Tag: Monaco Speech

Categories
FCPA Compliance Report

James Koukios on the Monaco Speech

In this episode of the FCPA Compliance Report, I am joined by fan favorite James Koukios, partner at Morrison and Foerster. In this episode we take a deep dive into the Lisa Monaco speech from October and related remarks from other DOJ representatives about the DOJ refocus on white collar enforcement and related issues. Highlights of this podcast include:

·       Who is the DAG and what does that position entail?

·       Reinstatement of Yates Memo.

·       Does this change an investigation focus?

·       The new focus on culture and how do you assess corporate culture?

·       What about reports of all violations, enforcements and even investigations even is outside FCPA?

·       What are the implications of this change?

·       How will all this work with current FCPA Corporate Enforcement Policy?

·       The revocation of Benczkowski Memo. What are the implications?

·       The new focus on monitorships?

·       What about recidivists or those who fail to meet the obligations of their DPA/NPA?

Resources

James Koukios on the MoFo website.

Categories
This Week in FCPA

Episode 288– the 13 Second edition

How long does it take to win a NFL playoff game? Patrick Mahomes says 13 seconds. After perhaps the most thrilling NFL playoff game ever,  Tom and Jay are back look at some of the week’s top compliance and ethics stories this week in the 13 Seconds edition.

Stories

1.     TI-CPI 2022 Report out. Results not good. TI-CPI Press Release. Rick Messick says make it useful in GAB. Jaclyn Jaeger is disheartened in Compliance Week (sub req’d).
2.     Compliance officer burnout? Dick Cassin explores in the FCPA Blog.
3.     Emphasizing the ‘G’ in ESG. David Simon in LinkedIn.
4.     Investor demand driving ESG risk and compliance initiatives? Valerie Charles and Tracy Groves in CCI.
5.     Human Rights Due Diligence. James Reardon and Tomas Navarro look at Switzerland’s new law  in FCPA Blog. Tom considers your corporate Human Rights strategy in a 2-part blog series in the FCPA Compliance and Ethics Blog.
6.     Monaco Speech and Compliance in 2022. Stephanie Yonekura and Rupinder Garcha  in CCI.
7.     DOJ announces shift in antitrust policy. DOJ Press Release. Matt Kelly in Radical Compliance.
8.     ESG and M&A in 2022. Wachtel lawyers in Harvard Law School forum on Corporate Governance.
9.     FTC compliance risk re: cyber and privacy. Debevoise lawyers in Compliance and Enforcement.
10.  Cultural and ESG to-do list for 2022 for CCO. Mike Volkov in Corruption Crime and Compliance.

Podcasts and More

11.  In January on The Compliance Life, I visited with Valerie Charles, partner at StoneTurn. Val has one of the most interesting journeys in compliance. In Part 1, she discussed her academic background and early professional career. In Part 2, she discussed her move to ComTech. In Part 3, Valerie moved into the consulting world. In the concluding Part 4, Valerie looks down the road for what’s ahead.
12.  The Everything Compliance gang took a deep dive into the Microsoft acquisition of Activision Blizzard in a special episode.  Check out the Shout Outs and Rants. Finally the gang had a special tribute to Meatloaf here.
13.  CCI releases new e-book from Tom “FCPA 2021 Year in Review”. Available free from CCI.
14.  Trial of the Century-the Enron Trial. This week, Tom premiered a 5-part podcast series on the Enron Trial with Loren Steffy, who covered the trial for the Houston Chronicle. In Part 1, run up to the trial. In Part 2, the trial begins. In Part 3, the star witnesses and key testimony. In Part 4, the Verdict comes in. In Part 5, what did it all mean. It is be available on the Compliance Podcast Network, Megaphone, iTunes, Spotify and all other top podcast platforms.
15.  Check out 31 Days to a More Effective Compliance Program returns, which runs for the month of January, from January 1 to January 31. Available on the Compliance Podcast Network, Megaphone, iTunes, and all other top podcast platforms.
Tom Fox is the Voice of Compliance and can be reached at tfox@tfoxlaw.com. Jay Rosen is Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com.

Categories
Blog

Introducing the January 2022 Podcast Series – 31 Days to a More Effective Compliance Program

I have always striven to provide my readers and listeners with the most up-to-date information on what goes into a best practices compliance program. To that end, beginning January 1, and for the next 31 days, I will be exploring the best way to more fully operationalize a compliance program using these resources. The podcast series will provide the compliance practitioner with a thorough grounding in the key aspects of a best practices compliance program based on the latest information from the regulators. Each day I will highlight a new topic based upon the information we learned on compliance programs in 2021. If you are starting out to design, create and implement a best practices compliance program, this series will give you the basics. If you are looking for the most current thinking on how to enhance your compliance program, this series will also benefit you as well.
I hope you will join me as we engage in 31 days to a more effective compliance program. It will be available on the FCPA Compliance Report, iTunes, YouTube and JDSupra.

Categories
Blog

Not Your Father’s Monitor – Vin DiCianni on Monitorships in 2022

In October, Deputy Attorney General (DAG) Lisa O. Monaco gave a Keynote Address at ABA’s 36th National Institute on White Collar Crime (Monaco Speech). Her remarks reframed a discussion about the uses of, reasons for and perceptions on independent monitors and monitorships. I asked Affiliated Monitors Inc. (AMI) founder Vin DiCianni for his thoughts around the remarks on monitors. He said, “For Affiliated Monitors this refreshed approach by DAG Monaco highlights the seriousness which businesses must place on the investment in their programs and in addressing what has for some been a negative experience with a monitor. For those who might be the subject of a monitorship, DAG Monaco recognized that the negativity that has sometimes surrounded monitorships as being punitive, should be seen in a different light bringing value, pointing a way forward and as a solution which has had great success in resolving matters.”
Monaco’s remarks should be studied by every compliance professional as they portend a very large change in the way the Department of Justice (DOJ) will utilize monitors going forward. Over this podcast series, sponsored by AMI, we have considered why DAG Monaco’s remarks herald a new era for monitorships from a variety of perspectives. Bethany Hengsbach discussed this change in monitorships from the white-collar enforcement and defense perspective. Mikhail Reider-Gordon looked at global aspects of the new DOJ monitor’s focus. Cristina Revelo discussed how ethics and compliance (E&C) assessments help drive more compliant companies. Jesse Caplan, Managing Director of Corporate Oversight, brought his views on the twin topics of antitrust and healthcare compliance. We conclude the series in Part 5, with AMI founder Vin DiCianni who takes a look down the road where monitorships are going in 2022 and beyond.
DiCianni heard a couple of different things in the Monaco Speech as they related to monitors. First, monitoring now has been around for quite some time. The DOJ used it historically with much greater frequency under prior administrations. DiCianni believes, “It works, so why not go back to a sanction that can help companies improve? And when you think about it, that’s what a monitorship is. It’s allowing the entity to stay in business, you know, to remain viable through, an independent monitor.” The Monaco Speech simply recognized the use of monitorships is a very good tool for DOJ to use.
Second, the Monaco Speech recognized companies are “perhaps becoming a little bit more lax about compliance, notwithstanding the DOJ guidance that has come out over the years.” DiCianni believes the Monaco Speech reinvigorated the point that companies need to go back and look at their compliance programs. Yet the reality is that it is sometimes hard for a company to make that type of dispassionate analysis. An independent monitor can assist in that process by looking at, for instance, your E&C program and controls around compliance.
Another key insight from the Monaco Speech was that going forward monitors would not be viewed as punitive, and they would not act as prosecutors. Here DiCianni noted, “I think the evolution of monitoring, and it’s an evolution and it’s continuing to evolve, has included consideration that the monitor is not simply an arm of the government.” He believes that the government saying to the monitor, “be a mentor, tell them how to fix them. You’ve seen it, compare it to other companies.” Once the settlement agreement is in place, “the whole notion is let’s fix this. I think that that’s crucial to this whole notion of how monitorships have evolved, because it’s no longer just, you know, a check the box. Are they doing this, doing that now it’s make recommendations on improvement and let’s see if the company make those changes.”
We considered the types of monitors and the types of skills a monitorship needs. It all begins with the settlement agreement, whether it is a Deferred Prosecution Agreement (DPA) or other form of resolution. A monitor must have the necessary skills to be able to look at things like business development, so they can understand how a company is going after business? Another growing area is in data analytics, as sometimes the monitorship is driven by data. This could require the monitor to have a data analytics team that can analyze test and look at data in various ways. Sometimes you do need forensic accounting. Sometimes you need an expert in healthcare when the monitorship is dealing with issues such as coding and billing. The AMI approach is to “shape each monitorship to make sure that we have a team that has the various perspectives, what would the government be looking for, but equally importantly how can this be helpful to the entity? Those are the most successful monitorships that we have engaged in. I think that having that broader perspective as you approach a monitorship is crucial.”
I concluded by asking DiCianni where he saw monitors going down the road. DiCianni believes that the use of monitors will increase, in many different areas such as different non-governmental groups and agencies, federal government agencies, state, and municipal agencies. For instance, AMI works with attorney inspector generals, the World Bank and other organizations. They will continue to be used as a tool, as more agencies that have never used them before are starting to recognize the benefits of them. He stated, “I think monitorships are going to continue to grow. The fear that I have is the bad monitoring, where the monitor that does not understand what they are doing and does not know what type of issues to look at or the kinds of things that they should be looking at. This will give everybody a bad name in terms of monitoring.” He concluded, “if you’re going to put a monitor in place to make sure that the selection of the monitor is appropriate. But I think it’s going to be a growing opportunity for both regulators and businesses.”
Affiliated Monitors
Vin DiCianni

Categories
Blog

Not Your Father’s Monitor – Jesse Caplan on Antitrust and Healthcare Compliance

In October, Deputy Attorney General (DAG) Lisa O. Monaco gave a Keynote Address at ABA’s 36th National Institute on White Collar Crime (Monaco Speech). Her remarks reframed a discussion about the uses of, reasons for and perceptions on independent monitors and monitorships. I asked Affiliated Monitors Inc. (AMI) founder Vin DiCianni for his thoughts around the remarks on monitors. He said, “For Affiliated Monitors this refreshed approach by DAG Monaco highlights the seriousness which businesses must place on the investment in their programs and in addressing what has for some been a negative experience with a monitor. For those who might be the subject of a monitorship, DAG Monaco recognized that the negativity that has sometimes surrounded monitorships as being punitive, should be seen in a different light bringing value, pointing a way forward and as a solution which has had great success in resolving matters.”
Monaco’s remarks should be studied by every compliance professional as they portend a very large change in the way the Department of Justice (DOJ) will utilize monitors going forward. Over this podcast series, sponsored by AMI, we will consider why DAG Monaco’s remarks herald a new era for monitorships. We will consider Monaco’s remarks from a variety of perspectives. Bethany Hengsbach discussed this change in monitorships from the white-collar enforcement and defense perspective. Mikhail Reider-Gordon looked at global aspects of the new DOJ monitor’s focus. Cristina Revelo discussed how ethics and compliance (E&C) assessments help drive more compliant companies. We will conclude the series with Vin DiCianni who will look at where monitorships are going in 2022 and beyond. In Part 4, Jesse Caplan, Managing Director of Corporate Oversight, brings his views on the twin topics of antitrust and healthcare compliance.
Both antitrust and healthcare have significant needs for monitorships. Antitrust concerns raised by the government can be handled through a monitorship of specific issues so that a merger can often go through and satisfy the regulators. This is a prime example of the DOJ or Federal Trade Commission (FTC) extending their reach so that anti-competitive issues do not arise or are properly remediated. Healthcare regulators are most interested in the continued delivery of healthcare services, particularly on the state and local level. It is not in anyone’s interest to stop the delivery of healthcare services which puts a hospital, healthcare practice group or doctor out of business, absent grievous circumstances. By using a monitor, a state regulator can help assure an appropriate level of compliance from a healthcare provider.
There were three key components from the Monaco Speech around monitors. Number one, that monitors are not viewed by the DOJ as punitive and should not be viewed as such by the compliance community or wider corporate community. Here Caplan observed, it is not the job of a monitor “to be punitive, but rather to facilitate a successful compliance program and a successful settlement agreement, works with both the government and for the company.” Number two is a monitor can act as an early tripwire to prevent companies from sliding into a recidivous situation. Number three, monitors bring a level of skill and talent around compliance programs and corporate culture that can help companies create a best practices program so the monitor actually works with the companies under an enforcement action to help them create a program that will be sustainable far down the road. Caplan said, a monitor can bring an “appreciation for what government enforcers are looking for, what the goals of government regulators are, as well as some of the challenges and goals of companies, who want to be successful and to do so in a compliant and fair manner.”
We then turned to the evolution of thinking of state regulators around monitors. Caplan noted, “some of these state Attorney General’s (AG) offices have realized for a long-time monitors can really be a resource extend for government agencies and particularly enforcement agencies.” He pointed to the example of the “Massachusetts Attorney General’s office, particularly with their Medicaid fraud control.” He went on to say, “more and more state AGs are using monitors when they enter in settlement agreement with conditions.” Using an independent allows an extension of their resources, to “verify that the company is compliant with those settlement conditions.”
Perhaps most powerfully, independent monitors can be seen as “an honest broker, bridging between the company and the regulator. Moreover, monitors can actually facilitate, a successful transition and then termination of a monitorship.” Caplan said, “we can do that because we can have candid conversations with both the company and then separately with the government, so that we can better understand where there might be disconnect between the two, and then we can help connect compliance up so that there’s not misunderstandings. There may be different expectations that end up sometimes torpedoing a settlement agreement and by having those conversations, by serving as that bridge, we can help prevent problems address so that ultimately the monitorship is successful.”
Affiliated Monitors
Jesse Caplan

Categories
Blog

Not Your Father’s Monitor – Cristina Revelo, Using Assessments to Drive Compliance

In October, Deputy Attorney General (DAG) Lisa O. Monaco gave a Keynote Address at ABA’s 36th National Institute on White Collar Crime (Monaco Speech). Her remarks reframed a discussion about the uses of, reasons for and perceptions on independent monitors and monitorships. I asked Affiliated Monitors Inc. (AMI) founder Vin DiCianni for his thoughts around the remarks on monitors. He said, “For Affiliated Monitors this refreshed approach by DAG Monaco highlights the seriousness which businesses must place on the investment in their programs and in addressing what has for some been a negative experience with a monitor. For those who might be the subject of a monitorship, DAG Monaco recognized that the negativity that has sometimes surrounded monitorships as being punitive, should be seen in a different light bringing value, pointing a way forward and as a solution which has had great success in resolving matters.”
Monaco’s remarks should be studied by every compliance professional as they portend a very large change in the way the Department of Justice (DOJ) will utilize monitors going forward. Over this podcast series, sponsored by AMI, we will consider why DAG Monaco’s remarks herald a new era for monitorships. We will consider Monaco’s remarks from a variety of perspectives. Bethany Hengsbach will consider this change in monitorships from the white-collar enforcement and defense perspective. Mikhail Reider-Gordon will look at global aspects of the new DOJ monitor’s focus. Jesse Caplan brings his views on the twin topics of antitrust and healthcare compliance. We will conclude the series with Vin DiCianni who will look at where monitorships are going in 2022 and beyond. In Part 3, Cristina Revelo, Deputy Director, Corporate Monitoring and Compliance Services at AMI, discusses how ethics and compliance (E&C) assessments help drive more compliant companies.
Revelo has a different professional background than many compliance professionals, having earned both her Master of Science and Bachelor of Science in Accountancy. We began by exploring why a proactive monitorship can be such a valuable tool in a best practices compliance program. With this an independent monitor can help companies review their ethics and compliance programs. AMI’s vast experience in monitorships under different regulators and requirements gives them insights into what the regulators are looking for in this type of project. With this knowledge from prior monitorships AMI can facilitate a very practical assessment. It can highlight to a company what are some gaps within, for example, their anti-corruption program, ethics program, internal controls, or for their entire E&C program.
This type of approach allows AMI to provide recommendations based on what we think the regulars might be looking for. Revelo noted, “These are great because it helps companies get ahead of potential regulators coming, knocking on their door.” It also allows a company to demonstrate they have been proactively working on their E&C program and that they are seeking to close those gaps and enhance their programs.
We then turned to Revelo’s academic and professional background which gives a different perspective from a legally trained compliance professional. As more individuals with different backgrounds, especially with the auditing and forensic background, Revelo feels it really does help in these proactive assessments because she’s looking to “follow the gaps, follow the issues,  use the five whys, digging a little bit deeper as opposed to potentially just checking that there is a law and that we have complied with the law.” A forensic type will inevitably dig a little bit deeper to understand a company’s internal controls, how they implement their controls, whether those internal controls are manual or automated, where there could be a failure, essentially to walk through the entire process.
Revelo emphasized, “conducting a walkthrough of your entire internal controls process, sitting with different individuals, having interviews, really understanding, whoever is implementing that process. This allows you to really pick apart and identify the different failures that could come up throughout the different controls in the process.” It is really looking at things through a different lens. From there you can move to enhance or remediate as needed. These are the types of skills and analysis an accountant or forensic auditor could bring to a proactive E&C assessment.
Turning to a more commercial reason for proactive assessments, Revelo concluded with an observation about culture. In the ever-increasing race for talent acquisition and talent retention, culture has become one of the most critical factors for millennials as they make up most of the workforce now and will be above 50% of the workforce in a few years. Millennials want to have pride in a place they work, they want to be happy, and money is not the driving factors in their equation. Revelo noted, “they want to work for companies that are ethical, that are socially responsible, that are behind the right things that they care about.” As these areas fall directly within the area of E&C, Revelo said, “I think it’s really important for companies in order to attract the right talent and retain that talent because sometimes also you see millennials moving jobs very often. Those employees a company might want to retain are going to care about what you are behind, how ethical you are, how you treat your employees, and all of this has to do with a company culture and the ethical culture.”
Affiliated Monitors
Cristina Revelo

Categories
Blog

Not Your Father’s Monitor – Mikhail Reider-Gordon on Global Aspects of New DOJ Monitor’s Focus

In October, Deputy Attorney General (DAG) Lisa O. Monaco gave a Keynote Address at ABA’s 36th National Institute on White Collar Crime (Monaco Speech). Her remarks reframed a discussion about the uses of, reasons for and perceptions on independent monitors and monitorships. I asked Affiliated Monitors Inc. (AMI) founder Vin DiCianni for his thoughts around the remarks on monitors. He said, “For Affiliated Monitors this refreshed approach by DAG Monaco highlights the seriousness which businesses must place on the investment in their programs and in addressing what has for some been a negative experience with a monitor. For those who might be the subject of a monitorship, DAG Monaco recognized that the negativity that has sometimes surrounded monitorships as being punitive, should be seen in a different light bringing value, pointing a way forward and as a solution which has had great success in resolving matters.”
Monaco’s remarks should be studied by every compliance professional as they portend a very large change in the way the Department of Justice (DOJ) will utilize monitors going forward. Over this podcast series, sponsored by AMI, we will consider why DAG Monaco’s remarks herald a new era for monitorships. We will consider Monaco’s remarks from a variety of perspectives. Bethany Hengsbach will consider this change in monitorships from the white-collar enforcement and defense perspective. Mikhail Reider-Gordon will look at global aspects of the new DOJ monitor’s focus. Cristina Revelo will discuss how ethics and compliance (E&C) assessments help drive more compliant companies. Jesse Caplan brings his views on the twin topics of antitrust and healthcare compliance. We will conclude the series with Vin DiCianni who will look at where monitorships are going in 2022 and beyond. In Part 2, Mikhail Reider-Gordon, Managing Director of Institutional Ethics & Integrity, will look at global aspects of the new DOJ monitor’s focus.
Mikhail said the change in DOJ focus and orientation actually started in late 2020 when then Acting Assistant Attorney General Brian Rabbit said in a speech, “notably many of DOJ, corporate resolutions in 2020 included coordination with one or more foreign enforcement authorities and increasingly important aspect of DOJ his work.” Mikhail believes that since that time, it is reasonable to conclude that US regulators have progressively coordinated with foreign enforcement authorities to resolve multi-jurisdictional corruption and money laundering cases and other white-collar crimes. She added, “I would even say the cross jurisdictional approach has really gained traction in 2021.”
Next, she pointed to a recent interview of John Carlin in the Financial Times. In this article, Carlin drew particular attention to two types of companies. The first, those entities which violated their Deferred Prosecution Agreements (DPAs) or other settlement agreements and the second are those companies failing to invest in compliance systems that are now in all practicality a mandatory business and legal practice. Taking Carlin’s FT interview, Rabbit’s 2020 speech and the Monaco Speech and the renewed focus on corporate malfeasance US legislation recently passed or proposed, we see a DOJ which is fully focused on fighting the international scourge of corruption. Finally, if the Biden Administration announcement raising corruption to a national security concern.
Mikhail highlighted one key outcome from the Monaco Speech and related DOJ announcements. It is that companies can take proactive steps right now to address these DOJ concerns. She said that businesses “may want to take a hard look at their corporate compliance programs and assess just how robust and effective they truly are. If you are a corporation currently under a DPA and a monitor was not imposed, but you aren’t certain how well you’re meeting the terms of your settlement agreement really well. You know, now may be the time to seek out an independent assessment.”
We concluded by circling back to two words from the Monaco Speech, ‘independent’ and ‘integrity’. I asked Mikhail why she thought those two words were so significant. She said, “one thing that when we talk about independence is that it indicates that the monitor is a neutral, impartial evaluator. Whether it is a law firm or consultancy that offers a range of services, your firm cannot be thinking down the road, we can sell them more services. So, let’s handle them gently, lightly. Let’s not tell them the truth. We don’t want to offend them. We want them to hire us later for all this other work. You can’t have independence that way.” Your firm must be truly independent.
We then turned to the word ‘integrity’, which Mikhail observed “is at the core, all of compliance and ethics.” Unfortunately, we seemed to have moved away from this concept of integrity somewhat. Mikhail noted, “we don’t focus enough anymore on the philosophy that underpins the concept of integrity and ethics. You can have all the transparency in the world, but if you don’t have integrity what you do fails. The concept of independence and understanding we do this; this is the right thing to do that this is better for society. This is the spirit of the law. It is embracing integrity, it’s not compromising integrity, it’s not phoning it in if you will.”
Even the G20 is moving in this direction, dovetailing in concert with the Biden administration. In November, the G20 issued their anti-corruption action plan for 2022 through 2024. The G20 has made clear, now more than ever, the international fight against corruption requires increased international cooperation and renewed global commitment. Here Mikhail noted they are “really calling for a spirit of zero tolerance of corruption.”

Categories
Blog

Not Your Father’s Monitor – Bethany Hengsbach on White Collar Enforcement and Defense

In October, Deputy Attorney General (DAG) Lisa O. Monaco gave a Keynote Address at ABA’s 36th National Institute on White Collar Crime (Monaco Speech). Her remarks reframed a discussion about the uses of, reasons for and perceptions on independent monitors and monitorships. I asked Affiliated Monitors Inc. (AMI) founder Vin DiCianni for his thoughts around the remarks on monitors. He said, “For Affiliated Monitors this refreshed approach by DAG Monaco highlights the seriousness which businesses must place on the investment in their programs and in addressing what has for some been a negative experience with a monitor. For those who might be the subject of a monitorship, DAG Monaco recognized that the negativity that has sometimes surrounded monitorships as being punitive, should be seen in a different light bringing value, pointing a way forward and as a solution which has had great success in resolving matters.”
Monaco’s remarks should be studied by every compliance professional as they portend a very large change in the way the Department of Justice (DOJ) will utilize monitors going forward. Over this podcast series, sponsored by AMI, we will consider why DAG Monaco’s remarks herald a new era for monitorships. We will consider Monaco’s remarks from a variety of perspectives. Bethany Hengsbach will consider this change in monitorships from the white-collar enforcement and defense perspective. Mikhail Reider-Gordon will look at global aspects of the new DOJ monitor’s focus. Cristina Revelo will discuss how ethics and compliance (E&C) assessments help drive more compliant companies. Jesse Caplan brings his views on the twin topics of antitrust and healthcare compliance. We will conclude the series with Vin DiCianni who will look at where monitorships are going in 2022 and beyond. In Part 1, Bethany Hengsbach, Managing Director of Global Corporate Compliance, looks at the speech from the perspective of white-collar enforcement and defense.
Hengsbach was present for the Monaco Speech. She noted that while the remarks were a bit of a surprise because of their content and their timing, she did not believe they were a change in policy but “going back to the way things had been for a long time. And obviously, you know, she specifically rescinds certain guidance from the past specifically with respect to monitors” [Benczkowski Memo]. Moreover, the Monaco Speech emphasized the “non-punitive” nature of monitorships. The DOJ views the imposition of independent monitors as appropriate to do so in order to satisfy itself that a company is living up to its compliance and disclosure obligations under a settlement agreement. Hengsbach believes this is “a recognition of the role, that monitors play in fostering an environment of compliance, not just as a penalty, or even as a component of NDA or a DPA or a plea agreement, but really as a tool to incentivize compliant conduct on the front end.”
The Monaco Speech really drove home the message that monitorships do not have to be a negative experience. Here Hengsbach believes “it is incumbent upon the independent monitorship community understand that our role is not to play the ‘gotcha’. It’s to lend a helping hand to the company to say, this is the way forward. This is the way out of this difficult situation.” A monitorship can be used to build a stronger, more compliant company that has better relationships with regulators. Hengsbach added, “the change in policy is important but I think it’s incumbent also upon monitors themselves to really react to this, to this change in policy and ensure that monitors, are not viewed in a punitive way, because in many ways I think that was earned.”
Hengsbach concluded by considering the third component of the Monaco Speech, recidivism. Obviously, this is something the DOJ is very concerned about, both in the Foreign Corrupt Practices Act (FCPA) context as well as other white collar enforcement actions. A more proactive use of monitors can help keep the company from becoming a recidivist during the pendency of a Deferred Prosecution Agreement (DPA) or Non-Prosecution Agreement (NPA) or other form of settlement agreement through putting in a more robust compliance program to prevent and detect compliance violations. A monitorship also acts to expand the reach of the DOJ to also stop recidivist conduct.
The one other area I wanted to visit with Hengsbach about was related to DAG Monaco’s remarks about recidivism. If you draw a line back to monitorships, monitors can be used in yet another way, in addition to the non-punitive manner, in addition to extending the DOJs reach through the use of the tool of the monitorship, it could actually help to prevent future corruption, because we do have recidivous in the FCPA world, or we have it had in the past. How can the use of a monitorship keep a company from a coming of recidivists, from getting into more trouble, having additional financial penalties or other burdens put upon them as well?
Hengsbach has represented a recidivist corporation. She stated, “the issue of recidivism is real. I think that since then it has become unfortunately much more common. What we need to keep in mind here is what the Monaco Speech said about culture.” For it is through installing and maintaining a culture of compliance that you fix ongoing problems, particularly when it comes to corruption is to change the culture. Hengsbach believes this is a key reason why there are “repeat offenders in the FCPA world, because the fixes that are put in place are extremely narrow and geared at logistics or operations and not culture.”
What really drives compliance is real changes in culture. Hengsbach believes this is “an area in which monitors can be extremely useful. We have engagements now where we are exclusively focused on culture and companies, really smart companies, realize that cultural issues are the canary in the coal mine, oftentimes for real enforcement problems.” Hengsbach concluded, “this shift in policy to use monitors to prevent recidivism is fantastic. Especially when you take into account the impact that we as monitors can have on culture.”
For more from Bethany Hengsbach, check out her podcast here.