Show Notes for Episode 32, week ending December 9:

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h up on the week’s top FCPA compliance and ethics storylines, events and issues with This Week in FCPA.

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Show Notes for Episode 32, week ending December 9, 2016-the Fly the Not So Friendly Skies edition: 

1. United Airlines SEC enforcement action for domestic; the Chairman’s Flight and the US Corrupt Practices Act, for a copy of the Justice Department NPA, click here and for a copy of the SEC Cease and Desist Order, click here.
2. Monetary Authority of Singapore seeks to suspend former Goldman Sachs trader in 1MDB scandal. Link to Fox blog post on Compliance Week.
3. FATF report that US weak on beneficial ownership issues, for a copy of the report, click here.
4. Wal-Mart up to $820MM in pre-settlement FCPA settlement spend, on Radical Compliance.
5. Release of eBook, Trump on Compliance.
6. SEC Director of Enforcement, Andrew Ceresny announces he will leave the SEC. See NYT article, here.
7. GibsonDunn briefing on The Road Ahead: DOJ and Federal Enforcement in the Trump Administration predicts a Southern California centered FCPA matter will be concluded by year end.
8. 10th Annual SEC & DOJ HOT TOPICS 2017 -- Current Developments Materially Affecting Corporations, Financial Institutions, Individuals organized by Sandpiper Partners LLP and program developed by PwC, notes GibsonDunn partner Deb Yang listed as potential SEC Commissioner.
9. Jay Rosen weekend report update.

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We are back to our more rounded format for this episode on a variety of topics including anti-corruption enforcement across the globe, the new French anti-corruption law, Sapin II, the Agricultural Bank of China compliance enforcement action by the state of New York Department of Financial Services; how corruption influences as much as it pays money and individual accountability for corporate malfeasance is not a Democratic or GOP issue but a law enforcement issue. We end with a well-deserved one minute rant from the panel about what is in the front of their mind.

Mike Volkov discusses the internationalization of anti-corruption enforcement. He refers to the comments from the ACI FCPA conference, by Kara Brockmeyer and Dan Kahn about the increasing international enforcement efforts against corruption. This extends far beyond cooperation but also to enforcement. Recent examples are VimpelCom and Embraer where other countries received proceeds from fines and penalties. How does a company begin to deal with this type of complexity? Who does it disclose to? Who does it pay? When will the US give credit for payments made to other countries and when does it not? Finally this year saw of the third joint DOJ/SEC week long training for foreign prosecutors put on in DC. How do such events assist enforcement efforts, particularly around cooperation and mutual assistance?

For Tom Fox’s blog post, “Anti-Corruption Enforcement Has Gone International?” click here. 

• Matt Kelly leads a discussion dive into the AgBank enforcement/sanction action. He explains what does it all means and then pivots into a discussion of where he might see state regulators such as the state of New York Department of Financial Services or state banking regulators becoming more aggressive if the Trump administration pulls back? He discusses how these issues may have relevance for areas of compliance other than bribery and corruption and if so how. Finally, he ends with a reverse states’ rights discussion of Democratically aligned states fighting federal roll back of rights and privileges through litigation.

For Kelly’s posts, see post on the enforcement action involving the Agriculture Bank of China, click here. 

• Jonathan Armstrong leads a discussion on the new French anti-corruption law, Sapin II. He discusses the genesis of the law and why prior French efforts at anti-corruption law and enforcement was so harshly criticized by the OECD. He articulates how Sapin II differs from the UKBA, FCPA, the Brazilian Clean Companies Act and other anti-corruption laws across the globe. He talks about where he envisions French enforcement efforts going and the whistleblower protections of the law. Finally he ends with the key piece(s) of advice for clients regarding this law Cordery is suggesting around this law.

For Cordery’s piece on the new law click here.

Jay Rosen takes us through a Paul Krugman NYT post on some of the invidiousness of corruption, focusing on the corrupting nature of compliance around undue influence. Rosen explains incentives more than anything else and how such incentives skew the marketplace. We consider whether Trump’s discussions with the Carrier Corp over jobs was unduly influenced recalling President Kennedy’s ‘jawboning’ of the US steel industry in the 1960s. He also discusses the remarks of Sally Yates at ACI national FCPA conference about individual accountability and how this is not a GOP or Democratic issue but a criminal enforcement issue. For a link Krugman post, click here. For a copy of the text of Yates remarks, click here.

For a copy of Jay blog post entitled, “The DOJ and SEC Share Patriots Mantra—Next Prosecutor Up” click here.

Rants this week include the new UK surveillance law, the SEC domestic corruption enforcement action involving United Airlines for the Chairman’s Flight and the Chicken Littles of the compliance world claiming the sky is falling.

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What might the DOJ and legislation look like in the Trump era? Listen to Compliance into the Weeds to find out.

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Show Notes

In this episode, I visit with Miller & Chevalier Counsel, Saskia Zandieh on the new French anti-corruption law, Sapin II. She discussion how it may improve the nation’s current anti-corruption framework, and review the practical implications gleaned from lessons learned from the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. Zandieh addresses key changes made by Sapin II, including: (i) expanded jurisdictional reach of French prosecutors in bribery cases; (ii) creation of the “Agence française anti-corruption” (AFA), a new anti-corruption agency; (iii) a new compliance program requirement; (iv) whistleblower protection provisions; (v) the introduction of U.S.-style deferred prosecution agreements to the French legal landscape; (iv) and international double jeopardy considerations.

She notes that with Sapin II, France has the potential to become a major player in anti-corruption enforcement. For more information on the new law see the Newsletter co-authored by Zandieh entitled, “France’s New Anti-Corruption Law: A Game Changer or More of the Same?” by clicking here.

What is the significance of the new French anti-corruption law, Sapin II? 

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Show Notes for Episode 31, week ending December 2, 2016-the Government Speaks edition

What were the top FCPA, compliance and ethics issues for the week ending December 2, 2016?

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Show Notes:

What is risk and how should it be evaluated? What is the data that should be reviewed to determine if an increase in sales is based on unethical or even illegal behavior? Finally, what happens when you migrate company personnel who have been involved in such illegal or unethical behavior to other locations, does their nefarious conduct spread throughout the organization or is it curtailed? In this episode Matt Kelly and I explore some of these questions and others.

Every Chief Compliance Officer (CCO) and compliance practitioner understands that the sales side of a business is where the highest risk is located because that is most generally the side of the business which generates the most money and potential profit. Yet looking at sales numbers are not something which compliance professionals will generally have access to as a part of a compliance program.

Sales spikes in low performing regions can and should be reviewed by a wide variety of disciplines within an organization, including compliance. One would think that companies would want to know and understand the reasons for any sales increase so that it could be determined if such strategies might work in other areas of a company’s operations. This is true for the compliance function as well. As far back as the December 2012, in the Eli Lilly Foreign Corrupt Practices Act (FCPA) enforcement action brought by the Securities and Exchange Commission (SEC), I raised the issue that a dramatic sales increase should be reviewed by compliance to determine if there were any corruption issues involved. This same logic works for sales in the US over products as benign as debit cards. Moreover, if you consider whether the issue should be reviewed by a Board of Directors, it certainly would be material for one state region going from worst to first in sales.

One CCO told me that every time he hears an employee who wins a sales award for making numbers wildly far above plan, he wonders what might have led to such remarkable attainment. Sales spikes is data that increasingly becomes more important for compliance to consider. Just as the Key Energy FCPA enforcement specifically mentioned transaction monitoring around massive increases in gift giving in a geographic region where sales had spiked.

Why transaction monitoring is critical to fulfill the detect and prevent prongs of a compliance program.

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Show Notes

1. Introduction
   1. What is the FAR
   2. What’s the differences with DFARs
   3. What types of companies should be concerned
   4. What are some examples of covered with these regs (eg. Ozone depleting substances, child labor, sanctions/debarment)
2. Reporting requirements
3. What sort of resources are available to help demonstrate compliance

  What is the Federal Acquisition Regulation (FAR)

• The purpose of the FAR is to provide uniform policies and procedures for acquisition of goods supplied to the US federal government. Among its guiding principles is to have an acquisition system that satisfies customer's needs in terms of cost, quality, and timeliness; minimize administrative operating costs; conduct business with integrity, fairness, and openness; and fulfill other public policy objectives
• At over 1,800 pages in its entirety, is a substantial and complex set of rules governing the procurement of all goods and services required by the U.S. Government
• When a federal government agency issues a contract, it will specify the applicable FAR provisions, which may be numerous. In order to be awarded a contract, a company must either comply with the provisions, demonstrate that it will be able to comply with them once awarded, or claim an exemption from them (eg. Small business exemption)
• All government issued contracts include any number of the FAR and/or DFARS clauses either in full text or by reference requiring the company issued the contract to demonstrate compliance to the requirements
• Failure to comply with the requirements of FAR and DFARS may result in loss of contract or monetary fines

 What’s the differences with DFARs?

• Updated in July of this year the DFARS is one of the best-known examples of an agency supplement to the FAR addressing further reporting requirements put forth by the Department of Defense
• This supplement covers contracts with the office of the secretary of defense, branches of the military, and other defense agencies
• In order to be in the running for one of these highly lucrative defense contracts, companies need to stay on top of the latest changes to DFARS and ensure their contracts, systems and processes reflect these requirements

 What types of companies should be concerned?

• Companies that conduct their business with agencies of the US govt including defense contractors
• Additionally those companies selling to organizations which conduct business with agencies of the US govt. will likely be asked to supply certain documentation to support their customer’s ability to demonstrate compliance
• Winning a federal or defense contract means complying with laws and regulations unique to those doing business with the government. Many new contractors as well as their suppliers, are often unprepared for the rules and regulations they must follow and demonstrate, which can lead to costly errors and potential legal problems

 Why should they be concerned? 

• Depending on the type of end product provided to government agencies, different types of concerns or risk becomes a focus in such situations

Reporting Requirements

• In many cases sufficient screening, policy reviews and certification collection and validation will allow reporting companies to demonstrate compliance. But the issue isn’t necessarily what you have to collect to demonstrate compliance to meet FAR requirements (or report to customers which are obligated to) it’s how you do it.  Having a platform which can automate the data collection process as well as act as a repository is where most struggle…

• What sort of resources are available to help me demonstrate compliance with these regs
  • We’ve created workflows to meet 48 of the specific FARs/DFARS supplier reviews and data collection processes

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Show Notes:

This episode is dedicated exclusively to where FCPA enforcement, SEC enforcement, the compliance profession and compliance programs may be headed under the Trump administration, with a dash of anti-trust enforcement and EU Privacy Shield.

• Mike Volkov about where FCPA enforcement may be headed. We explore how FCPA cases are largely self-funded through company internal investigations which are turned over to the Justice Department. Volkov discusses funding and resources for the Department’s FCPA unit. He also touches on potential (or the lack thereof) of anti-trust enforcement going forward.

For Volkov’s post, “A New Administration: A New FCPA Enforcement Regime?” click here.

• Matt Kelly leads a discussion on how the new administration may view the SEC going forward. He considers the announced resignation of SEC Chairman Mary Jo White and the appointment (and dismissal) of Kevin O’Connor from Trump’s transition team. Matt explains how Trump’s attacks on Dodd-Frank focus on easing rules for capital formation not on the whistleblower provisions or other sections more applicable to the compliance profession.

For Kelly’s posts, see the following:

1. Five Post-Election Points for CCOs to Ponder;
2. It’s Starting: Disclosure of ‘Trump Risk’;
3. Compliance in the Trump Era, Part I: The SEC;
4. A CCO Voice Emerges in Trump World; and
5. Well That Didn’t Last Long…

• Jonathan Armstrong leads a discussion of the view from across the pond on where anti-corruption compliance enforcement may be headed after the election. He considers what the effects might be on the UK Serious Fraud Office (SFO)? He also considers what the effect of the Trump election might mean for EU and UK privacy advocates, privacy protections and privacy legislation going forward. He also discusses issues surrounding Privacy Shield. Privacy Shield faces a number of challenges from regulators, courts and possibly from the European Parliament.  A new Trump administration is likely to make Privacy Shield’s future even more uncertain.  Jonathan’s thoughts on Privacy Shield are here - http://www.corderycompliance.com/privacy-shield-faqs/

For Armstrong’s blog post, “What does the election of President Trump mean for compliance?” click here.

• Jay Rosen takes us through how all of this may well be much ado about nothing. He points out that the compliance profession will continue to thrive as it becomes more as a part of business processes. From his role as ‘Mr. Translations’ he explains that companies have been moving compliance into the fabric of organizations and that by doing so, companies become better run, more efficient and more profitable.

For Rosen’s blog post (and great riff off of The Clash) “Should I Stay or Should I Go?”, click here.

• For my blogs posts on these topics see the following:

1. FCPA Enforcement Going Forward in the Trump Administration;
2. Compliance Isn’t Going Away (and neither should you), Part I;
3. Compliance Isn’t Going Away (and neither should you), Part II;
4. Compliance Isn’t Going Away (and neither should you), Part III; and
5. Why FCPA Compliance Makes America Great.

The members of the Everything Compliance panel include:

• Jay Rosen (Mr. Translations) – Jay is Vice President of Legal & Corporate Language Solutions at United Language Group. Rosen can be reached at [email protected].
• Mike Volkov – One of the top FCPA commentators and practitioners around and is the Chief Executive Officer (CEO) and owner of The Volkov Law Group, LLC. Volkov can be reached at [email protected].
• Matt Kelly – Founder and CEO of Radical Compliance, is the former Editor of the noted Compliance Week Kelly can be reached at [email protected]
• Jonathan Armstrong – Rounding out is our UK colleague, who is an experienced lawyer with Cordery in London. Armstrong can be reached at [email protected].

For additional reading check out some of the following posts:

1. Over at the Global Anti-Corruption Blog, Matt Stephenson talks about his nightmare version of a Trump administration for the global fight against anti-corruption.
2. NYT Times DealB%K- on what DOJ and SEC enforcement may look like going forward.
3. Sam Rubenfeld at the WSJ Corruptions Currents online site,a collection of some thoughts on what a Trump administration may mean for compliance.
4. SCCE CEO Roy Snell tells us how he has seen it all before and advises everyone to wait a year and see what happens.
5. Finally, in an uncharacteristically restrained post, the FCPA Professor advises everyone to take a deep breath, when it comes to FCPA enforcement under a Trump administration.
6. Mike Scher advises President-Elect Trump to consider compliance officers.

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