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Thoughts Regarding “Principles And Practices Of High-Quality Ethics & Compliance Programs”

If Only

Recently, the Ethics & Compliance Initiative (ECI) released this “Principles and Practices of High-Quality Ethics & Compliance Programs.” As stated in the report, the ECI convened a group of 24 thought leaders and challenged them to identify the qualities that distinguish … ‘high-quality’ ethics and compliance programs.”

I have no doubt that the thought leaders worked hard and in good faith in drafting the report. However, the report was disappointing unless of course one loves checklists, charts, bullet points, vague generalities and other Compliance 2.0 (or has Compliance 3.0 arrived) buzzwords.

More substantively, as highlighted below, the report contains an asserted best practice that few (including former high-ranking DOJ officials) are likely to agree with.

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It Is Pure Speculation To Say That Nortek / Akamai Benefited Or Received An Excellent Result From Its Disclosure

crystalball

Several law firm client alerts and commentary about last week’s Nortek and Akamai Technologies enforcement actions are carrying forward the conventional wisdom that the companies benefited from their voluntary disclosure and cooperation because the SEC resolved the matters via non-prosecution agreements and the DOJ “declined” to prosecute. Taking it a stop further, this commentator asserts that “these enforcement actions resulted in excellent results for both companies.”

However, it is pure speculation to say that Nortek or Akamai benefited or that the enforcement actions resulted in excellent results for the companies.

To state the obvious, in the Nortek and Akamai enforcement actions (as well as other enforcement actions which originate from voluntary disclosures) we know what we know and we don’t know what we don’t know.

What we don’t know is what would have happened if Nortek and Akamai did not disclose its internal findings of possible FCPA issues to the SEC and DOJ.

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FCPA Insanity: Doing The Same Thing Over And Over Again And Expecting Different Results

insanity

Albert Einstein is credited with saying that insanity is “doing the same thing over and over again and expecting different results.”

You don’t need to be an Einstein to realize that the main thrust of the DOJ’s recently announced FCPA “pilot program” (that is to encourage voluntary disclosure) is nothing new.

All you need to have done over the past decade is pay attention to DOJ enforcement agency speeches because the DOJ has been saying the same thing over and over again.

As noted in this original post announcing the DOJ’s “new” “pilot program,” the DOJ’s latest attempt to encourage voluntary disclosure should most certainly be seen as an acknowledgement that its long-standing efforts have not been as successful as the DOJ might hope.

Does the DOJ honestly believe that this most recent iteration is going to lead to any different results – particularly since (as will be explored in a future post) the “pilot program” really does not represent anything new despite the DOJ’s best effort to convince the corporate community otherwise?

Set forth below are numerous DOJ speeches since 2005 to encourage voluntary disclosure, including the DOJ’s repeated assurances that voluntary disclosure results in meaningful credit.

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DOJ Announces “New” One-Year FCPA “Pilot Program”

Justice Dept

For over a decade, DOJ officials have tried to motivate business organizations to voluntarily disclose Foreign Corrupt Practices Act violations.

In what should be seen as an acknowledgement that such long-standing efforts have not been as successful as the DOJ might hope, in a press conference this morning, Assistant Attorney General Leslie Caldwell and DOJ Fraud Section Chief Andrew Weissmann announced a new one-year Foreign Corrupt Practices Act “pilot program.”

According to the DOJ officials, the purpose of the “pilot program” is provide guidance to DOJ FCPA prosecutors about resolutions in corporate FCPA cases and to motivate companies to self-disclose and fully cooperate with the DOJ’s fraud section in FCPA enforcement actions.

Prior to summarizing the press conference (which I attended via telephone) let me offer my own two cents.

“To knowledgeable observers, there is little that is new in today’s DOJ announcement of a “pilot program”. Just by holding a press conference and ascribing a new label to something, does not make something new. The objectives of the DOJ are laudable, however if the DOJ best wants to accomplish its objectives, this new “pilot program” is not the best answer. Rather, as current Fraud Section Chief Andrew Weissmann (and several other former high-ranking DOJ officials) have recognized, an FCPA compliance defense is the best incentive to get companies to voluntary disclose FCPA violations by employees or agents within its organization. For additional information on how such an approach can best position the DOJ to better achieve its policy objectives, see prior posts here and here.”

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Revisiting The Benefits Of Voluntary Disclosure With Responsible Statistical Analysis

Statistical Analysis

Today’s post is from Peter Leasure J.D. (current Ph.D. candidate, University of South Carolina, Department of Criminology and Criminal Justice).

*****

When asked about all sorts of automotive and household repairs, a dear friend used to reply, “I know just enough to get into trouble.”

Such can be the case with statistics and Foreign Corrupt Practices Act (FCPA) research. While statistical research within the FCPA is sparse[1], some efforts have been made. However, some of these efforts fell short and the entire legal field, especially those publishing legal journals, could greatly benefit from a better understanding of statistics.

My new article forthcoming in the Journal of Financial Crime titled “Embracing Fragility in Our Data: A Cautionary Example from Research on the FCPA and Voluntary Disclosure” (click here to download) provides a clear example of the need for a greater understanding of statistics in FCPA research.

“Embracing Fragility in Our Data” critiques the methodology of a previous study [2] which looked at whether there are benefits to voluntary disclosure of FCPA misconduct. In the study being critiqued, results showed that voluntarily disclosing companies faced nearly two and a half times higher total fines than companies that did not voluntarily disclose. A simple Google Scholar search yields twenty eight manuscripts that have relied upon and cited the findings noted by that previous study. It is no doubt likely that several other academics and practitioners have also relied upon and communicated those findings.

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