The Anti-Corruption Report

The definitive source of actionable intelligence covering anti-corruption laws around the globe

Articles By Topic

By Topic: Boards of Directors

  • From Vol. 7 No.14 (Jul. 11, 2018)

    Beyond Technical Capacity: The Importance of Building Relationships As a CCO

    No matter how skilled a chief compliance officer is, if the business does not trust its compliance leader, little is likely to be accomplished. The Anti-Corruption Report recently spoke with Kristy Grant‑Hart, founder and CEO of Spark Compliance and formerly the CCO at United International Pictures, about the importance of building relationships throughout an organization. From the business to the board, Grant-Hart shares her strategies for establishing rapport and building trust. See “Finding the Softer Side: VMware’s Senior Director of Ethics and Compliance Discusses Her Department’s ‘Re-Brand’” (Jan. 24, 2018).

    Read Full Article …
  • From Vol. 6 No.16 (Aug. 16, 2017)

    NAVEX Global Ethics and Compliance Training Survey Offers Benchmarking Data on Compliance Training

    In an era of intense regulatory scrutiny and stretched compliance budgets, understanding the benefits derived from a company’s ethics and compliance training, and how that training stacks up against the company’s peers, can encourage executive and employee buy-in and assist in efficient allocation of resources. In its “2017 E & C Training Benchmark Report,” NAVEX Global offers timely insights from more than 900 compliance, legal and other personnel from a broad range of businesses into the maturity and focus of their E&C training programs, training topics, techniques and goals; budgeting and staffing; and effectiveness metrics. See also “NAVEX Global Offers Benchmarking Data on Hotline and Internal Reporting Mechanisms” (Apr. 26, 2017).

    Read Full Article …
  • From Vol. 5 No.17 (Aug. 31, 2016)

    Eighth Circuit Dismisses Wal-Mart Shareholders’ FCPA-Related Derivative Suit

    In the more than four years since Wal-Mart’s Mexican bribery scheme was reported in The New York Times, the company has incurred sky-high expenses responding to the allegations and has revamped its compliance program. Although it has not yet reached an FCPA settlement with the government, it has recently prevailed in a string of shareholder actions in Arkansas related to the misconduct. In Cottrell v. Duke, the 8th Circuit affirmed the district court’s dismissal of shareholders’ consolidated derivative claims against the board. We analyze the court’s holding that the plaintiffs failed to adequately plead facts showing that a demand on the board to bring a suit would have been futile, and examine the effects the shareholders’ allegations had on the company. See “The Fallout From Wal-Mart’s Ongoing FCPA Investigation” (Jun. 25, 2014).

    Read Full Article …
  • From Vol. 5 No.12 (Jun. 15, 2016)

    Board Responsibility for Ethics and Compliance

    In recent months, the DOJ and SEC have made it abundantly clear that they are focused on prosecuting individuals for their part in FCPA violations. In light of this additional attention, board members and others responsible for company compliance programs must be even more diligent about meeting their obligations. In a recent conversation with The FCPA Report, Jean-Marc Levy and Susan Divers of training, advisory and education company LRN discuss the nature of a board’s compliance and ethics responsibilities and provide suggestions for how board members can fulfill their anti-corruption compliance duties. See “Directors and CCOs Share Insights on Maximizing a Board’s Impact on Compliance” (May 4, 2016).

    Read Full Article …
  • From Vol. 5 No.9 (May 4, 2016)

    Directors and CCOs Share Insights on Maximizing a Board’s Impact on Compliance

    How can a board best shape and support a company’s compliance efforts? At Ethisphere’s 2016 Global Ethics Summit, a panel featuring directors, executives and compliance experts from JLL, AT&T, U.S. Steel Corporation, Walmart, ManpowerGroup and PwC discussed the challenges boards face and best practices for approaching compliance issues. See also “How the Board and Compliance View Each Other” (Sep. 23, 2015).

    Read Full Article …
  • From Vol. 4 No.19 (Sep. 23, 2015)

    How the Board and Compliance View Each Other

    Robust communication between the board and the compliance department is integral for a strong anti-corruption program, but relations between the two groups are not always straightforward.  The Society of Corporate Compliance and Ethics (SCCE), in cooperation with New York Stock Exchange Governance Services (NYSE), recently explored the interaction between board-level personnel and compliance personnel in their 2015 Board of Director’s Compliance and Ethics Survey.  NYSE senior compliance counsel Eric Morehead and senior analyst Leslie Prendergast, along with SCCE vice president Adam Turteltaub, discussed the survey in a webinar.  They compared various compliance topics from the perspective of both compliance officers and the board, including how companies should structure reporting lines, how frequently compliance should report to the board, how comfortable the board is hearing from compliance and the traits boards look for in CCOs.  See also “Customizing Codes of Conduct to Spread the Message of Compliance,” The FCPA Report, Vol. 4, No. 5 (Mar. 4, 2015); “Using Behavioral Psychology Tools to Leverage Compliance Resources,” The FCPA Report, Vol. 4, No. 3 (Feb. 4, 2015).

    Read Full Article …
  • From Vol. 4 No.2 (Jan. 21, 2015)

    The Board’s Role in an Anti-Corruption Investigation

    An educated and active board of directors can do a lot to keep companies in compliance with anti-corruption laws, and if there is a potential violation, can steward the company successfully through the investigation process.  An effective board must maintain a working relationship with the members of management responsible for the compliance program and must understand the specific risks faced by the company.  During a recent panel at the Practising Law Institute’s Directors’ Institute on Corporate Governance 2014, experts explained the active role boards should take in the current environment of increased enforcement actions and sanctions.  The panel featured Dennis Beresford, Executive in Residence at the J.M. Tull School of Accounting at the University of Georgia and former Chairman of the Financial Accounting Standards Board; Larry Boyd, Executive Vice President, Secretary, and General Counsel of Ingram Micro Inc.; Robert Khuzami, a partner at Kirkland & Ellis and former SEC Director of Enforcement; and Antonio Yanez, Jr., a partner at Willkie Farr & Gallagher.  See also “Anti-Corruption Compliance Best Practices for Boards of Directors,” The FCPA Report, Vol. 2, No. 12 (Jun. 12, 2013).

    Read Full Article …
  • From Vol. 3 No.23 (Nov. 19, 2014)

    Management Compliance Committees: Operation and Support (Part Three of Three)

    A management-level compliance committee can address corruption risks, improve relationships between compliance and business personnel and show regulators that the company takes compliance seriously.  But unrealistic plans and failure to follow through can have the opposite effect.  To assist companies in establishing and maintaining effective compliance committees, The FCPA Report is publishing a three-part series on the topic.  This, the third article, advises companies about how to structure their compliance committees.  It includes discussions of who should oversee the committee, advice on how to support the committee, and pointers on committee operations.  In the first article, we weighed the pros and cons of having a committee and discussed what types of companies may benefit from having a compliance committee.  The second article detailed best practices for forming and operating a compliance committee.

    Read Full Article …
  • From Vol. 3 No.13 (Jun. 25, 2014)

    The Fallout From Walmart’s Ongoing FCPA Investigation

    Walmart’s ongoing trials and tribulations demonstrate that anti-corruption violations can have ramifications far beyond the costs of a fine or penalty.  More than two years after Walmart’s anti-corruption troubles began, it is still suffering significant collateral consequences.  The retail giant has been deeply embroiled in a wide-ranging internal investigation since its 2011 SEC disclosure of possible FCPA violations, followed by the 2012 New York Times report that Walmart had paid over $24 million in bribes in Mexico.  The company has poured hundreds of millions of dollars into the investigation, overhauled its compliance program and personnel, and has faced criticism regarding the independence of its board, with Institutional Shareholder Services recommending that the company take actions to improve transparency and independence.  The company has also been the subject of ongoing civil litigation related to the bribery allegations.  See “How to Anticipate and Manage Collateral Litigation after an FCPA Investigation Becomes Public,” The FCPA Report, Vol. 2, No. 17 (Aug. 21, 2013). 

    Read Full Article …
  • From Vol. 3 No.5 (Mar. 5, 2014)

    Do Compliance Officers Have More Seats in the C-Suite?

    The influence of CCOs in global companies has grown over the past decade as the enforcement landscape in many areas – notably the FCPA – has changed.  Yet, where a CCO should fit into a company's reporting structure remains unsettled.  A recent survey conducted by the Society of Corporate Compliance and Ethics and the Health Care Compliance Association examined how CCOs are interacting with boards of directors, providing benchmarks for companies.  See “How to Structure Chief Compliance Officer Reporting Lines to Maximize the Efficacy of Anti-Corruption Compliance (Part One of Three),” Vol. 2, No. 22 (Nov. 6, 2013), Part Two of Three, Vol. 2, No. 23 (Nov 20, 2013), Part Three of Three, Vol. 2, No. 24 (Dec. 4, 2013).

    Read Full Article …
  • From Vol. 2 No.24 (Dec. 4, 2013)

    How to Structure Chief Compliance Officer Reporting Lines to Maximize the Efficacy of Anti-Corruption Compliance (Part Three of Three)

    To whom a company’s chief compliance office reports fundamentally affects the authority of the CCO, directly influencing the effectiveness of the company’s anti-corruption compliance program and the company’s reputation and revenue.  However, there is little guidance, official or otherwise, on how to best tailor a reporting structure to a company’s needs.  To help companies with this critical task, The FCPA Report is publishing a three-part series on compliance reporting lines.  This, the third article in the series, explores the pros and cons of having the CCO report to both the board and a member of management, provides a roadmap for CCOs handling compliance violations (including insight from the former head of compliance at AIG), explores how CCOs can protect themselves from liability and discusses how companies should evaluate their reporting structures.  The first article in the series addressed the recent trend of companies shifting away from direct reporting of compliance to the legal department, discussed guidance provided by the government on this topic, outlined various issues a company should consider when choosing a reporting structure and explained why there is no one-size-fits-all solution to this compliance quandary.  The second article explored the benefits and drawbacks of five different reporting line structures.  See also “Five Tools Every Chief Compliance Officer Needs for Effective FCPA Compliance: Title, Authority, Access, Budget and Culture (Part One of Two),” The FCPA Report, Vol. 2, No. 7 (Apr. 3, 2013); Part Two of Two, Vol. 2, No. 8 (Apr. 17, 2013). 

    Read Full Article …
  • From Vol. 2 No.23 (Nov. 20, 2013)

    How to Structure Chief Compliance Officer Reporting Lines to Maximize the Efficacy of Anti-Corruption Compliance (Part Two of Three)

    The structure of a company’s compliance reporting lines is a fundamental element of its ability to build and maintain an effective anti-corruption compliance program.  To whom a company’s chief compliance officer reports influences that CCO’s visibility, authority and effectiveness – which, in this era of increasing enforcement, affect the company’s revenue and reputation.  However, reporting structures vary among companies, and best practices are unsettled.  The FCPA Report is examining various reporting structures in a three-part series.  This article, the second in the series, explores the benefits and drawbacks of five different reporting line structures.  See also “Five Tools Every Chief Compliance Officer Needs for Effective FCPA Compliance: Title, Authority, Access, Budget and Culture (Part One of Two),” The FCPA Report, Vol. 2, No. 7 (Apr. 3, 2013); Part Two of Two, Vol. 2, No. 8 (Apr. 17, 2013). 

    Read Full Article …
  • From Vol. 2 No.22 (Nov. 6, 2013)

    How to Structure Chief Compliance Officer Reporting Lines to Maximize the Efficacy of Anti-Corruption Compliance (Part One of Three)

    The structure of a chief compliance officer’s reporting line within a company fundamentally affects the authority and efficacy of the CCO.  Operating, investment and other companies generally agree on the stakes of appropriately structuring CCO reporting lines – they agree that the right reporting design is essential to revenue and risk mitigation – but industry practice on the topic is by no means settled.  Companies routinely ask, for example: Does having the CCO report to the company’s CEO – as opposed to the board of directors – confer sufficient authority?  Can the CCO operate effectively while reporting to the general counsel?  Is a direct line from the CCO to the board a requirement for an effective compliance program?  To help companies answer these questions, The FCPA Report is publishing a three-part series examining the pros and cons of various reporting structures.  This article, the first in the series, (1) assesses the recent trend of companies shifting away from direct reporting of compliance to the legal department, (2) discusses guidance provided by the government on this topic, (3) outlines various issues a company should consider when choosing a reporting structure and (4) explains why there is no one-size-fits-all solution to this compliance quandary.  See also “Five Tools Every Chief Compliance Officer Needs for Effective FCPA Compliance: Title, Authority, Access, Budget and Culture (Part One of Two),” The FCPA Report, Vol. 2, No. 7 (Apr. 3, 2013); Part Two of Two, Vol. 2, No. 8 (Apr. 17, 2013).  On evaluating compliance programs generally, see “Best Practices for Reviewing Anti-Corruption Compliance Programs: Implementation, Remediation and Documentation (Part Three of Three),” The FCPA Report, Vol. 2, No. 18 (Sep. 11, 2013).

    Read Full Article …
  • From Vol. 2 No.12 (Jun. 12, 2013)

    Anti-Corruption Compliance Best Practices for Boards of Directors

    The board of directors is now viewed by regulators, shareholders and other stakeholders as a central bulwark in a company’s anti-corruption infrastructure – the result of a dramatic increase in FCPA enforcement actions, issuance of the joint SEC/DOJ FCPA Resource Guide and related factors.  Boards and their committees are taking a more vigorous and proactive approach to FCPA compliance and monitoring, but few board members have deep experience in the area, and fewer still are conversant with relevant best practices.  A recent Practising Law Institute panel offered insights that can help board members identify issues, ask the right questions and accurately measure corruption risk.  The panel was moderated by F. Joseph Warin of Gibson, Dunn & Crutcher LLP, and approached the issues of a board’s role in anti-corruption compliance from three perspectives: that of a seasoned board member (Nina Henderson), a prosecutor (Jason Jones of the DOJ) and outside counsel (Martin J. Weinstein of Willkie Farr & Gallagher LLP).

    Read Full Article …
  • From Vol. 2 No.12 (Jun. 12, 2013)

    Complying with the FCPA: Mergers, Acquisitions and Investment Transactions (Part Five of Five)

    In light of the significant FCPA risk posed by cross-border transactions, The FCPA Report is serializing (in five parts) a chapter from a recently published treatise, The Foreign Corrupt Practices Act: Compliance, Investigations and Enforcement.  The authors of the treatise are Martin Weinstein, Robert Meyer and Jeffrey Clark, all partners at Willkie, Farr & Gallagher LLP, and highly-regarded FCPA practitioners.  This part of the series discusses: the FCPA risks faced by minority interest holders, and additional compliance measures that may be needed when an individual investor or one or more employees or representatives of a private equity firm serve on the board of directors of an investment or portfolio company.  The first part of the series provided an overview of the corruption liability inherent in M&A and investment transactions and provided insight on mitigation of corruption risk before transactions occur, focusing on successor liability, ratification, acts in furtherance of corruption and investment valuation.  The second installment in the series analyzed post-transaction risk, including the concept of willful blindness and the application of the FCPA’s accounting provisions to mergers and acquisitions.  The third installment in the series provided guidance on the due diligence process, including the initial risk assessment, determining the scope of the review, coordinating the work of the review team and investigating red flags.  It also provided advice on steps to take if a compliance issue is discovered and contractual safeguards to include in deal documents to minimize corruption risk.  The fourth part of the series addressed corruption risk in non-U.S. investments, including steps to take during pre-investment due diligence, contractual safeguards to mitigate risk and post-investment responsibilities.

    Read Full Article …
  • From Vol. 2 No.7 (Apr. 3, 2013)

    Five Tools Every Chief Compliance Officer Needs for Effective FCPA Compliance: Title, Authority, Access, Budget and Culture (Part One of Two)

    Hiring an outstanding chief compliance officer (CCO) is necessary but not sufficient for effective FCPA compliance.  To be effective, the right CCO needs the right tools – actual authority credibly conveyed by an appropriate title; access to the board and management; a workable reporting structure; sufficient budget; quality people; up-to-date technology; and a receptive culture.  Few companies would dispute the notion that a CCO needs the foregoing tools, among others, to do his or her job well.  But fewer still have a coherent and consistent approach to translating these concepts into practice.  How, for example, can a company structure reporting lines to maximize the effectiveness of its CCO and minimize the likelihood of FCPA violations?  What level of board access is appropriate for the CCO, and how can a company facilitate such access?  This article addresses these and similar questions.  In doing so, this article aims to help companies empower their CCOs and thereby minimize the probability and magnitude of FCPA and other compliance violations.  Many of the recommendations in this article do not involve increased spending, but rather a more prudent allocation of resources, better informed structuring and refocused culture.  More effective FCPA compliance is not just about spending more money; it’s about thinking differently, confronting reality and giving the right people the right tools.

    Read Full Article …
  • From Vol. 1 No.5 (Aug. 8, 2012)

    FCPA Investigation Protection: D&O Insurance and Beyond

    Few subjects receive as much attention in legal, compliance and accounting circles these days as the FCPA, the United Kingdom Bribery Act and other foreign and international anti-corruption laws.  However, while legal issues, compliance questions and legislative initiatives are the subject of constant scrutiny from companies, legal counsel, blogs, commentators and lobbyists, one potential means of ameliorating FCPA risk receives relatively little consideration: insurance.  So, what can a company do in the insurance context to protect itself against the costs of an FCPA investigation and/or proceeding?  In a guest article, M. Machua Millett, a Senior Vice President at international insurance brokerage firm Marsh USA, Inc., addresses this important question.

    Read Full Article …
  • From Vol. 1 No.4 (Jul. 25, 2012)

    An Interview with Judge Stanley Sporkin, the “Father of the FCPA” (Part Two of Two)

    This article includes the second part of The FCPA Report’s extensive interview with the esteemed Judge Stanley Sporkin, who is widely credited with developing the books and records provision of the FCPA when he was Director of the Division of Enforcement of the SEC in the 1970s.  Judge Sporkin was also a federal judge in the District of Columbia and General Counsel of the CIA, and is currently the Ombudsman for BP America.  The second part of our interview includes Judge Sporkin’s comments on: self-reporting; the new FCPA Unit at the SEC; his proposal for amnesty; the biggest mistake companies make when it comes to corruption; the movement to amend the FCPA; the potential importance of ombudsmen; and combining anti-corruption audits with annual audits.  In the first part of the interview, Judge Sporkin offered insight into, among other things: the origins of the FCPA following the Watergate hearings; his contemporaneous view on the difficulty of substantiating anti-bribery claims; the origins of internal investigations; and the pro-business orientation of the FCPA.  See An Interview with Judge Stanley Sporkin, the ‘Father of the FCPA’ (Part One of Two),” The FCPA Report, Vol. 1, No. 3 (Jul. 11, 2012).

    Read Full Article …