Corruption Crime & Compliance

Companies face a myriad of risks that can cause significant legal and reputational risks.  A company's employees are critical sources of concerns to prevent and detect problems.  Employees have to be encouraged to raise concerns to help the company address these problems proactively.  As a result, it is critical for companies to invest and promote its speak up culture to maximize employee communication and prevent serious harm to the company. In this episode, Michael Volkov discusses how to implement and promote a speak up culture.

United Technologies recently settled an FCPA enforcement action with the SEC by paying $13.9 million for bribes paid by its elevator and aircraft businesses. UT disclosed the investigation to DOJ and the SEC in late 2013 or early 2014. DOJ declined to prosecute in March 2018. UT agreed to disgorge $9 million, plus interest of about $919,000 and to pay a penalty of $4 million.   The SEC's FCPA settlement contains extensive details on the conduct and the alleged violations ranging from bribery through third parties to excessive gifts and entertainment involving two significant subsidiaries, Pratt & Whitney and Otis Elevator. The settlement focused on bribery schemes in Azerbaijan and China relating to third-party bribery payments. In addition to these two bribery schemes, UT was cited for improper trips and gifts paid by Otis and its Pratt & Whitney division to foreign officials in China, Kuwait, South Korea, Pakistan, Thailand and Indonesia. In this episode, Michael Volkov discusses the SEC's settlement with UTC and identifies important lessons learned from the investigation.    

To promote a culture of integrity and a commitment to organizational justice, companies have to implement an effective, efficient and reliable internal investigation program.  Such a system has to respond to employee concerns promptly and investigate these concerns fairly and consistently.  Companies have to devote adequate resources and attention to its internal investigation program. In this episode, Michael Volkov discusses how to design and implement an effective internal investigation program.

Donna Boehme is our guest on this week's podcast.  She is an advocate for an independent, and empowered Chief Compliance Officer.   Donna is an internationally recognized authority in the field of organizational compliance and ethics with over 20 years’ experience designing and managing compliance and ethics solutions, within the US and globally. As Principal of Compliance Strategists LLC, she has advised a wide spectrum of private, public, governmental, academic and non-profit entities. She serves on the respective boards of RAND Center of Corporate Ethics and Governance, Rutgers Center for Government Compliance & Ethics. Donna is an Emeritus Member and past Board member of the Ethics and Compliance Officer Association,  past Board member of the Association of Corporate Counsel – Europe and past Advisory Board member of The Society of Corporate Compliance & Ethics. Donna has been cited and interviewed as the “Lion of Compliance” because of her tireless work to increase understanding of the role of the chief compliance officer (CCO) and to improve the governance model for CCOs to include empowerment and independence, and position CCOs for success.    

Since 2014, the United States has put into place a comprehensive set of sanctions against Russia.  In response to Russia's annexation of Crimea and its hostile activities in the Ukraine, President Obama put in place a set of sanctions focused against various sectors of the Russian economy.  Since the Trump Administration came to power, Congress enacted additional sanctions, and the Department of Treasury adopted targeted sanctions against Russian Oligarchs.  Recently, the State Department announced new sanctions against Russia for its violation of international laws relating to chemical and biological weapons. In this episode, Michael Volkov discusses the Russia Sanctions Program and the difficult compliance issues surrounding compliance.

Since my last update on the Russia investigation in December 2017, Special Counsel Mueller's investigation has been gaining momentum -- Paul Manafort plead guilty and agreed to cooperate after being convicted in the Eastern District of Virginia.  Michael Cohen entered into a plea agreement with the Southern District of New York prosecutors, including a specific admission that President Trump directed him to make hush payments to Stormy Daniels and Karen McDougal.  Aside from these two major developments, Special Counsel Mueller's team has been focusing the investigation on new subjects, including Roger Stone, Donald Trump Jr., and of course, the President. In this episode, Michael Volkov discusses recent developments in the Russia investigation and offers some predictions for the future course.

On May 8th, 2018, the Trump administration withdrew from the Joint Comprehensive Plan of Action or JCPOA and began to reimpose the U.S. nuclear-related sanctions. All of the sanctions in existence prior to the JCPOA including nuclear-related secondary sanctions will be effective on November 5, 2018.  The wind-down of Iran-related activities pursuant to authorizations provided by the JCPOA is required in two wind-down periods – a 90 day period which just ended, and a second 180-day period, which occurs on November 5, 2018.   On August 6, 2018, the Trump administration issued a new executive in order to reimpose the first tranche of the Iran sanctions. In doing so, the executive order consolidates relevant sanctions authorities and broadens the scope of the previous restrictions.   The re-imposed sanctions create significant compliance obligations, and in particular, in the third-party risk management area.   In this episode, Michael Volkov reviews the re-imposed sanctions, the broader authorities and new third-party risks created by the new regulations.

In June 2018, the SEC announced an FCPA settlement with Beam Suntory for violations in India.  Beam's settlement totaled over $8 million.  Beam's conduct involved illegal payments made through third-party representatives to increase Beam's sales, product placement and secure appropriate registrations and approvals needed to distribute liquor in India.  Beam also did not receive any remedialtion credit for its failure to adequately respond to and investigate early indications of bribery conduct. In this episode, Michael Volkov reviews Beam's conduct and its compliance failures.

An effective compliance program requires that companies review and improve their compliance programs.  A company should regularly review and test its controls, and address potential weaknesses in its compliance program.  The Justice Department and the SEC have encouraged companies to conduct regular tests and reviews to create a sustainable compliance program.  Companies should design and implement a proactive evaluation program to ensure that their compliance program continuously improves. In this episode,  Michael Volkov, CEO of The Volkov Law Group, discusses strategies for companies to conduct proactive evaluation programs to assess their compliance program.

The federal government continues to push aggressive False Claims Act enforcement cases against healthcare companies, including hospitals, skilled nursing facilities, hospices and other healthcare providers.  The Justice Department has employed the FZlse Claims Act to target companies in the opioid industry as a response to the opioid crisis in our country. Healthcare companies have to implement effective ethics and compliance controls to protect against fraud and possible government enforcement actions. In this episode, Michael Volkov discusses recent developments and trends in False Claims Act enforcement.