputation of the organization. By involving leadership, conducting root cause analysis, collaborating with stakeholders, monitoring effectiveness, and fostering ongoing communication, organizations can create and maintain a culture of compliance that aligns with best practices and meets the expectations of employees and consumers alike. As Alexander Cotoia aptly stated, “Creating a culture of compliance just makes good business sense.”

Tune into Alexander Cotoia on the Diligent podcast series Unlocking Success: The Crucial Role of Culture in a Best Practices Compliance Program.

Categories
Innovation in Compliance

Unlocking Success: The Crucial Role of Culture in Compliance: Part 5 – Alexander Cotoia on the Continuous Improvement of Culture

Welcome to a special series on building a stronger culture of compliance through targeted and effective training sponsored by Diligent. I will visit with Yvette Hollingsworth-Clark, Viktor Culjak, Jessica Czeczuga, Michael Parker, and Alexander Cotoia in this series. Over this series, we will consider what culture is, how to assess culture, putting together a strategy to manage culture based upon this assessment, monitoring that strategy in the future, and using information from your monitoring to improve your culture continuously. In this concluding Part 5, we visit with Alexander Cotoia to discuss a strategy to enhance your compliance program in the future constantly.

Alexander Cotoia, a regulatory compliance manager and consultant at the Volkov Law Group, has a rich background in commercial litigation and has spent a significant part of his career in an in-house role at Virgin Galactic. Alexander strongly emphasizes the importance of compliance culture in organizations, believing that a culture promoting compliant behavior reduces the likelihood of ethical lapses or legal violations. He argues that creating a culture of compliance is not only ethically sound but also makes good business sense in today’s era, where consumers are well-informed and employees prioritize alignment with organizational values. Alexander suggests that organizations should reinforce their values and highlight the economic benefits of compliance to gain employee buy-in and engagement, emphasizing the need for continuous improvement, conducting root cause analysis, and involving various stakeholders to address cultural issues effectively. Join Tom Fox and Alexander Cotoia as they dive deep into how to continuously improve your compliance program in this episode of Unlocking Success: The Crucial Role of Culture in Compliance Best Practices podcast episode.

Key Highlights: 

  • Cultivating CEO Involvement for Compliance Success
  • Improving Corporate Culture through Effective Monitoring
  • Cultivating Compliance Culture through Stakeholder Collaboration

Ready for Purpose-Driven Compliance? Diligent equips leaders with the tools to build, monitor, and maintain an open, transparent ethics and compliance culture. For more information and to book a demo, visit Diligent.com.