All We Need Is Trust :)
It’s as predictable as the sun rising in the morning.
A corporate “crisis” happens and supposed compliance “commentators / gurus” or those with fancy self-made titles or institutional affiliations come out of the woodwork with the supposed secret sauce like “doing compliance,” “tone at the top,” “values-based culture” and my favorite “trust.”
Indeed, “Trust Your Employees, Not Your Rule Book,” was the title of this recent article in the Harvard Business Review.
A Case Study In Risk Aversion Or What Happens When Defendants Fight Back
[This post is part of a periodic series regarding “old” FCPA enforcement actions]
Previous posts here and here highlighted the 2001 DOJ/SEC FCPA enforcement action against KPMG Siddharta Siddharta & Harsono (KPMG-SSH) and Sonny Harsono and Baker Hughes regarding alleged improper payments in connection with an Indonesia tax assessment. All of the defendants resolved the enforcement actions without putting the DOJ/SEC to its burden of proof (the risk aversion portion of this post).
However, also in 2001 the SEC charged Eric Mattson (the former CFO of Baker Hughes) and James Harris (the former Controller of Baker Hughes) with Foreign Corrupt Practices Act offenses based on the same substantive allegations. Unlike the other defendants, as highlighted in this post, Mattson and Harris fought back – a process that resulted in a federal court judge dismissing the FCPA charges against them.
North Carolina’s Season Of Failures
Earlier this week, North Carolina won the national championship basketball game to cap off a successful season. By one measure, North Carolina was thus the most successful team in college basketball this year. But what if North Carolina was a business organization subject to the FCPA?
It is undisputed that North Carolina failed many times this year.
For starters, North Carolina ended the season 33-7 which means that North Carolina lost approximately 18% of its games. During the season, North Carolina lost to unranked Georgia Tech and Miami and failed to win the ACC tournament conference championship.
Further To JPMorgan Representing A Trifecta Of Off-The-Rails FCPA Enforcement
This prior post highlighted the recent article “JPMorgan – A Trifecta of Off-The-Rails FCPA Enforcement” (the article can be downloaded here).
A recent Federal Reserve Board enforcement action against Fang Fang (the former Managing Director and head of China Investment Banking at J.P. Morgan Securities (Asia Pacific) Limited (JPMSAP)) and Timothy Fletcher (the former Managing Director and Head of the Junior Resources Management Group at JPMSAP – the group responsible for recruiting, hiring, staffing, and compensation and reviews for junior employees) further highlights how the JPMorgan Foreign Corrupt Practices Act enforcement (see prior posts here and here) represents a trifecta of off-the-rails enforcement and why anyone who values the rule of law should be alarmed.
In addition, this post highlights how the recent Federal Reserve action against Fang and Fletcher was not the first Federal Reserve action against an individual in the FCPA context.
Criminal Internal Controls Charges Against Individuals
Pardon me for being that guy, but in the Foreign Corrupt Practices Act space someone needs to put on the stripes every now and then and blow the whistle on certain commentary.
Another statement (see here for a similar prior post) from Michael Volkov’s Corruption, Crime & Compliance has left me scratching my head and thinking to myself “you gotta be kidding me.” In the post, Volkov writes: “If you follow my blog, you know that I have often predicted that DOJ will eventually prosecute criminally an individual for circumventing internal controls. The implications of such a prosecution will be significant.”
Newsflash.
As highlighted in this post, the DOJ has already criminally prosecuted several individuals for circumventing internal controls.