Tag: DOJ

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Argentieri at ABA White Collar Conference: Corporate Enforcement, Part 1

There were recently two significant speeches by Department of Justice (DOJ) officials at the American Bar Association National Institute on White Collar Crime. The first was by Deputy Attorney General Lisa Monaco. The second was by Acting Assistant Attorney General Nicole Argentieri. They both had important remarks for the compliance professional. Over the next several blog posts, I will review both speeches and what they might indicate for compliance and Foreign Corrupt Practices Act enforcement going forward. Yesterday, I considered the Monaco speech. Today is the speech by Nicole Argentieri.

After reviewing some of the more significant individual prosecutions, Argentieri turned to corporate enforcement, noting, “Corporate accountability is the other side of our white-collar work because companies are the first line of defense against misconduct.” She emphasized the need for “a strong compliance program that is key to preventing corporate crime before it occurs and addressing misconduct when it does occur.” The DOJ’s Corporate Enforcement Policy also encourages “companies to invest in strong compliance functions and to step up and own up when misconduct occurs.” She cited one company that did not have a robust compliance program (or a culture of compliance), Binance, which explicitly communicated its “priorities, telling employees that, when it came to compliance, it was “better to ask for forgiveness than permission.”

In the Foreign Corrupt Practices Act enforcement arena, Argentieri pointed to four cases the DOJ prosecuted over the past 18 months. The companies all entered into corporate resolutions for FCPA violations. This group included Vitol, Glencore, Freepoint, and, most recently, Gunvor. Additionally, the DOJ prosecuted multiple individuals in connection with these cases. She even detailed the multiple bribery schemes involved: “Bribe payments funneled into the pockets of foreign officials through corrupt third-party agents using sham contracts and fake invoices.”

In each organization, there was a decided lack of a culture of compliance. Additionally,  employees exploited gaps in their companies’ internal controls and compliance programs. Personal cell phones and personal email accounts were used, which the organizations seemingly had no access to during the corruption and after the internal investigations. To make payments, internal controls were overridden or ignored to make off-the-books systems not subject to the organization’s standard checks and controls.

Because of the internal control and compliance failures that led to or contributed to the FCPA violations, each of these entities was required to make critical enhancements to their compliance programs to prevent future violations of the FCPA. Argentieri said, “Companies that take forward-leaning steps on compliance will be better-positioned to certify that they have met their compliance obligations at the end of the term of their agreements, as is now required in corporate resolutions with the Criminal Division.”

However, the DOJ’s work done after a settlement with a company is equally important. She clarified that the DOJ will monitor companies after resolution as they make, monitor, and attest to their compliance program and internal controls enhancements. She reported that “twenty-four companies have a market capitalization of more than $1 billion, and 22 are public companies. Over the past decade, hundreds of other companies across a wide range of industries have similarly been subject to compliance obligations in cases brought by the Criminal Division.” This ongoing oversight is not an independent monitorship but to ensure compliance with the resolution documents and to “have a real impact on corporate culture and compliance.”

The DOJ wants good corporate citizens and incentivizes companies to do so in various ways. Beyond enforcement actions are the Evaluation of Corporate Compliance Program (ECCP), the Corporate Enforcement Policy (CEP), the Voluntary Self-Disclosure Program (VSP), and the Compensation Incentives and Clawbacks Pilot Program. Argentieri reported that self-disclosures have increased over the past three years: “In 2023, we received nearly twice as many disclosures as in 2021. We expect this trend to continue as more companies take advantage of the benefits of voluntary self-disclosure and the CEP more generally.”

Argentieri believes that the DOJ has articulated policies that apply transparent criteria for both prosecutors to use and as “guideposts for companies and their counsel to consider when deciding what to do when faced with the prospect of a government investigation. It is a goal of the DOJ “to demonstrate the benefits that await those who voluntarily disclose misconduct.” She concluded this section by stating, “It’s one thing to issue and update policies. It’s another way to change corporate behavior. That is why we track the number of disclosures from companies. I’m proud to announce that early indications are that our policies are bearing fruit.”

Join us tomorrow as we examine how the ECCP, VSD, CEP, and Clawbacks Program have been reflected in recent enforcement actions.

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DAG Monaco at ABA White Collar Conference: Self-Disclosure, Wanted Posters and AI

There were recently two significant speeches by Department of Justice (DOJ) officials at the American Bar Association National Institute on White Collar Crime. The first was by Deputy Attorney General Lisa Monaco. The second was by Acting Assistant Attorney General Nicole Argentieri. They both had important remarks for the compliance professional. Over the next few blog posts, I will look at both speeches and what they might indicate for compliance and enforcing the Foreign Corrupt Practices Act. Today is the speech by DAG Lisa Monaco.

Self-Disclosure Initiatives

Monaco emphasized the importance of timely self-disclosure for companies to receive benefits under the Corporate Enforcement Policy. This tracks speeches made by DOJ officials over the past 18 months and the most significant enforcement actions over the past 15 months, ABB, Albemarle, SAP, and Gunvor. Monaco restated the incentives in place, “ I want to be clear: no matter how good a company’s cooperation, a resolution will always be more favorable with voluntary self-disclosure. We’ve structured our Voluntary Self Disclosure (VSD) programs to encourage companies to take responsibility for misconduct within their organizations. And we’ve conditioned benefits on the company’s willingness to step up and own up—requiring it to disgorge profits, upgrade compliance systems, and cooperate in investigations of culpable employees.”

Monaco also pointed to two separate US Attorney’s Offices, which have initiated their own self-disclosure programs. She stated, “At least two U.S. Attorney’s Offices — led by the Southern District of New York and recently the Northern District of California — are piloting initiatives that are, in essence, voluntary self-disclosure programs for individuals. Both offer non-prosecution agreements to certain categories of at-fault individuals who self-disclose wrongdoing and cooperate against other, more culpable targets. We look forward to evaluating the results of these pilots and determining what’s to come later this year.”

 DOJ Whistleblower Program-Modern Day Wanted Posters

The next area is a new DOJ whistleblower initiative. The money line from her talk was, “Going back to the days of “Wanted” posters across the Old West, law enforcement has long offered rewards to coax tipsters out of the woodwork.” She added, “Today, we’re announcing a program to update how DOJ uses monetary rewards to strengthen our corporate enforcement efforts.” How will the DOJ incentivize this program? The short answer is money.

The DOJ has recognized that paying bounties is a surefire method to attract whistleblowers. She pointed to the examples of Dodd-Frank whistleblower programs at the SEC and the CFTC. She said, “Those agencies have received thousands of tips, paid out many hundreds of millions of dollars, and disgorged billions in ill-gotten gains from corporate bad actors.” There are other similar programs at different agencies and departments, such as the IRS and FinCen, as well as through qui tam actions. “These programs have proven indispensable — but they resemble a patchwork quilt that doesn’t cover the whole bed. They don’t address the full range of corporate and financial misconduct that the Department prosecutes.”

The DOJ will offer payments under four parameters:

  • Only after all victims have been properly compensated;
  • Only to those who submit truthful information not already known to the government;
  • Only to those not involved in the criminal activity itself and
  • Only in cases without an existing financial disclosure incentive — including qui tam or another federal whistleblower program.

Monaco also offered the types of areas the DOJ wants to focus its whistleblower initiative around:

  • Criminal abuses of the U.S. financial system;
  • Foreign corruption cases outside the jurisdiction of the SEC, including FCPA violations by non-issuers and violations of the recently enacted Foreign Extortion Prevention Act,
  • Domestic corruption cases, especially involving illegal corporate payments to government officials.

The DOJ will engage in a 90-day “Policy Sprint” to develop and implement a pilot program, with a formal start date later this year. But the premise should be simple: ” If an individual helps DOJ discover significant corporate or financial misconduct—otherwise unknown to us—then the individual could qualify to receive a portion of the resulting forfeiture.”

Monaco ended with a message for whistleblowers and corporations: “With these announcements, our message to whistleblowers is clear: the Department of Justice wants to hear from you. And to those considering voluntary self-disclosure, our message is equally clear: knock on our door before we knock on yours. “

Justice AI

Recognizing that “all new technologies are a double-edged sword—but AI may be the sharpest blade yet,” Monaco announced that the DOJ would seek sentencing enhancements to increase penalties for criminals whose conduct uses or includes AI. She stated, “Where AI is deliberately misused to make a white-collar crime significantly more serious, our prosecutors will seek stiffer sentences—for individual and corporate defendants alike.”

She went on to add that “compliance officers should take note. When our prosecutors assess a company’s compliance program — as they do in all corporate resolutions — they consider how well the program mitigates its most significant risks. And for a growing number of businesses, that now includes the risk of misusing AI.” To assist compliance professionals with this new area of responsibility, she said that “assessment of disruptive technology risks — including risks associated with AI — into its guidance on Evaluation of Corporate Compliance Programs.”

Cliff Notes

For those old enough to know what Cliff Notes were, Monaco ended with the following:

First, we’re continuing to execute our core strategy: invest the most significant resources in the most serious cases, hold individuals accountable, and pursue tough penalties for repeat offenders.

Second, we’re using carrots and sticks to encourage companies to step up, own up, and report misconduct to the government. With a first-in-the-door strategy, we’re making it clear that neither companies nor individuals can afford to sit on evidence of wrongdoing.

Third, we’re designing our whistleblower rewards program as part of our broader effort to fill gaps and innovate in this space. Stay tuned.

And finally, we’re applying DOJ tools to new, disruptive technologies — like addressing the rise of AI through our existing sentencing guidelines and corporate enforcement programs.

Join me tomorrow as I look at Nicole Argentieri’s speech.

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The Gunvor FCPA Enforcement Action: Part 3 – The Discounted Fine

We continue our exploration of the resolution of the FCPA enforcement action involving the Swiss trading firm Gunvor S.A. The enforcement action came in with a $661 million penalty against the company, which has pleaded guilty to bribing Ecuadorian government officials through the 2010s in exchange for intelligence about upcoming business contracts with the state-owned oil company of Ecuador. The matter was resolved via a Plea Agreement. Information detailing the company’s conduct was also issued.

Given the multi-year nature of the bribery scheme, how high it went up in the organization, and the lack of self-disclosure, one might charitably wonder how Gunvor was able to garner a fine that was so low. According to the Plea Agreement,  Gunvor paid over $97 million to corrupt third-party agents, who then made bribes to Ecuadorian officials. Gunvor earned over $384 million in profits from the business obtained through the corrupt scheme. Yet Gunvor received a 25% discount off the 30th percentile of the applicable US Sentencing Guidelines fine range. How did Gunvor achieve this discount?

Extensive Cooperation

The starting point for this analysis is the Plea Agreement. It noted several factors, including, among others, the nature and seriousness of the offense. Gunvor received credit for its cooperation with the department’s investigation, which included: (i) producing documents to the department from multiple foreign countries expeditiously while navigating foreign data privacy and criminal laws; (ii) providing information obtained through its own internal investigation to the department, which allowed the department to preserve and obtain evidence as part of the department’s investigation; (iii) making detailed, factual presentations to the department; (iv) arranging for the interview of an employee based outside the United States; (v) promptly collecting, analyzing, and organizing voluminous information, including complex financial information, at the request of the department, and producing an analysis of trading activity conducted by multiple outside forensic accounting firms retained by Gunvor; (vi) translating foreign language documents to facilitate and expedite review by the department; and (vii) imaging the phones of relevant custodians at the beginning of Gunvor’s internal investigation, thus preserving business communications sent on mobile messaging applications.

The Remediation

The Plea Agreement also included information on the remediation that Gunvor carried out. Gunvor also engaged in timely and appropriate remedial measures, including: (i) eliminating the use of third-party business origination agents; (ii) enhancing its third party due-diligence process; (iii) developing and implementing a control framework for internal business developers and additional layers of review and approval for counterparty payments; (iv) enhancing the independent compliance committee with responsibility for reviewing high-risk transactions; (v) engaging resources to review its compliance program and test the effectiveness of its overall reporting process, its reporting hotline and the effectiveness of the investigation of reports made through the hotline; (vi) evaluating and updating its compensation policy to better incentivize compliance with the law and corporate policies; (vii) hiring additional compliance personnel; (viii) testing and enhancing its compliance program, including by conducting compliance culture reviews, testing new third party due diligence process and payment controls, and evaluating controls around business development activities; and (ix) developing and implementing a risk-based business communications policy that addresses the use of ephemeral and encrypted messaging applications.

Prior Misconduct

The department also considered Gunvor’s history of misconduct. In October 2019, Gunvor resolved with the Office of the Attorney General of Switzerland concerning a corrupt scheme to bribe officials in Congo-Brazzaville and Côte d’Ivoire to secure oil contracts obtained between 2009 and 2012. As part of the 2019 Swiss resolution, Gunvor admitted that it lacked sufficient controls to prevent the underlying misconduct and failed to take “all the reasonable organizational measures” required to prevent Gunvor’s employees and agents from engaging in bribery.

Fine Calculation

The explanation from the DOJ answered an open question in the minds of many compliance professionals about recent FCPA enforcement. That question was about how culture and prior misconduct were factored into the fine determination. This case follows the recent SAP enforcement action, where there was a similar analysis. The DOJ is not discounting fines off the low end of a fine range but instead on some point above that low end. In Gunvor’s case, the high end of the fine range (after the full calculation under the Sentencing Guidelines) was $768,328,352, and the low end of the fine range was $384,164,176. With the uplift to the 30th percentile, the final fine was $374,560,071, with an additional forfeiture of $287,138,444. In the SAP enforcement action, the company received a 40% discount off the 10th percentile of the Sentencing Guidelines fine range.

Failure to Self-Disclose

We need to emphasize, once again, that under the Corporate Enforcement Policy, Gunvor’s failure to self-disclose cost it an opportunity of at least 50% and up to a 75% reduction off the low end of the U.S. Sentencing Guidelines: fine range. Moreover, its actions resulted in the company not receiving a reduction of at least 50% and up to 75% from the low end of the U.S.S.G. fine range but rather at the 30th percentile noted above. Gunvor’s failure to self-disclose cost it an estimated $50 million under the Sentencing Guidelines. Its inability to self-disclose and recidivism cost it a potential $150 million in total discounts available under the Corporate Enforcement Policy.

 Once again, the significance is that the DOJ is sending the message that self-disclosure is the single most important thing a company can do in any FCPA investigation or enforcement action. Kenneth Polite said that when announcing the updated Corporate Enforcement Policy in January 2023, the new Monitor Selection Policy was the number one reason for a company not having a monitor required. The DOJ’s message could not be more explicit: self-disclose, self-disclose, self-disclose, self-disclose.

Join us tomorrow as we consider the lessons learned from the Gunvor FCPA enforcement action.

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10 For 10

10 For 10: Top Compliance Stories For The Week Ending March 16, 2024

Welcome to 10 For 10, the podcast that brings you the week’s Top 10 compliance stories in one podcast each week. Tom Fox, the Voice of Compliance, brings to you, the compliance professional, the compliance stories you need to be aware of to end your busy week.

Sit back, and in 10 minutes, hear about the stories every compliance professional should be aware of from the prior week. Every Saturday, 10 For 10 highlights the most important news, insights, and analysis for the compliance professional, all curated by the Voice of Compliance, Tom Fox.

Get your weekly filling of compliance stories with 10 for 10, a podcast produced by the Compliance Podcast Network.

  1. The Swiss bank settles sanctions violations.  (WSJ)
  2. JPMorgan was fined $350MM. (Reuters)
  3. Accountability and corruption in South Sudan. (State Dept. Press Release)
  4. DOJ should have a policy sprint to get the whistleblower program ready.  (WSJ)
  5. MOD paid millions into a Saudi account. (The Guardian)
  6. Leadership lessons from Robert Oppenheimer.  (WSJ)
  7. The NYT reviews the new off-Broadway play, Corruption. (NYT)
  8. A Boeing whistleblower was found dead. (BBC)
  9. The DoT wants South Africa to increase its fight against corruption. (Reuters)
  10. Boeing overwritten the video of safety work. (Axios)

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

You can check out the Daily Compliance News for four curated compliance and ethics related stories each day, here.

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2 Gurus Talk Compliance

2 Gurus Talk Compliance – Episode 24 — The Self-Disclosure Edition

What happens when two top compliance commentators get together? They talk about compliance, of course. Join Tom Fox and Kristy Grant-Hart in 2 Gurus Talk Compliance as they discuss the latest compliance issues in this week’s episode! In this episode, Tom and Kristy take on a wide variety of compliance-related topics.

The Department of Justice (DOJ) is launching a paid whistleblower initiative, specifically targeting cases of criminal exploitation of the U.S. financial system that slip through the cracks of existing agency schemes. This move has elicited various perspectives, notably from compliance experts Tom Fox and Kristy Grant-Hart. Fox, drawing on his extensive experience in compliance, identifies the program as a vital development, filling a gap in whistleblower compensation efforts. He anticipates that it will compel compliance officers to foster a culture of reporting and enhance efficiency in managing investigations. On the other hand, Kristy, a renowned compliance specialist, also views the initiative positively but expresses concerns about the increased pressure on organizations to ensure compliance.

Despite this, both experts agree that the program is a step in the right direction towards promoting transparency, accountability, and ethical corporate behavior.

Highlights Include:

1. DAG Monaco Speech (DOJ Release)

2. Nicole M. Argentieri Speech (DOJ Release)

3. CTA struck down (WSJ)

4. Leadership Lessons from Robert Oppenheimer (WSJ)

5. State governments move to regulate AI (NYU)

6. The Percentage Of Corporate DOJ And SEC FCPA Enforcement Actions That Result From A Voluntary Disclosure (FCPA Professor)

7. Husband Who Eavesdropped on Wife’s Work Calls Pleads Guilty to Insider Trading (WSJ)

8. SEC Adopts Climate Disclosure Rule (Radical Compliance)

9. Is It Ever OK to Have an 8 a.m. Meeting? (WSJ)

10. The Florida Man Games (NYTimes)

Resources:

Kristy Grant-Hart on LinkedIn

Spark Consulting

Tom

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The Gunvor FCPA Enforcement Action: Part 2 – The Bribery Schemes

We continue our exploration of the resolution of the FCPA enforcement action involving the Swiss trading firm Gunvor S.A. The enforcement action came in with a $661 million penalty against the company, which has pleaded guilty to bribing Ecuadorian government officials through the 2010s in exchange for intelligence about upcoming business contracts with the state-owned oil company of Ecuador. The matter was resolved via a Plea Agreement. Information detailing the company’s conduct was also issued.

The Gunvor bribery schemes ran for nearly 8 years. Between 2012 and 2020, Gunvor paid more than $97 million to intermediaries, knowing that some money was used to bribe Ecuadorean officials. Those officials included Nilsen Arias Sandoval, a then-high-ranking official at Petroecuador. To show the blatantness of the bribery scheme, Gunvor managers and agents attended meetings in the United States and elsewhere, and bribe payments were routed through banks in the United States using shell companies in Panama and the British Virgin Islands controlled by Gunvor’s co-conspirators. According to the DOJ, a Gunvor employee also directed one of the intermediaries to use the money to purchase an 18-karat gold Patek Philippe watch.

According to the Plea Agreement, the Brothers Ycaza, Antonio Pere, and  Enrique Pere were agents for Gunvor who exercised control over companies and bank accounts in the United States and elsewhere. These accounts were used to facilitate the payment of bribes to Ecuadorian government officials to, among other things, obtain and retain business for Gunvor.

Gunvor paid over $97 million to the Brothers Ycaza via their companies, EIC and OIC. Several Gunvor employees, including Kohut, Gunvor Manager #1, and Gunvor Manager #2, knew and intended that some payments would be used to bribe Ecuadorian officials. After that, the Brothers Ycaza made millions of dollars in bribe payments on Gunvor’s behalf, directly and indirectly, to Ecuadorian officials identified by number in the Plea Agreement.

To do so, the Brothers Ycaza set up shell companies to launder Gunvor’s corrupt payments, entered into several service agreements to facilitate the payment of bribes, created fake invoices for purported consulting services, and used email accounts with pseudonyms to transfer funds to offshore shell companies involved in the conspiracy. The illegal payments were made through multiple bank accounts in the United States and abroad to conceal the bribes.

Gunvor Singapore made the corruption payments through a services agreement with the Brothers Ycaza and their company through EIC, which enabled the payment of bribes to Ecuadorian officials on Gunvor’s behalf. The agreement provided for certain prepayments and success fees, but the bulk of the compensation was through per-barrel “volume fee” payments to EIC that depended on the amount of oil purchased in connection with the oil-backed loan contract. Gunvor and EIC amended the services agreement several times to change, among other things, the amount of the volume fees due to be paid to EIC. The Brothers Ycaza used portions of the volume fees to pay bribes to Ecuadorian officials on Gunvor’s behalf. The volume fee compensation model for the Brothers Ycaza was increased multiple times to increase both their compensation and the amount of bribes being paid on behalf of Gunvor over the length of the bribery scheme.

In exchange for the bribes, Ecuadorian officials provided improper advantages to Gunvor, including (a) helping to direct Petroecuador to award contracts to State-Owned Entities for the ultimate benefit of Gunvor and (b) providing Gunvor, through certain of its employees and agents, information about Petroecuador that assisted Gunvor in corruptly obtaining and retaining business for Gunvor in connection with Petroecuador. This structure allowed Gunvor and its co-conspirators to avoid a competitive bidding process and obtain contractual terms they could not have otherwise. Gunvor also received confidential Petroecuador information in exchange for the bribes. Gunvor earned more than $384 million in profits from the contracts it obtained corruptly from Petroecuador.

In 2017, when the corrupt Petroecuador official Arias left the company, the Brothers Ycaza engaged other corrupt Petroecuador officials through cash bribe payments. This new scheme included effecting bribe payments on Gunvor’s behalf in exchange for confidential Petroecuador information about shipping windows. To facilitate this scheme phase, Gunvor continued to pay fees to the Brothers Ycaza through another company, OIC, on each barrel of oil products purchased in connection with their oil-backed loan contracts with Petroecuador. As in the prior phase of the scheme, Gunvor employee Kohut continued to coordinate the processing and payment of the invoices by Gunvor. Upon receiving funds from Gunvor, the Brothers Ycaza wired money to intermediaries based in Ecuador, who then arranged for the bribes to be delivered in cash to Ecuadorian officials within Petroecuador, who provided confidential Petroecuador information to Gunvor.

Gunvor employees and officers participating in the bribery scheme worked to conceal their illegal actions. One Gunvor Manager instructed Kohut to communicate using personal email accounts. The Brothers Ycaza also used personal or pseudonymous email accounts to speak about the scheme. Alias were often used rather than their actual names.

Interestingly, and perhaps equally troublingly, Gunvor executives and compliance personnel knew that Gunvor had paid the Brothers Ycaza tens of millions of dollars. This was without receiving other supporting documentation for EIC’s or OIC’s business activities on Gunvor’s behalf. Between May 2018 and May 2020, Gunvor executives and compliance personnel requested the Brothers Ycaza (i) for supporting documentation to justify the commission payments and (ii) to meet with executives and compliance personnel. The Brothers Ycaza repeatedly failed to respond entirely to Gunvor’s documentary requests and would not travel to Gunvor’s headquarters for the requested meeting. Finally, the Plea Agreement dryly noted, “Notwithstanding these repeated failures, Gunvor continued to make corrupt payments to entities owned and controlled by Antonio Pere and Enrique Pere until approximately January 2020, at which time Gunvor suspended payments to OIC.”

It is unclear from any resolution documents or the DOJ Press Release how the bribery scheme was uncovered or even ended. It may have been through a DOJ investigation into one of the other corrupt companies that came to grief working in Ecuador or with Petroecuador. It is clear that Gunvor did not self-disclose.

Join us tomorrow, and we will consider Gunvor’s steps after the DOJ knocks.

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Compliance Into the Weeds

Compliance into The Weeds: Monaco on DOJ Whistleblower Initiative and AI

The award-winning Compliance into the Weeds is the only weekly podcast that takes a deep dive into a compliance-related topic, literally going into the weeds to more fully explore a subject. Looking for some hard-hitting insights on compliance? Look no further than Compliance into the Weeds! In this episode, Tom and Matt take a deep dive into a recent speech by Deputy Attorney General Lisa Monaco on the DOJ’s creation of a whistleblower program and compliance oversight of AI.

The Department of Justice Whistleblower Awards Program is a recent development that has prompted considerable discussion due to its possible implications and the potential range of awards. The program, which is designed to protect whistleblowers, raises a number of complex issues, particularly for compliance officers. According to Tom, the program is aligned with those from other regulatory bodies, like the SEC, and is not necessarily groundbreaking. He points out potential limitations in the range of awards and questions the efficiency of the review process.

Matt views the program as a significant, yet familiar, development for compliance officers. He highlights that the program seems to follow an existing trend, rather than pioneering a new approach and points out the need for further clarification on the eligibility criteria and the procedure for issuing awards. Both Fox and Kelly, from their extensive experience in the field, emphasize the program’s potential benefits for whistleblowers seeking protection but concur that there are still many details to be clarified.

Key Highlights:

  • Navigating DOJ Whistleblower Program: Award Dynamics
  • Navigating Compliance in DOJ’s Whistleblower Program
  • Enhancing Criminal Penalties for AI-based Crimes
  • Enforcement Challenges in AI Technology Governance

Resources:

Matt on Radical Compliance

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Compliance Week Conference Podcast

Compliance Week 2024 Speaker Preview Podcasts – Michael Koenig on Lessons Learned from JBS

In this episode of the Compliance Week 2024 Speaker Preview Podcasts series, Michael Koenig discusses his presentation at Compliance Week 2024, “Rebuilding The Compliance Department Post-DOJ and SEC Settlements – Lessons Learned from JBS.” Some of the issues he will discuss in this podcast and his presentation are:

  • What happens in the first 6 weeks?
  • Dealing with the DOJ and SEC after post-resolution
  • Learning about new best practices and seeing acquaintances at Compliance Week 2024

I hope you can join me at Compliance Week 2024. This year’s event will be held April 2-4 at the Westin Washington, DC, Downtown. The line-up is first-rate, with some top ethics and compliance practitioners around.

Gain insights and make connections at the industry’s premier cross-industry national compliance event, offering knowledge-packed, accredited sessions and take-home advice from the most influential leaders in the compliance community. Back for its 19th year, join 500+ compliance, ethics, legal, and audit professionals who gather to benchmark best practices and gain the latest tactics and strategies to enhance their compliance programs. Compliance, ethics, legal, and audit professionals will gather safely face-to-face to benchmark best practices and gain the latest tactics and strategies to enhance their compliance programs, among many others, to:

  • Network with your peers, including C-suite executives, legal professionals, HR leaders, and ethics and compliance visionaries.
  • Hear from 80+ respected cross-industry practitioners, including CEOs, CCOs, regulators, federal officials, and practitioners, to help inform and shape the strategic direction of your enterprise risk management program.
  • Hear directly from panels on leadership, fraud detection, confronting regulatory change, abiding by cross-border rules and regulations, and the always-favorite fireside chats.
  • Bring actionable takeaways from various session types, including cyber, AI, Compliance, Board obligations, data-driven compliance, and many others, to your program for you to listen, learn, and share.
  • Compliance Week aims to arm you with information, strategy, and tactics to transform your organization and career by connecting ethics to business performance through process augmentation and data visualization.

I hope you can join me at the event. For information on the event, click here. As an extra benefit to listeners of this podcast, Compliance Week is offering a $200 discount on the registration price. Enter the discount code TFOX2024 for $200 off.

The Compliance Podcast Network produces the Compliance Week 2024 Preview Podcast series. Compliance Week sponsors this series.

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Blog

Ten Top Lessons from Recent FCPA Settlements – Lesson No. 10, Getting to Self-Disclosure: Speak Up, Triage and Internal Investigation

Over this series, I have reviewed the messages communicated by the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) from three key Foreign Corrupt Practices Act (FCPA) enforcement actions regarding their priorities in investigations, what they want to see in remediations, and what they consider best practices compliance programs. These enforcement actions warrant a close study of the lessons learned. They should guide not simply your actions should you find yourself in an investigation but also how you should think about priorities. One thing is abundantly clear: It all begins with self-disclosure.

The three FCPA enforcement actions we have reviewed are ABB from December 2022, Albemarle from November 2023, and SAP from January 2024. I added a fourth, the Gunvor S.A. enforcement action, as a discussion point, as it was released while I was writing this series. I have also cited several speeches by DOJ officials, including those from Deputy Attorney General Lisa Monaco and Assistant Attorney General Kenneth Polite. They pointed out a clear path for the company, which finds itself in an investigation, using extensive remediation to avoid monitoring. They provided insight for the compliance professional into what the DOJ expects in a best practices compliance program on an ongoing basis.

Late last week, there were two speeches at the ABA White Collar Conference: one by DAG Lisa Monaco and a second by Acting Assistant Attorney General Nicole M. Argentieri, which re-emphasized the points I have articulated. Today, I want to use their speeches to add another factor to my Top Ten Lessons List: a Speak Up Culture, effective triage, and quick, efficient, and accurate internal investigation when information is brought forward.

DAG Monaco could not have been clearer when she said, “When a business discovers that its employees broke the law, the company is far better off reporting the violation than waiting for DOJ to discover it. Now, when the DOJ does discover the violation, the company can still reduce its exposure by proactively cooperating in our investigation. But I want to be clear: no matter how good a company’s cooperation, a resolution will always be more favourable with voluntary self-disclosure.” [emphasis supplied]

DAG Monaco noted that the DOJ has structured its “Voluntary Self Disclosure (VSD) programs to encourage companies to take responsibility for misconduct within their organizations. And we’ve conditioned benefits on the company’s willingness to step up and own up — requiring it to disgorge profits, upgrade compliance systems, and cooperate in investigations of culpable employees…We want to empower them to make the business case for investing in compliance. And when they do, they can point to our policies. Early reports on this work are promising. We directed all components and U.S. Attorneys to implement self-disclosure programs.”

The benefits of the VSD come from this self-disclosure. The DOJ’s announcement that it was launching a whistleblower program for payments to people who come forward with information about criminal activity emphasised this idea even more. While the SEC, CFTC, IRS, and other agencies have whistleblower reward programs, this is a powerful message from the DOJ that if your company has an issue, it is far better to self-disclose than investigate, remediate, and hope the DOJ (or any other agency) never finds out about the matter. Put another way, Argentieri spoke about “the benefits that await those that voluntarily disclose misconduct.”

All of this means you must be able to intake, evaluate, and investigate the information.

Culture of Speak Up

Your organization must have an effective and efficient means of allowing employees to raise their hands and speak up. That speak-up can be through an anonymous hotline, by going into their supervisor’s office to report something, or by coming to the compliance function. Or it could be another avenue of reporting. The point is that every company must be ready, willing, and able to hear and act on internal reports of wrongdoing.

Triage

Given the number of ways that information about violations or potential violations can be communicated to government regulators, having a robust triage system is a critical way to separate the wheat from the chaff and bring the correct number of resources to bear on a compliance problem. One important area is determining whether to bring in outside counsel to head up an investigation and the resources you may want or need to commit to a problem. You need to “kick the tyres” of any allegations or information so that you know the circumstances in front of you before you make decisions. You can achieve this through a robust triage process.

Internal Investigations

You can decide whether or not to investigate by consulting with other groups, such as the Compliance Committee of the Board of Directors or the Legal Department. The head of the business unit in which the claim arose may also be notified that an allegation has been made and that the Compliance Department will be handling the matter on a go-forward basis. Using a detailed written procedure, you can ensure complete transparency on all parties’ rights and obligations once an allegation is made. This gives compliance the flexibility and responsibility to deal with such matters, from which it can best assess and decide how to manage them.

We concluded this series where we began with the need for or benefits of self-disclosure. The benefits laid out by the DOJ are clear, tangible, and direct. If you self-disclose, provide extraordinary cooperation, extensively remediate, and disgorge any ill-gotten gains through profit disgorgement, there will be a presumption of declination. Even if you do not meet the self-disclosure threshold, you can still garner significant discounts under the DOJ’s Corporate Enforcement Policy through extraordinary cooperation and extensive remediation.

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Daily Compliance News

Daily Compliance News: March 12, 2024 – The Lessons From Oppenheimer Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee and listen to the Daily Compliance News.

All from the Compliance Podcast Network. Each day, we consider four stories from the business world: compliance, ethics, risk management, leadership, or general interest for the compliance professional.

In today’s edition of Daily Compliance News:

  • Leadership lessons from Robert Oppenheimer.   (WSJ)
  • Senator Menendez pleads not guilty. (Reuters)
  • French prosecutors are looking into corruption allegations at Altice.  (FT)
  • How Trump’s derailed a DOJ investigation for a friend.  (NYT)

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