Corruption Crime & Compliance

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.

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. 

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.

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.

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.

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.

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.

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.

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.

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.