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Episode 242 -- LRN Report on Assessing Corporate Culture -- Interview of Ty Francis, Chief Advisory Officer
LRN has released a new and informative report on Assessing Corporate Culture. LRN's report provides invaluable guidance and practical steps for corporate boards to lead in the management, oversight and monitoring of corporate culture. A link to the report is below, along with an earlier LRN report on Benchmarking Ethical Culture.
In this Episode, Michael Volkov interviews Ty Francis, Chief Advisory Officer at LRN, concerning LRN's recent report on Assessing Corporate Culture.
LRN Report Assessing Corporate Culture -- https://pages.lrn.com/-a-practical-guide-to-improving-board-oversight-tapestry
LRN Report on Benchmarking Ethical Culture -- https://blog.lrn.com/introducing-the-benchmark-of-ethical-culture-report
|Aug 07, 2022|
Episode 241 -- Continuous Improvement, Testing and Auditing of Your Ethics and Compliance Program
The Justice Department and various regulatory agencies continue to emphasize the importance of continuous improvement, testing and review as part of robust assessment procedures in an effective compliance program. The Treasury Department's Office of Foreign Asset Control has specifically stated that a sanctions compliance program should include "a comprehensive, independent, and objective testing or audit function" so that a company can determine "how their program [is] performing and should be updated, enhanced, or recalibrated to account for a changing risk assessment or sanctions environment." The Health and Human Services -- Office of Inspector General has made similar statements underscoring the need to conduct compliance audits and testing.
An important part of every compliance program focuses beyond the design and operation of the program to the important issue of whether the program itself is working. In this respect, DOJ and regulatory agencies have noted that CCOs should be striving to develop "continuous" monitoring systems and avoid "snapshots" in time. In order to execute such monitoring, compliance has to maintain broad access to operational data across all key functions in a company. This data has to be used to update regularly risk assessments, compliance policies and procedures and financial controls.
In this Episode, Michael Volkov takes a broad review of testing and auditing of ethics and compliance programs.
|Jul 31, 2022|
Episode 240 -- The CCO's Role in an Effective Compliance Program
I have been -- and continue to be-- hyper-focused on the proper role and responsibilities for Chief Compliance Officers. Not that I see any cause for alarm, but it is easy to lose focus in the sea of so-called hot issues -- ESG, Diversity, Climate Change, Threats to Democracy, Cybersecurity and Data Privacy, each of which is an important component and focus for organizations. All of these issues intersect, are interdependent and should be addressed through organizational commitment.
But I want to take a step back and return to an issue of importance -- the proper role of CCOs. To do so, we need to remind everyone about basic requirements, lessons learned and ways forward to meet the fast-changing times. CCOs have to maintain and then advance their positions. In my view, given the interdependence of all of the important issues mentioned above, the role of the CCO has become even more critical.
In this Episode, Michael Volkov reviews the standards applicable to the CCOs function in an effective compliance program.
|Jul 24, 2022|
Episode 239 - DOJ's New CCO Certification Requirement
The Department of Justice continues to respond to the compliance community's concerns about the new certification requirement adopted as part of the Glencore FCPA enforcement action. DOJ has adopted this new requirement to "empower" CCOs and to ensure that CCOs have a "seat at the [senior management] table." While these are all laudable goals, CCOs continue to question whether DOJ's new certification requirement will undermine their authority by opening CCOs to internal pressure to execute a certification despite concerns about the status of a company's compliance program.
In this Episode, Michael Volkov reviews DOJ's new CCO certification requirement.
|Jun 26, 2022|
Episode 238 -- 2022 FCPA Enforcement Trends . . . So Far
In following the Justice Department and the Securities Exchange Commission FCPA enforcement actions, I am always reminded of the popular phrase — “reading the tea leaves.” (or “tasseography,” a fortune-telling method based on tea leave patterns in tea sediments). Despite a slow initial year in 2021, the Biden Administration’s stamp and push on FCPA enforcement is becoming clear.
Keep in mind, DOJ and SEC officials have promised a new, tougher approach to FCPA enforcement. Change in government enforcement policies and results take time. However, no one expected the changes to take this long. In addition, the initial enforcement push has raised some interesting questions concerning the specific steps taken by enforcement officials.
In looking at the most recent FCPA enforcement actions (i.e., Stericycle, Glencore, and Tenaris), there are significant new trends and some important issues.
In this Episode, Michael Volkov reviews the important trends and issues surrounding FCPA Enforcement in 2022.
|Jun 20, 2022|
Episode 237 -- The Tenaris SEC FCPA Settlement
The SEC announced another FCPA settlement in 2022. FCPA enforcement, in general, is picking up. Tenaris, a global supplier of steel pipes and related services for the energy industry agreed to pay the SEC $78 million to resolve FCPA violations that occurred in Brazil. The US Department of Justice closed its investigation without bringing charges.
In this Episode, Michael Volkov reviews the SEC settlement.
|Jun 12, 2022|
Episode 236 - The Glencore FCPA and Fraud Settlement
In a long-anticipated and major enforcement action, the Justice Department and the Commodities and Futures Exchange Commission resolved a sprawling investigation with Glencore International A.G. and Glencore Ltd, a Swiss-based commodity trading and mining company.
Both companies entered guilty pleas for FCPA violations and a commodity price manipulation scheme. Glencore paid over $1.1 billion to resolve these two major investigations.
The resolution in the U.S. was part of a coordinated set of criminal and civil resolutions involving the United States, the United Kingdom and Brazil.
In this Episode, Michael Volkov reviews the settlement and the implications for future enforcement actions.
|May 28, 2022|
Episode 235 -- Third-Party Risk Management
The global economy has suffered two significant shocks -- first, the pandemic sent shockwaves through every organization, and second, the war in Ukraine. Both of these events exposed the importance of risk management, especially with regard to supply chain and distribution operations. Hence, the renewed focus on third-party risk management and the repetitive description of "holistic" third-party risk management.
Reality has a way of forcing change and we are now experiencing significant adjustments to overall risk management procedures. At the top of every list has to be third-party risk management beyond legal and compliance risks -- we have new disruptive risks that have to be identified, quantified or ranked, and then addressed.
In this Episode, Michael Volkov outlines the new reality and opportunities stemming from holistic third-party risk management.
|May 22, 2022|
Episode 234 -- A Deep Dive into the Stericycle FCPA Enforcement Action
The Justice Department ended its FCPA enforcement drought by announcing its first corporate settlement in 2022. In a parallel action, the SEC announced its settlement with Stericycle for $28 million for FCPA violations. The SEC’s settlement was its second with a company for 2022 (the first was KT Corp.).
Under the settlement, Stericycle resolved investigations being conducted by the Department of Justice, the Securities and Exchange Commission and Brazil. Stericycle agreed to enter into a three-year deferred prosecution agreement and pay more than $84 million. Stericycle will pay $52.5 million in criminal penalties, $28 million to the SEC in civil penalties and disgorgement, and approximately $9.3 million to Brazilian authorities. DOJ agreed credit up to one-third of the criminal penalty against fines the company pays to Brazil authorities.
Significantly, the DPA requires Stericycle to obtain an independent compliance monitor for a two-year period and then submit a self-report for the rest of the DPA term.
Stericycle is a global waste management company which is headquartered in Illinois. In its factual admission, Stericycle admitted a wide ranging scheme involving payment of bribes to foreign officials in Brazil, Mexico and Argentina. In total, Stericycle paid approximately $10.5 million in bribes to foreign officials in Brazil, Mexico and Argentina to secure business contracts from which Stericycle profited by at least $21.5 million.
In this Episode, Michael Volkov reviews the Stericycle FCPA enforcement action.
|May 08, 2022|
Episode 233 -- Tom Fox and Michael Volkov Discuss Recent DOJ Criminal Trials
In this Episode Tom Fox and Mike Volkov review recent DOJ trial successes and stumbles -- Tom and Mike review DOJ trial strategy, successes and failures and approach of the antitrust division.
|May 02, 2022|
Episode 232 -- OFAC Settles with S&P Global for $78,750 for violation of Ukraine-Russia Sanctions
OFAC recently announced a settlement with OFAC for $78,750 for violations of the Ukraine-Russia Sanctions Program. The enforcement action provides important reminders relating to compliance with various "deby" maturity restrictions and how OFAC construes this restriction.
In this Episode, Michael Volkov reviews OFAC's enforcement action against S&P Global.
|Apr 24, 2022|
Episode 231 -- SEC Update: Proposed Climate Change and Cyber Incident Rules
The SEC is a very busy agency. While promising more aggressive enforcement of securities rules, the SEC has issued two set of comprehensive rule amendments. The first proposes new rules governing cyber incident reporting, disclosures and governance. In the second major policy action, the SEC issued its long-awaited rules governing climate change and greenhouse gas emissions.
in this Episode, Michael Volkov reviews the two proposals.
|Apr 17, 2022|
Episode 230 -- Catching Up with DOJ's Antitrust Division
The Antitrust Division’s Assistant Attorney General Jonathan Kanter promised a new era in antitrust enforcement. He won bi-partisan support from both Republicans and Democrats. Across the antitrust field, he promised aggressive merger enforcement, civil enforcement against digital markets, and constraint of market power in numerous industries. AAG Kanter promised a new approach and he is delivering.
In this Episode, Michael Volkov reviews two recent speeches and enforcement efforts by DOJ's Antitrust Division.
|Apr 10, 2022|
Episode 229 -- DOJ Charges TV Producer with Violations of Crimea-Related Sanctions Program
In another indication of DOJ's aggressive approach to enforcement of sanctions against Russia, DOJ announced the indictment of a TV producer for violations of the Crimea-Related Russian sanctions program. As outlined in the indictment, Jack Hanick, a former Fox News executive, was indicted for a sanctions violations stemming from his long-time relationship with a prohibited Russian oligarch (Specially Designated National) relating to the creation and promotion of the Russian Television Network.
In this Episode, Michael Volkov reviews DOJ's indictment and the facts surrounding Hanick's conduct.
|Mar 19, 2022|
Episode 228 -- Update on Russia Sanctions and Export Controls
The continuing crisis in Ukraine has resulted in additional sanctions and export controls. It is hard to keep up with new developments each day. In recent steps, the United States has adopted a comprehensive set of export controls and implemented a ban on import of Russian oil, gas and coal.
In this Episode, Michael Volkov reviews the recent changes to the Russia sanctions and export controls.
|Mar 13, 2022|
Episode 227 -- The Russia Sanctions and Export Controls
In an unprecedented and sweeping set of actions, the United States in coordination with its Allies and partners has implemented a robust set of sanctions and export controls against Russia designed to cripple Russia's economy. The unprecedented actions against Russia are intended to deter Russia from continuing its violent invasion of Ukraine and attacks against the Ukrainian people.
The Department of Treasury Office of Foreign Asset Control and the Department of Commerce Bureau of Industry and Security have issued comprehensive sanctions against Russia's financial industry, government investment funds, and oligarchs. In scope and complexity, the Russia sanctions and export controls raise significant compliance challenges for U.S. and global companies conducting business in Russia.
In this Episode, Michael Volkov surveys the sanctions and export controls.
|Mar 05, 2022|
Episode 226 -- A Deep Dive into KT Corp's SEC Settlement for FCPA Violations
The SEC announced the first FCPA enforcement action in 2022. South Korean telecommunications company, KT Corporation, agreed to pay $6.3 million to settle FCPA violations. As part of the settlement, KT Corp. agreed to pay $3.5 million in civil penalties and $2.8 million in disgorgement. KT Corp. is South Korea’s largest telecommunications company.
KT Corp. violated the FCPA’s books and records and internal accounting controls provisions stemming from its activities in South Korea and Vietnam. As explained in the SEC’s Order, KT lacked sufficient internal accounting controls over its expenses, including executive bonuses and purchases of gift cards, which resulted in KT Corp. managers and executives generating slush funds for illegal purposes. Additionally, KT Corp. failed to adopt anti-corruption policies and procedures with respect to donations, employment candidates, vendors, subcontractors or third-party agents. As a result, KT Corp. employees were able to provide improper benefits to government officials and potential government customers.
In this Episode, Michael Volkov reviews the KT Corp. settlement.
|Feb 27, 2022|
Episode 225 -- Interview of Susan Divers, LRN Senior Advisor, LRN's 2022 Ethics and Compliance Program Effectiveness Report
Susan Divers, LRN Senior Advisor, reviews LRN's 2022 Ethics and Compliance Program Effectiveness Report. LRN conducts an annual Ethics and Compliance Program Effectiveness Report (“LRN Report”) that is a must-read for business leaders, managers, investors, compliance professionals and other stakeholders. LRN’s annual report has addressed key issues surrounding the impact of the COVID-19 pandemic on companies and ethics and compliance programs.
|Feb 20, 2022|
Episode 224 -- 2022 Ethics and Compliance Predictions
Ethics and compliance professionals believe in their mission – if they did not, they would not be in the field. E&C professionals believe in the power of positive thinking, ethical conduct, and in the overall ability of an organization to operate as an “ethical” company. They work for their mission and it is a positive mission.
The New Year is a great time for E&C professionals to take stock on their compliance programs and to plot out a path forward. Luckily for most compliance professionals, there are lots of opportunities to advance their objectives. E&C is poised for another big jump on the corporate governance ladder, and this is a big year for E&C professionals to push their respective companies to support such efforts.
There are three significant trends that will continue to play out this year that create opportunities. These three trends, which I will discuss in greater detail are: (1) the continued emphasis on the importance of corporate culture; (2) the importance of ESG and in particular the “G” element; and (3) the current Administration’s aggressive enforcement and regulatory initiatives.
In this Episode, Michael Volkov reviews these important ethics and compliance trends.
|Feb 13, 2022|
Episode 223 -- DOJ Issues FCPA Opinion Letter Drawing Lines on "Corrupt Intent" and "Business Purpose" Test
Even with the absence of any major DOJ FCPA enforcement actions, DOJ issued an interesting FCPA Opinion Letter last week addressing application of the FCPA in circumstances where organizations face imminent serious bodily harm. While the situation may appear to be unique, it is a factual scenario that occurs more often than DOJ recognizes.
In October 2021, a Requestor submitted an Opinion Letter application that presented compelling circumstances. The Requestor, an owner of a vessel, explained that a Foreign Country’s Navy had seized its vessel. Arrested and detained the captain and detained the vessel and its crew. Given the captain’s mental and physical health, the captain’s incarceration created an immediate threat of serious physical harm. A third-party acting on behalf other Country’s Navy demanded a cash payment of $175,000 to release the captain, the crew and the vessel. DOJ acted quickly and approved the Opinion Letter request. The payment was made and the captain and crew were released.
The Requestor submitted additional information to DOJ, and a more formal Opinion Letter was released last week containing the full story and analysis. While the circumstances are relatively unique, DOJ’s analysis provides additional clarity surrounding the definition of “corrupt intent” and the “business purpose” test.
In this Episode, Michael Volkov reviews this interesting FCPA Opinion Letter.
|Feb 06, 2022|