Tag: Tom Fox

Categories
The Corruption Files

Episode 11: Parker’s Offshore Oil Drilling with Tom Fox and Michael DeBernardis

There’s no such thing as low risk or no risk.

Crafting a web of bribery with a corrupt law firm, a Nigerian fixer, and Panalpina’s hand landed Parker Drilling in hot waters. Tune in as Tom Fox and Michael DeBernardis explore the facts of the Parker Drilling case, why overestimating risk is always for the better, how proper conduct impacts sentencing, and why having the right people can impact outcomes.

▶️ Parker’s Offshore Oil Drilling with Tom Fox and Michael DeBernardis

Key points discussed in the episode:

✔️ Tom Fox lays out the basics of the Parker bribery case.

✔️Michael DeBernardis explains the points on the Nigerian agent’s efforts, bribery for unfair business advantage, the lack of due diligence, and fake invoices.

✔️ Tom Fox points out Sarbanes-Oxley as the main driver of compliance, the power of internal controls, the blurry calculations of discounts on the final sentencing, and the impact of Dan Chapman.

✔️ Michael DeBernardis highlights how the FCPA system maintains sentencing consistency but still has room for tightening and the nuances of every bribery case.

✔️Tom Fox underscores the importance of good conduct for the credit and an unanswered question. Michael DeBernardis reaffirms why having the right people in place is beneficial.

✔️ Tom Fox and Michael DeBernardis leave their final thoughts on the case: Have a second set of eyes on dubious wire transfers. Rethink how risk analysis is done. Focus on what you’re doing every step of the way.

—————————————————————————-

Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.

Categories
Role of the Board of Compliance

Caremark

Tom Fox and Jonathan T. Marks kick off the series with a deep dive into the 1996 Caremark decision, the 2006 Stone v. Ritter resolution, and the compliance lessons companies and board members can learn from the facts and patterns of these fundamental cases.

▶️ Caremark with Tom Fox and Jonathan T. Marks

Key points discussed in the episode:

  1. Tom Fox gives a brief background on the Caremark case.
  2. Jonathan T. Marks describes how ethical behavior is the backbone of an organization and how this case defined the importance of having proper oversight monitoring.
  3. Tom Fox lays out Caremark’s penalties. He describes the Stone v. Ritter facts, how the bank was sued for failure to perform due diligence on fraudulent investors and violating the Bank Secrecy Act. These schemes follow a pattern that has been seen repeatedly. It has also defined the duties of board members: avoiding negligence and arising from failures.
  4. Jonathan T. Marks explains how fundamentals made their way into compliance laws in other countries, how guidelines are warning shots for companies to clean up, and urging companies to step up.
  5. The Caremark doctrine later refined two conditions for director liability and emphasized why boards must actively engage in oversight.
  6. Board members must get down to the nitty-gritty of what is truly happening in their organizations, ask tough questions, do a deeper self-assessment, and stop refusing to avoid problems and the ugly truth.

—————————————————————————-

Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.

Categories
The Corruption Files

Episode 10: The Goldman Sachs Corruption Case with Tom Fox and Michael DeBernardis

Risk is never static but dynamic.

The Goldman Sachs case has proven that playing with fire will always get you burned. Listen in as Tom Fox, and Michael DeBernardis dissect the rights and wrongs of the situation, why probing deeper into red flags is a must, the importance of setting off preventative controls right away, and why companies should publicly show their general policy statement.

▶️ The Goldman Sachs Corruption Case with Tom Fox and Michael DeBernardis

Key points discussed in the episode:

✔️ Tom Fox gives a brief background on the Goldman Sachs case.

✔️ Michael DeBernardis explains the successes and failures in compliance.

✔️ Tom Fox points out the suspicious timing of bond offerings, the significant risk involved, and why organizations should trust but verify, considering the visibility within the organizational structure.

✔️ Michael DeBernardis emphasizes why preventative controls like electronic surveillance should be implemented right away and how the Goldman Sachs case proves that improving your company structure is vital.

✔️ Tom Fox and Michael DeBernardis talk about the Monaco Memo and how the Goldman Sachs case perfectly applies the implementation of clawbacks.

✔️ Michael DeBernardis encourages companies to publish their general policy statement to prevent future problems.

—————————————————————————-

Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.

Categories
Role of the Board of Compliance

Introduction to the Role of the Board In Compliance

This is Tom Fox, The Compliance Evangelist.

I want to welcome you to a new special video podcast series I’m doing with my co-host, Jonathan T. Marks, from Baker Tilly.

In this podcast series, we’ll look at the changing and expanding obligations of the boards of directors of U.S. public companies around compliance, known as the Caremark Doctrine. We’ll discuss how and when it was created and what it means for the modern corporate board in 2022.

It will be a fascinating exploration of a series of law cases from Delaware, which has greatly changed the obligations of boards of directors and made them enter global parts of a corporate compliance program.

I hope you will join us and see how the requirements of Caremark have strengthened corporate compliance programs, made boards of directors more effective, and how all of this ties directly into modern ESG.

Thanks so much for listening.

Stay tuned and enjoy the Role of the Board in Compliance.

Categories
The Corruption Files

Episode 09: Odebrecht/Braskem with Tom Fox and Michael DeBernardis

Brazilian petroleum company Petrobras caught itself in an intricate bribery scheme involving top construction corporations like Odebrecht and Braskem and political parties. Tom Fox and Michael DeBernardis lay out the facts and share their insights on what lessons other companies can learn and practice to avoid similar compliance troubles.

▶️ Odebrecht/Braskem with Tom Fox and Michael DeBernardis

Key points discussed in the episode:

✔️Tom Fox gives a brief background on the Petrobras-Odebrecht-Braskem case.

✔️Michael DeBernardis clarifies more facts on the case, such as the bribery feedback loop and the increasing spending on litigation. Tom Fox adds that even if you “create bad law, it’s still a law.” It has also brought attention to compliance authorities and politicians in Brazil. More companies in other countries were also involved in the scheme.

✔️The bribery scheme was intricately designed to avoid compliance detection. Michael DeBernardis recommends ensuring maximum procurement controls. Petrobras employees benefited mostly in this case. This case has emphasized the importance of visibility in supply chains.

✔️Michael DeBernardis emphasizes the importance of having appropriate controls to mitigate supply chain risk despite being lower than other aspects of the business. It also exposed the massive scale of corruption.

✔️Michael DeBernardis and Tom Fox hit home their suggestions to companies: Do a deep risk analysis, get to know your joint venture partners, and any form of defense is helpful. Although the danger is not easy to detect up front, it can help lessen the risk. Also, you should not close the doors to working with businesses with a little bit of controversy.

—————————————————————————-

Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.

Categories
The Corruption Files

Episode 08: Banks Behaving Badly with Tom Fox and Michael DeBernardis

Tom Fox and Michael DeBernardis discuss the dubious bribery cases of financial institutions, specifically Deutsche Bank, Credit Suisse, and Societe Generale (SocGen), that utilized commission agents of significant political power. They also talk about why compliance committees should look closer into the backgrounds of company agents and how the Deutsche Bank kickstarted France’s fight against corruption.

▶️ Banks Behaving Badly with Tom Fox and Michael DeBernardis

Key points discussed in the episode:

(00:00:36) Michael DeBernardis gives a brief background on the Deutsche Bank case.

(00:05:10) Tom Fox examines the compliance lessons to be learned from the Deutsche Bank case. Compliance professionals should consider not only families but friends of commission agents. The worst misconduct can gain reduced penalties when companies cooperate with investigations. Michael adds how Deutsche Bank took corrective action to achieve a significant discount.

(00:11:09) Two possible discounts companies may get for compliance are (1) a cooperation discount under the US sentencing guidelines and (2) a discount under the FCPA corporate enforcement policy.

(00:12:15) Michael DeBernardis’ standpoint as a lawyer to his clients: be forthcoming and argumentative when appropriate.

(00:13:54) Michael DeBernardis gives a brief background on the SocGen case.

(00:19:28) The SocGen case was the first US-France anti-corruption collaboration. Though bribery through agents has been done by others, it’s still an effective dishonest practice. Michael adds that companies have since improved in doing background checks on their agents.

—————————————————————————-

Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.

 

Categories
The Corruption Files

The Sophisticated Conduct of Och-Ziff’s African Bribery with Tom Fox and Michael DeBernardis

In 2016, the DOJ and SEC served enforcement action against Och-Ziff Capital Management Group for inappropriate business practices in Africa. It seemed like only yesterday when this successful hedge fund was incriminated in a complex scheme of bribing government officials to maintain and get new business. The settlement was $412 million (and even more for restitution for the victims), making it one of the biggest payments for violating the Foreign Corrupt Practices Act (FCPA).

▶️ The Sophisticated Conduct of Och-Ziff’s African Bribery with Tom Fox and Michael DeBernardis

Key points discussed in the episode:

✔️ A crisis can breed opportunities for corruption. Even as its red flags became increasingly apparent, the option remained for the Och-Ziff to stop its bribery and illegal action before and even after its activities were discovered.

✔️ Compliance professionals need to have their eyes extra peeled, not simply to vet due-diligence partners but to look deeply into the ongoing business relationships with joint-venture partners. Och-Ziff Subsidiary was involved in corruption issues tied to its mining projects in the Democratic Republic of Congo. What was blatantly amiss was the review and audit necessary to view the joint venture from the compliance perspective.

✔️ Find a joint-venture partner that approaches compliance the same way you do. In handling joint ventures, there is a need for ongoing due diligence — and ongoing management of the relationship beyond due diligence. In the lifecycle of a third-party agent, work starts when the contract is signed, and the joint venture is formed.

✔️ There are various means for auditing available that don’t include turning the place upside down. Here are some good ways to keep an eye on an entity like a joint venture:

-Do spot checks on certain transactions
-Do sampling from a distance
-Make the audit by interviewing the employees to ensure they understand and follow the compliance requirements.

✔️ Remember, it becomes more complicated when you are not in control. Regarding building contractual protections and having strict control, ensure that you find a joint-venture partner that approaches compliance the same way you do.

✔️ Companies have always had audit rights but haven’t exercised those rights. It’s almost a requirement when making high-risk transactions to not only build in the audit rights but also exercise them. Ask the right questions and gauge whether the third party has been honest in the due diligence process.

Many companies get scared off by the idea of the disruption and invasion involved, but that’s what takes away the potential problems and the unnecessary bouts with the SEC and the Department of Justice (which is responsible for enforcing the FCPA).

—————————————————————————-

Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.

Categories
The Corruption Files

Episode 06: The Instrumentality Ruling of United States v. Esquenazi

Welcome to another episode of The Corruption Files!

Tom Fox and Michael DeBernardis explore their biggest takeaways from the appeal of the conviction of former Terra Telecommunications Corp. executive Joel Esquenazi. He and other involved parties were proven to pay bribes to Haitian government officials in a grand scheme. The case remains an example of a significant conclusion from a defense involving the FCPA.

▶️ The Instrumentality Ruling of United States v. Esquenazi with Tom Fox and Michael DeBernardis

Key points discussed in the episode:

✔️ The Esquenazi decision is vital in providing clear guidance for businesses to design robust compliance programs to address corruption, avoid making grease payments to foreign government officials, and remove the temptation to cull business favors and advantages for their company.

✔️ Companies doing business abroad should never forget the learnings from the Esquenazi decision in 2014. Following the conclusion of the Court of Appeals was identifying ownership and financial control to decipher the “instrumentalities” of foreign governments and to correctly identify that there were no red flags for FCPA compliance.

✔️ The 11th Circuit Court of Appeals’ opinion clarifies how a two-part test is crucial in determining the “instrumentality” of an employee, officer, agency, or department as an entity of foreign governments. The elements of “control” and “function” served as the two prongs that the US Court of Appeals for the Eleventh Circuit made in its decision for Esquenazi and the others involved in the case.

✔️ A key indicia of a governmental entity is it doesn’t have to make a profit. Think about the United States Postal Service — today; it still stands as a government service. Everyone uses it — and we don’t want it to go away even if it doesn’t make a profit. Indeed, non-earning can be the biggest indicator if you assess what constitutes any employee, officer, agency, or department as an “instrumentality” of foreign governments where clients are conducting business.

✔️ United States v. Esquenazi is a well-settled FCPA case that didn’t go to the U.S. Supreme Court. The Esquenazi decision is a significant case law that came out of a defense trial with the defendant paying heavily and sentenced to prison for 15 years — a landmark decision that remains relevant today.

✔️ Key lessons learned from United States v. Esquenazi:

1. Ownership/Financial Control – There is no percentage amount listed, but the inclusion of financial control would indicate that anything over 50% would be a significant factor.

2. Actual control is key in all three court decisions. In Lindsey and Esquenazi, it is characterized as the government’s right to appoint key officers and directors. In Carson, it is called government control. But this means that if the government exercises actual control, it may trump the 50% guidance stated above.

3. Privileges and Obligations are also mentioned in all three. Does the entity have the right to control its functions?

4. Financing – Is the entity a for-profit entity financed through its revenues, or does it depend on financing by its government?

5. Perception is Reality – André Agassi’s immortal words appear again. If it is widely perceived as providing an official function, it is an instrumentality under the FCPA.

—————————————————————————-

Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.

Categories
The Corruption Files

Hiring in the Financial Space

Welcome to another episode of The Corruption Files!

Thomas Fox and Michael DeBernardis discuss questionable hiring practices from JP Morgan, Credit Suisse, and Bank of New York (BNY) Mellon in employing relatives of high-profile clients to gain favor. They also discuss how companies can find a middle ground in hiring families, why Hiring can be a high-risk area, preventative questions to avoid a violation, and the significance of internal control and documentation.

▶️ Hiring in the Financial Space with Thomas Fox and Michael DeBernardis

Key points discussed in the episode:

✔️ Thomas Fox gives a brief background on the BNY Mellon case.

✔️ Michael DeBernardis mentions how Hiring based on connections has existed for a long time and doesn’t directly violate any laws. It’s all up to a company’s intent. For BNY Mellon, it was to maintain close connections with major clients. He recommends compliance professionals look into their company’s hiring process.

✔️ Hiring unqualified people means you’re hiring them for other reasons. JP Morgan took in ineligible candidates for leverage with high-profile clients and free advertising in their respective home countries. Documentation stopped JP Morgan in its tracks.

✔️ JP Morgan structured hiring program managed to override compliance controls, revealing regulation flaws. Being discovered next to BNY Mellon’s case, it was not the last instance of son-and-daughter corruption.

✔️ Thomas Fox retells the Credit Suisse case. Retracing the company’s spreadsheets revealed their inner workings.

✔️ The risk of hiring relatives can be minimized when there is a middle ground. Thomas Fox shares questions to ask to prevent violations. He also adds strengthening internal control can put a company on the good side of regulators.

—————————————————————————-

Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.

Categories
Everything Compliance - Shout Outs and Rants

Everything Compliance-Shout Outs and Rants from Episode 102

Welcome to our fan-favorite Shout Outs and Rants.

  1. Matt Kelly rants about the LIV exhibit golf tour and the insane amount of money being spent by Saudi Arabia to rehabilitate its reputation through sports.
  2. Jonathan Marks shouts out SEC Chairman Gary Gensler on the 20th anniversary of the enactment of SOX.
  3. Tom Fox shouts out to Vin Scully, the former play-by-play announcer for the Los Angeles Dodgers.
  4. Jay Rosen shouts out to Celtic great Bill Russell, who died this week.

The members of Everything Compliance are:

  • Jay Rosen– Jay is Vice President, Business Development Corporate Monitoring at Affiliated Monitors. Rosen can be reached at JRosen@affiliatedmonitors.com
  • Karen Woody – One of the top academic experts on the SEC. Woody can be reached at kwoody@wlu.edu
  • Matt Kelly – Founder and CEO of Radical Compliance. Kelly can be reached at mkelly@radicalcompliance.com.
  • Jonathan Armstrong is our UK colleague, an experienced data privacy/data protection lawyer with Cordery in London. Armstrong can be reached at armstrong@corderycompliance.com.
  • Jonathan Marks is Partner, Firm Practice Leader – Global Forensic, Compliance & Integrity Services at Baker Tilly. Marks can be reached at marks@bakertilly.com.

The host and producer, ranter (and sometime panelist) of Everything Compliance is Tom Fox, the Voice of Compliance. He can be reached at tfox@tfoxlaw.com. Everything Compliance is a part of the Compliance Podcast Network.