Tag: Venice

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FCPA Compliance Report

Compliance Lessons from Venice – Into The Lion’s Mouth

In Part 3 of this special 3-episode series, we explore how Venice created the first modern hotline and whistleblower reporting system. Whistleblower and hotline reporting systems in compliance programs are crucial tools for organizations, providing a confidential platform for employees to report misconduct. Fox emphasizes the value of using an external hotline system, which offers an additional layer of anonymity and impartiality and can bring specialized expertise that may be difficult to match within an organization.

He also highlights the role of hotlines in collecting detailed information, which can provide greater insight into situations and help protect companies from accusations of negligence or wrongdoing. Fox underscores the need for hotlines to inspire employee confidence, offer on-demand support from subject matter experts, and provide in-built litigation support and avoidance tools. Join Tom Fox in this episode of the Compliance Lessons from Venice podcast to delve deeper into the significance of hotline reporting systems in compliance programs.

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Blog

How the Venetian Republic Invented the Modern Hotline-Into the Lion’s Mouth

It turns out that Venice invented the modern hotline reporting system with their Lion’s Mouth reporting protocol. The symbol of Venice is the Lion St. Mark. The use of this symbol has led to the maxim straight from the lion’s mouth. This adage came because the Republic of Venice had its own hotline reporting system where citizens could report misconduct. A citizen could write down his concern on paper and literally put this message into the mouths of statues of lions’ heads placed around the city. The system was originally set up to be anonymous, but later changed to require that a citizen had to write down his name when submitting a message. I thought about this early form of anonymous reporting and then Hotline reporting and how it portended the hotline system used today to help companies identify compliance issues which might arise under the FCPA or other compliance laws.

Hotline reporting systems play a crucial role in modern compliance programs. They provide employees with a confidential and secure channel to report suspected misconduct or violations of company policies. In a recent episode of the podcast “Compliance Lessons from Venice,” hosted by Tom Fox, the importance and benefits of hotline reporting systems were discussed in detail.

One of the key factors emphasized in the podcast is the need for hotline systems to allow employees to report misconduct confidentially and without fear of retaliation. This is in line with the guidance provided in the FCPA Resource Guide, which states that an effective compliance program should include a mechanism for confidential reporting. By ensuring anonymity and protection, hotline reporting systems encourage employees to come forward with their concerns, leading to early detection and prevention of compliance issues.

One of the benefits of using external hotline systems, as highlighted by Tom Fox, is the increased employee trust. Employees tend to trust third-party providers more than internally maintained systems, as they perceive an extra layer of anonymity and impartiality. External providers also bring specialist expertise that may be difficult to match within an organization.

Another benefit of hotline reporting systems is the collection of detailed information. Information is power, and by gathering and recording information throughout the complaint’s lifecycle, companies gain greater insight into the situation. This allows for more effective protection against accusations of negligence or wrongdoing. Hotline systems should provide consolidated, real-time access to data across departments and locations, along with analytic capabilities to uncover trends and hotspots.

Data retention is another important factor to consider. Hotline systems should meet the company’s data retention policies, especially considering privacy regulations like GDPR. Having a secure and accessible report retention database ensures compliance with data protection requirements and avoids the need for complicated and costly arrangements for storing older reports.

To be effective, hotline reporting systems must inspire employee confidence. Retaliation or perceived unfairness can destroy the effectiveness of internal reporting and poison the company’s culture. Employees should feel that the hotline offers the highest levels of protection and anonymity. It should allow them to bring their concerns directly to someone outside the immediate chain of command or workplace environment, especially when the complaint involves a supervisor or superior. Providing the option to submit reports from offsite locations also enhances participation rates.

Hotline systems should offer on-demand support from subject matter experts. Opening lines of communication can bring new issues to the compliance group’s attention. It is crucial to follow up on reports in a timely manner and avoid sitting on complaints, as this can lead to employee frustration and potential legal risks.

Inbuilt litigation support and avoidance tools are also important features of hotline reporting systems. Compliance with legal requirements for document retention, attorney work product protections, and attorney-client privilege should be pre-configured in the system. Developing these tools in-house can be costly and expose the organization to unnecessary risks.

Direct communication with the persons filing a complaint is another aspect that enhances the effectiveness of hotline reporting systems. It signals to employees that their complaints are being heard at the highest level and reinforces their confidence in the process.

In addition to these key factors, the podcast episode also highlighted the importance of publicizing the hotline, training employees on how to use it, and ensuring no retaliation for its use. Regularly reviewing the data provided by the hotline and identifying any gaps is also crucial for making informed decisions and improving the compliance program.

Hotline reporting systems are essential components of modern compliance programs. They provide employees with a confidential and secure channel to report misconduct, leading to early detection and prevention of compliance issues. By ensuring anonymity, protection, and access to expert support, hotline reporting systems foster employee trust and contribute to a strong compliance culture within organizations. It turns out we do not have Sarbanes-Oxley to thank for the modern hotline system but the Republic of Vencie.

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FCPA Compliance Report

Compliance Lessons from Venice – Arsenale and Corporate Culture

In Part 2 of this special 3-part series, we continue our look at compliance lessons from Venice by reviewing the Arsenale and corporate culture. The Arsenale district in Venice, a significant maritime hub from the mid-1200s to mid-1400s, serves as a fascinating historical example of compliance program implementation. The district was renowned for its innovative shipbuilding techniques, which were zealously guarded as state secrets through strict regulations and severe punishments for violators.

Tom draws parallels between the practices of the Arsenale district and the guidance provided by the DOJ and SEC. He emphasizes the importance of a balanced approach to compliance, incorporating both incentives and discipline. Fox suggests that companies should provide job security, compensation for mishaps, and assistance to families as incentives for employees to remain loyal and compliant, while also using financial rewards, promotions, and acknowledgments as effective tools for driving corporate culture. Join Tom Fox on this episode of the Compliance Lessons from Venice podcast as he delves deeper into the lessons that can be learned from the Arsenale district’s historical example.

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Blog

Compliance Lessons from Venice: Incentives, Consequences and Compliance

This week I am running a three-part blog post series and three-part podcast series on compliance lessons from one of the most beautiful cities on earth, Venice. We will consider how construction in Venice can inform your compliance program, how the Venice ship building and repair business located in the Arsenale inform both corporate culture and your compliance program and how Venice created the first modern day hotline reporting system. In this second blog post and accompanying podcast we look at the Venetian ship building and ship repair industry centered in the Arsenale District and how they created a culture of compliance with the workers and implemented strategies which informed modern day compliance programs.

The Arsenale district in Venice serves as a historical example of the implementation of a corporate culture and implementation of a compliance program. This district was a significant maritime hub from the mid-1200s to the mid-1400s, known for its innovative shipbuilding techniques, which were considered state secrets. To protect this valuable intellectual property, the Venetian Fathers established a series of incentives and punishments that can inform best practices in compliance programs today.

One of the key takeaways from the Arsenale district is the importance of balancing incentives and discipline in a compliance program. This concept is emphasized by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). Companies can learn from this historical example by implementing clear procedures and consequences for violations, publicizing disciplinary actions as a deterrent, and offering positive incentives to encourage adherence to ethical business practices.

On the consequence side, the Venetian Fathers forbade skilled workers from leaving the city to work in neighboring or rival cities, establishing the first non-compete agreement. Additionally, those caught sharing state secrets faced summary execution after excruciating torture. While these specific punishment techniques may not be applicable in modern corporate America, they highlight the need for severe consequences for violations.

In terms of incentives, the Arsenale district focused on job security. Layoffs were unheard of, and if someone lost their job due to injury or mishap, they received enough compensation to sustain themselves in the city. Furthermore, the company provided funeral expenses and assistance to the family of a deceased worker, ensuring their well-being.

The dual focus on keeping shipbuilding secrets within the city and incentivizing loyalty among workers aligns with the DOJ and SEC’s emphasis on incorporating both incentives and discipline into compliance programs. According to the guidance provided by these regulatory bodies, companies should have clearly defined procedures that are applied reliably and promptly, with punishments commensurate with the violation. Publicizing disciplinary actions internally, where appropriate, can serve as a deterrent and demonstrate the consequences of unethical actions.

However, the guidance also highlights the importance of positive incentives. The DOJ and SEC recognize that rewards for following a company’s internal code of conduct and conducting business ethically can drive compliant behavior. These incentives can take various forms, such as personal evaluations, promotions, rewards for improving compliance programs, and recognition for ethical behavior.

Companies can integrate incentives into their DNA through the hiring and promotion process. Senior management hires and promotions should include a compliance component, ensuring that individuals who prioritize compliance are recognized and rewarded. By making compliance evaluations a part of every employee’s overall evaluation, companies can further incentivize compliance.

The Arsenale district serves as a valuable historical example of the tradeoffs involved in balancing incentives and discipline in a compliance program. While severe punishments were imposed to protect state secrets, the district also prioritized job security and support for workers and their families. This approach highlights the importance of considering the impact on employees when making decisions about compliance program implementation.

In conclusion, the Arsenale district in Venice provides valuable insights into the implementation of a compliance program. By balancing incentives and discipline, companies can establish clear procedures and punishments for violations, publicize disciplinary actions as a deterrent, and offer positive incentives to drive compliant behavior. The historical example of the arsenal district emphasizes the importance of considering the impact on employees when making decisions about compliance program implementation.

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FCPA Compliance Report

Compliance Lessons from Venice – Doing Compliance The Old Fashioned Way

Today we begin a special holiday podcast series on compliance lessons from Venice. In Part 1, we are doing compliance in the old-fashioned way.

The importance of compliance departments and the simplicity of compliance programs cannot be overstated. These elements are vital in maintaining ethical standards within an organization. An effective compliance program must have a compliance department that is adequately staffed with professionals who can handle the day-to-day compliance work. He argues that these departments should not only have the necessary headcount but also the expertise to answer questions and provide guidance to company personnel. Fox also underscores the significance of basic methods in compliance programs, likening them to the simple yet effective block-and-tackle pulley system used in Venice. Join Tom Fox as he delves deeper into this topic in the Compliance Lessons from Venice podcast episode.

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Blog

Simplifying Compliance Programs: The Power of Basic Approaches

This week I am running a three-part blog post series and three-part podcast series on compliance lessons from one of the most beautiful cities on earth, Venice. We will consider how construction in Venice can inform your compliance program, how the Venice ship building and repair business located in the Arsenale inform both corporate culture and your compliance program and how Venice created the first modern day hotline reporting system. In this first blog post and accompanying podcast we go back to basics by considering the importance of simplicity in compliance programs was highlighted, drawing a comparison to the simple yet effective block and tackle pulley system used in Venice.

One of the things that has long fascinated me about Venice is how so little of the 21st century has impacted it. Take construction, for example. All materials must be brought to the city via boat, offloaded and then lifted by hand or by a handmade machine. Seen to the upper stories of a building where the residents are located. As no one lives on the ground floor anymore, as all the ground floors are now flooded, if the building is not on the water, the ground floor is used as a commercial establishment, but unlike other large metropolitan areas, there is no room for cranes or other large mechanical lifting devices.

I thought about this when I saw workmen lifting up materials through a block and tackle pulley system, which has been in use since antiquity. Not only were these workers doing it the old-fashioned way, but they were also getting the job done. As I watched this most basic level of construction, I thought about some of the things the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have said about what and how a compliance department should be doing compliance.

Sometimes the most basic and obvious methods are overlooked in compliance programs. Just like the block and tackle pulley system in Venice, which may seem quaint and old-fashioned, it still gets the job done effectively. The same concept applies to compliance programs – simplicity can lead to optimal results.

One of the key factors in the importance of compliance departments is the availability of resources. A compliance department must be staffed with an appropriate number of professionals dedicated to the day-to-day work of compliance. This includes answering phone calls and responding to emails promptly. It is not enough to have someone in the seat; they must actively provide guidance and advice on complying with the company’s ethics and compliance program.

Having a live person to answer questions and walk noncompliance individuals through the process is essential. Compliance practitioners must possess the expertise to answer questions that come into the office. The DOJ has emphasized the importance of expertise in compliance functions, stating that it is not just about headcount but also about having knowledgeable practitioners who can provide accurate guidance.

However, balancing the need for resources with simplicity can be a challenge. Compliance departments must find the right balance between having enough staff to handle the workload and avoiding unnecessary complexity. It is crucial to avoid becoming the “land of no” and instead focus on providing practical answers and solutions to compliance-related queries.

Another challenge is ensuring that compliance departments are available and responsive when needed. Compliance personnel must be present to answer phone calls and respond to inquiries promptly. This includes being available on Fridays or during urgent situations. Failure to have someone available to answer questions can undermine the effectiveness of a compliance program.

The comparison to the block and tackle pulley system in Venice highlights the importance of simplicity in compliance programs. Sometimes, the old-fashioned way can be the most effective way. By keeping compliance programs simple and straightforward, organizations can ensure that employees understand and follow the policies and procedures.

Compliance departments are crucial for implementing and maintaining ethical standards within organizations. They provide the necessary resources and expertise to guide company personnel and ensure compliance policies are understood and adhered to at all levels. Simplicity in compliance programs is essential for optimal results, just like the block and tackle pulley system in Venice. Balancing resources, responsiveness, and simplicity can be challenging, but it is necessary to achieve an effective compliance program. By considering the impact on employees and making decisions that prioritize simplicity, organizations can create a culture of compliance that is both effective and efficient.

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Sunday Book Review

March 27, 2022 the Inspector Brunetti edition


In today’s edition of Sunday Book Review:

  • Death at La Fenice
  • The Anonymous Venitian
  • Aqua Alta
  • Friends in High Places
  • Uniform Justice
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Daily Compliance News

July 14, 2021 the Magical Thinking edition


In today’s edition of Daily Compliance News:

  • Elon Musk testifies. (FT)
  • Lawyer has amnesia on the witness stand. (Law Gazette)
  • Massive cruise ships banned in Venice lagoon. (Bloomberg)
  • Lordstown and ‘magical thinking’. (NYT)
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Daily Compliance News

June 26, 2021 the Venice edition


In today’s edition of Daily Compliance News:

  • AMEC Foster Wheeler settles FCPA case. (FCPA Blog)
  • Malta, Philippines added to FATF watch list. (WSJ)
  • Toshiba BOD Chair ousted. (NYT)
  • UNESCO warns of dangers to Venice. (Bloomberg)
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FCPA Compliance Report

How the Lion’s Mouth Informs Your Internal Reporting System


The week of Thanksgiving is the time of our annual trip to the most beautiful and unique city on earth-Venice, Italy. With travel to Italy shut down this year due to Covid-19, I am visiting Venice virtually and mining this rich city for compliance lessons. This episode concludes my podcast series on how the city of Venice informs your internal reporting system. The symbol of Venice is the Lion of St. Mark. The use of this symbol led to the maxim ‘straight from the lion’s mouth’. This adage came about because the Republic of Venice had its own hotline system where citizens could report misconduct. A citizen could write down his concern on paper and literally put the message into the mouth of statues of lion heads placed around the City. This system was originally set up to be anonymous but later changed to require that a citizen had to write his name down when submitting a message.
As podcast series on compliance lessons from Venice draws to an end, I am reminded how much the western world has to thank the Republic of Venice. From the forms of republican democracy that the US Founding Fathers drew from to helping to establish a world-wide trade and banking system which still reverberates today. But, if you look closer, ancient Venice had many good government techniques which also still inform the modern world. Straight from the lion’s mouth to your company’s internal reporting system is just one of them.