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

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<strong>Compliance</strong>, Legislative Reform Proposals, <strong>and</strong> FCPA GuidanceSuggestedLegislativeReformsfromChamber<strong>of</strong>Commerce• Adding<strong>Compliance</strong>Defense• LimitingSuccessorLiability• Adding WillfulnessRequirement for<strong>Corporate</strong> Liability• Limiting Liabilityfor Acts <strong>of</strong>Subsidiaries• Defining “ForeignOfficial”DOJ’s Focus inGuidance:Reinforce Scope <strong>of</strong> the FCPAClarity on Charging Decisions<strong>and</strong> Scope <strong>of</strong> <strong>Corporate</strong>LiabilityEmphasis On <strong>Compliance</strong>ProgramsRemediation© 2012 Baker & McKenzie LLP 9SEC-DOJ FCPA Guidance– On November 14, 2012, the U.S. Department <strong>of</strong> Justice <strong>and</strong> the U.S.Securities <strong>and</strong> 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, <strong>and</strong> taken appropriate remedial actions, DOJ <strong>and</strong> SECalso consider the adequacy <strong>of</strong> 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 <strong>of</strong> any DPA orNPA, or the term <strong>of</strong> corporate probation. It will <strong>of</strong>ten affect thepenalty amount <strong>and</strong> 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, <strong>and</strong> devise <strong>and</strong> maintain an adequate system <strong>of</strong> 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, <strong>and</strong> significantimprovement to its internal controls.– The SEC’s press release emphasized that this NPA “shows the benefit<strong>of</strong> implementing an effective compliance program,” adding that thecompany “discovered this problem after it put in place an enhancedcompliance program <strong>and</strong> began training its employees.”13The Essential Elements <strong>of</strong> <strong>Corporate</strong> <strong>Compliance</strong>USSG’s 7 Elements <strong>of</strong> an Effective<strong>Compliance</strong> Program1. St<strong>and</strong>ards <strong>and</strong> procedures toprevent <strong>and</strong> detect criminal conduct2. Leaders underst<strong>and</strong> / oversee thecompliance program to verifyeffectiveness <strong>and</strong> adequacy <strong>of</strong>support; specific individuals vestedwith implementation authority /responsibility3. Deny leadership positions to peoplewho have engaged in misconduct4. Communicate st<strong>and</strong>ards <strong>and</strong>procedures <strong>of</strong> compliance program,<strong>and</strong> conduct effective training5. Monitor <strong>and</strong> audit; maintainreporting mechanism6. Provide incentives; disciplinemisconduct7. Respond quickly to allegations <strong>and</strong>modify programNOTE: A general provision requires periodicassessment <strong>of</strong> risk <strong>of</strong> criminal conduct <strong>and</strong>appropriate steps to design, implement, ormodify each element to reduce risk13 Good Practices by the OECD on InternalControls, Ethics, <strong>and</strong> <strong>Compliance</strong>1. Risk assessment as basis for effective internalcontrols <strong>and</strong> compliance program2. Policy that clearly <strong>and</strong> visibly states bribery isprohibited3. Training – periodic, documented4. Responsibility – individuals at all levels should beresponsible for monitoring5. Support from senior management – strong,explicit <strong>and</strong> visible6. Oversight by senior corporate <strong>of</strong>ficers withsufficient resources, authority, <strong>and</strong> access to Board7. Specific risk areas – promulgation <strong>and</strong>implementation programs to address key issues8. Business partners due diligence9. Accounting – effective internal controls foraccurate books <strong>and</strong> records10. Guidance – provision <strong>of</strong> advice to ensurecompliance11. Reporting violations confidentially with noretaliation12. Discipline for violations <strong>of</strong> policy13. Re-assessment – regular review <strong>and</strong>necessary revisionsUK’s 6 Principles for“Adequate Procedures”1. Proportionate procedures2. Top level commitment3. Risk assessment4. Due diligence5. Communication6. Monitoring <strong>and</strong> review147

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