Joan E. Meyer presentation - Society of Corporate Compliance and ...

Compliance, Legislative Reform Proposals, and FCPA GuidanceSuggestedLegislativeReformsfromChamberofCommerce• AddingComplianceDefense• LimitingSuccessorLiability• Adding WillfulnessRequirement forCorporate Liability• Limiting Liabilityfor Acts ofSubsidiaries• Defining “ForeignOfficial”DOJ’s Focus inGuidance:Reinforce Scope of the FCPAClarity on Charging Decisionsand Scope of CorporateLiabilityEmphasis On ComplianceProgramsRemediation© 2012 Baker & McKenzie LLP 9SEC-DOJ FCPA Guidance– On November 14, 2012, the U.S. Department of Justice and the U.S.Securities and Exchange Commission jointly issued “A Resource Guideto the U.S. Foreign Corrupt Practices Act.”– Speaking to the weight given to a company’s compliance program, theGuidance states:• “In addition to considering whether a company has self-reported,cooperated, and taken appropriate remedial actions, DOJ and SECalso consider the adequacy of a company's compliance programwhen deciding what, if any, action to take. The program mayinfluence whether or not charges should be resolved through adeferred prosecution agreement (DPA) or non-prosecutionagreement (NPA), as well as the appropriate length of any DPA orNPA, or the term of corporate probation. It will often affect thepenalty amount and the need for a monitor or self-reporting.”© 2013 Baker & McKenzie LLP105

Case Study: Ralph Lauren Corporation– In this recent settlement, the SEC determined that Ralph LaurenCorporation failed to perform adequate due diligence on a customsbroker, adequately review reimbursement payments to the customsbroker, and devise and maintain an adequate system of internalcontrols for a subsidiary.– Yet, in deciding to resolve the matter with an NPA, the SEC credited,among several factors, the company’s “comprehensive” newcompliance program, including enhanced third-party due diligenceprocedures, a global risk assessment process, and significantimprovement to its internal controls.– The SEC’s press release emphasized that this NPA “shows the benefitof implementing an effective compliance program,” adding that thecompany “discovered this problem after it put in place an enhancedcompliance program and began training its employees.”13The Essential Elements of Corporate ComplianceUSSG’s 7 Elements of an EffectiveCompliance Program1. Standards and procedures toprevent and detect criminal conduct2. Leaders understand / oversee thecompliance program to verifyeffectiveness and adequacy ofsupport; specific individuals vestedwith implementation authority /responsibility3. Deny leadership positions to peoplewho have engaged in misconduct4. Communicate standards andprocedures of compliance program,and conduct effective training5. Monitor and audit; maintainreporting mechanism6. Provide incentives; disciplinemisconduct7. Respond quickly to allegations andmodify programNOTE: A general provision requires periodicassessment of risk of criminal conduct andappropriate steps to design, implement, ormodify each element to reduce risk13 Good Practices by the OECD on InternalControls, Ethics, and Compliance1. Risk assessment as basis for effective internalcontrols and compliance program2. Policy that clearly and visibly states bribery isprohibited3. Training – periodic, documented4. Responsibility – individuals at all levels should beresponsible for monitoring5. Support from senior management – strong,explicit and visible6. Oversight by senior corporate officers withsufficient resources, authority, and access to Board7. Specific risk areas – promulgation andimplementation programs to address key issues8. Business partners due diligence9. Accounting – effective internal controls foraccurate books and records10. Guidance – provision of advice to ensurecompliance11. Reporting violations confidentially with noretaliation12. Discipline for violations of policy13. Re-assessment – regular review andnecessary revisionsUK’s 6 Principles for“Adequate Procedures”1. Proportionate procedures2. Top level commitment3. Risk assessment4. Due diligence5. Communication6. Monitoring and review147