The Anti-Corruption Report

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

Articles By Topic

By Topic: Employee Discipline

  • From Vol. 7 No.22 (Oct. 31, 2018)

    Privilege, Data Privacy and Human Resources in Cross‑Border Investigations

    Increasing globalization and better international law enforcement cooperation have made cross‑border investigations increasingly complex, Angela Burgess, a partner at Davis Polk, explained during a panel at PLI’s recent White Collar Crime 2018 program. The panel, which Burgess moderated, addressed how to navigate the minefields of attorney‑client privilege, data privacy and employment law in cross‑border investigations. The panel also included attorneys from the U.S. Attorney’s office in the EDNY, Weil Gotshal, Skadden and HSBC. See “Dispelling Myths About When Attorney-Client Privilege Applies to Communications With In-House Counsel” (Sep. 20, 2017).

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  • From Vol. 7 No.12 (Jun. 13, 2018)

    Effective and Compliant Employee Monitoring (Part Two of Two)

    Keeping track of employees can be an important part of a compliance program, but complexities arise that require cross-department coordination and deep understanding of numerous privacy limitations and other legal requirements, especially whenthe monitoring is used for purposes beyond security. The second installment of this two-part series provides operational guidance on implementing monitoring programs and navigating contrasting rules in Europe, as well as issues surrounding individual monitoring and data controlled by third parties. The first part tackled the role of data monitoring, effective notice, legal considerations and specific policy considerations. See “Balancing Employment Law Considerations During Corruption Investigations” (Sep. 20, 2017).

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  • From Vol. 7 No.5 (Mar. 7, 2018)

    Compliance Program Checkup: A Checklist for Evaluating Employee Discipline Policies and Procedures

    Properly disciplining employees involved in an anti-corruption matter is a necessary and useful part of remediation. Companies should have good discipline policies in place before an anti-corruption issue arises to ensure that the procedure does not appear ad hoc or arbitrary to either employees or enforcers. When an issue does arise, companies should proceed with care to ensure a just and defensible outcome. This checklist provides companies with questions to ask both about their policies and specific procedures to make sure that their discipline process is running as smoothly as possible. For a deeper dive on this topic, see The Anti-Corruption Report’s three-part series on employee discipline for anti-corruption issues: “Predictability and Consistency in the Face of Inconsistent Laws” (Nov. 1, 2017); “Investigation and Documentation to Smooth the Discipline Process” (Nov. 15, 2017); and “Due Process for a Just and Effective System” (Nov. 29, 2017).

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  • From Vol. 6 No.23 (Nov. 29, 2017)

    Employee Discipline for Anti-Corruption Issues: Due Process for a Just and Effective System (Part Three of Three)

    Once a company has fully investigated an anti-corruption issue, it must decide whether and how to impose discipline. To promote a sense of fairness – and meet employment law requirements in some jurisdictions – the procedures governing those decisions need to include some form of due process for the employees involved. That procedure may differ between companies and jurisdictions, but it will have some common elements including notice to the employee, a set time frame for decision-making, a decision-maker with appropriate insight and authority, a range of possible punishments and a conclusion on what level of punishment to impose based on objective criteria. In this third and final article in The Anti-Corruption Report’s series on employee discipline, we discuss these elements of a discipline process and how they can promote a sense of fairness and due process. The first article in the series covered why having clean policies around discipline is important and the second described how to investigate an issue to make imposing discipline easier down the line. See “Balancing Employment Law Considerations During Corruption Investigations” (Sep. 20, 2017).

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  • From Vol. 6 No.22 (Nov. 15, 2017)

    Employee Discipline for Anti-Corruption Issues: Investigation and Documentation to Smooth the Discipline Process (Part Two of Three)

    Before a company can discipline an employee for corruption or bribery, it first has to determine whether, and to what extent, discipline is warranted. Investigation is a familiar part of anti-corruption remediation, but special attention must be paid to gather evidence in a way that it can support a discipline action later. In this second article in The Anti-Corruption Report’s three-part series on employee discipline, we discuss techniques for forward-thinking evidence-gathering, including the thorny issue of protecting privilege while building a record. The first article in the series addressed the value of setting expectations for discipline in advance and how to apply discipline consistently in the face of inconsistent local employment laws. The final article will discuss how to promote institutional due process. See “Employee Discipline and Internal Investigations After the Yates Memo” (Nov. 9, 2016).

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  • From Vol. 6 No.21 (Nov. 1, 2017)

    Employee Discipline for Anti-Corruption Issues: Predictability and Consistency in the Face of Inconsistent Laws (Part One of Three)

    Anti-corruption compliance has come very far in recent years, with many companies implementing strong policies and programs to prevent corruption and bribery. But no matter how good a compliance program is, some employees will violate company policy and the law to gain a business advantage or enrich themselves. When that happens, a key step in correcting the problem is employee discipline. In this first article of a three-part series, we discuss the value of having clean practices around discipline and the challenges of applying discipline uniformly across jurisdictions with varying employment laws. Subsequent articles will discuss what elements make a discipline process effective and how a company should conduct an investigation to support that process. See “Guide to Creating an Effective Compliance-Based Employee Incentive Program (Part One of Two)” (Jan. 7, 2015); Part Two (Jan. 21, 2015).

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  • From Vol. 6 No.20 (Oct. 18, 2017)

    New Criteria for Employee Monitoring Practices in Light of ECHR Decision

    The Grand Chamber of the European Court of Human Rights has laid out new criteria for national courts to consider when evaluating whether companies have safeguarded employees’ right to privacy. The court sided with an employee who claimed his privacy rights were violated when his messages were recorded. Some companies operating in the 47 member states may want to revisit their policies on monitoring communications, experts told The Anti-Corruption Report. We analyze the implications of the decision and how it aligns with other national laws. See “Balancing Employment Law Considerations During Corruption Investigations” (Sep. 20, 2017).

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  • From Vol. 5 No.25 (Dec. 21, 2016)

    Top FCPA Officials Encourage Strong Compliance Programs and Remediation, the Defense Bar Responds

    A year after the DOJ hired an in-house counsel to assist with assessing companies’ compliance programs, top enforcers at the DOJ, as well as the SEC, are touting the importance of compliance in anti-corruption resolutions. At ACI’s 33rd International Conference on the FCPA, recently held in Washington, D.C., federal regulators discussed the role Hui Chen is playing at the DOJ, how proactive remediation can lead to less harsh settlement terms and what the continued focus on individual accountability means for companies and their executives. The FCPA Report spoke to defense counsel for their reaction to the government’s statements. For additional coverage of the government speakers at this year’s conference, see “Ceresney and Yates Continue to Stress Individual Accountability, Voluntary Reporting and Cooperation” (Dec. 7, 2016).

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  • From Vol. 5 No.22 (Nov. 9, 2016)

    Employee Discipline and Internal Investigations After the Yates Memo

    Over the past year, the Department of Justice has reiterated and re-emphasized its focus on holding individuals accountable for corporate wrongdoing. For companies investigating potential FCPA violations, these mandates raise the stakes on the already complex issue of employee discipline. In a guest article, Paul Hastings partner Palmina M. Fava and her associate Mor Wetzler explain how companies must balance the need to promptly remediate and discipline wrongdoing with not depriving the company of access to employees before obtaining all of the facts needed to fully understand the issues. See “How Will the Yates Memo Change DOJ Enforcement? (Part One of Two)” (Sep. 23, 2015); Part Two (Oct. 7, 2015).

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  • From Vol. 5 No.20 (Oct. 12, 2016)

    Subsidiary Corruption, a Troublesome Joint Venture and a Fired Whistleblower: AB InBev’s Route to a $6 Million SEC Settlement

    Anheuser-Busch InBev (AB InBev) recently settled with the SEC to resolve FCPA books and records violations relating to the actions of its Indian joint venture and internal controls violations relating to its Indian subsidiary. The brewing company’s settlement highlights, once again, that companies operating in high-risk markets cannot be complacent about the activities of their foreign cohorts, whether that be subsidiaries, joint venture partners or third parties operating on behalf of the company. The settlement also highlights the dangers of interfering with whistleblowers. AB InBev was charged with impeding a whistleblower through the provisions of an employee separation agreement. See “Regional Risk Spotlight: Jay Holtmeier of WilmerHale Explains How to Navigate Bureaucratic Corruption Risks in India” (Sep. 23, 2015).

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  • From Vol. 5 No.20 (Oct. 12, 2016)

    The SEC as the Whistleblower Program’s Advocate: Severance Agreements and FCPA Investigations

    The recent close of the SEC’s fiscal year added notable guidance to a significant period of FCPA enforcement, including several cases that reveal a new feature of the SEC’s efforts to protect whistleblowers. These actions imposed penalties on companies for severance agreements that restricted the ability of employees to seek financial rewards for reporting potential violations of the securities laws to the SEC. They provide further evidence not only of the SEC’s dim view of companies’ efforts to undermine its growing Whistleblower Program, but also of the agency’s desire and ability to use Rule 21F-17 to combat them. In a guest article, Cravath partner David M. Stuart and his associate Kyle S. Gazis explain why these cases are particularly important precedents for companies with worldwide operations. They also analyze the SEC’s latest efforts to defend the Whistleblower Program and the resulting effects on companies seeking to address the risks of FCPA violations. See “Addressing Employees’ Perception That Internally Reporting Compliance Violations Is Futile” (Aug. 10, 2016).

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  • From Vol. 5 No.16 (Aug. 10, 2016)

    LATAM’s Delayed Self-Report and Inadequate Remediation Result in FCPA Fine Above Sentencing Guideline Minimum

    LATAM Airlines Group, along with its predecessor-in-interest LAN Airlines, has agreed to pay more than $22 million in penalties and disgorgement in order to settle allegations of books and records violations related to a union dispute in Argentina. Despite the lack of bribery allegations, the company paid a hefty penalty to the DOJ based on its failure to self-report the conduct in a timely manner or adequately remediate. Among the company’s remedial failures, the DOJ cited a lack of employee discipline, likely referencing the company’s CEO, who entered into a settlement with the SEC over the same conduct but remains in his position. See “CEO of LAN Airlines Settles FCPA Charges With SEC Over Union Dispute” (Feb. 10, 2016).

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  • From Vol. 5 No.14 (Jul. 13, 2016)

    Second Circuit Rules Employees May Be Fired for Refusing Internal Investigation Interview

    After the Yates Memo, which requires that a company under investigation disclose all information about individual wrongdoing to receive cooperation credit, individuals may be more likely to push back when asked to participate in internal investigations. What recourse do employers have if employees refuse to cooperate? A recent Second Circuit ruling “establishes a corporation’s right to ‘assume the worst’ and fire an employee who declines to sit for an interview, if and when the corporation has a reasonable basis to suspect the employee engaged in criminal conduct,” Juan Morillo, a partner at Quinn Emanuel, told The FCPA Report. We analyze the decision, Gilman v. Marsh & McLennan Co., Inc., and the questions it raises. See also “Internal Investigations and Criminal Discovery After the Yates Memo” (Apr. 6, 2016).

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  • From Vol. 4 No.17 (Aug. 19, 2015)

    Former Sales Exec Discusses How to Combat Corruption in the Field

    Anti-corruption policies are generally formulated in a company’s home office by attorneys and other compliance personnel.  But corruption usually happens on the front lines of a company’s international business – miles and sometimes oceans away.  Policies that seem sensible from corporate headquarters may look very different in far-flung locations around the world.  How can companies shape their business and compliance programs in such a way that they can stand up to the realities of life in the field?  At a recent event hosted by The Network, Inc., former sales executive Richard Bistrong, who spent 14 months in prison for FCPA violations, presented six risk factors employees on the front line face and provided actionable insight about combating those risks.  See “Mitigating Bribery Risks Using Financial Controls, Risk Assessments and Leveraging Internal Resources,” The FCPA Report, Vol. 3, No. 18 (Sep. 10, 2014).

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  • From Vol. 4 No.8 (Apr. 15, 2015)

    Companies Seeing an Increase in Hotline Reports and Higher Numbers of Repeat Reporters

    An effective compliance hotline is one of the key tools a company can use to gather information about its compliance challenges.  Companies should regularly examine the full body of reports they receive and benchmark their data against other organizations.  Examining industry trends will help companies to evaluate the effectiveness of their own ethics and compliance systems, to allocate resources where they are needed, and to educate boards on those matters.  Advisory firm Navex Global recently released its 2015 Ethics & Compliance Hotline Benchmark Report, which draws insights from hotline and other internal reporting data provided by 2,100 Navex Global clients.  This article details the key takeaways from that report and a related conference call hosted by the report’s authors.  See also “How Does Your Company’s Anti-Corruption Hotline Compare?,” The FCPA Report, Vol. 3, No. 21 (Oct. 22, 2014).

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  • From Vol. 4 No.5 (Mar. 4, 2015)

    $16 Million Goodyear SEC Settlement Highlights M&A Risks and Subsidiary Liability

    Goodyear Tire & Rubber Company has agreed to pay $16 million to settle civil FCPA charges, resolving allegations that it failed to detect more than $3.2 million in improper payments made by its Kenyan and Angolan subsidiaries.  The SEC says that due diligence failures relating to the acquisition of the Kenyan subsidiary and weak internal controls allowed the bribery to occur unchecked.  Goodyear received credit for self-disclosure, cooperation and remediation.  “Goodyear did very well,” Robert Appleton, a partner at Day Pitney, told The FCPA Report.  The company “got the best result I think it could have hoped for,” he said.  See also “Seven Issues to Address When Performing Pre-Acquisition Due Diligence,” The FCPA Report, Vol. 2, No. 23 (Nov. 20, 2013).

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  • From Vol. 4 No.2 (Jan. 21, 2015)

    Guide to Creating an Effective Compliance-Based Employee Incentive Program (Part Two of Two)

    An employee incentive program that provides effective disciplinary measures for compliance missteps and incentives for positive behavior is one of the “hallmarks of an effective compliance program,” according the DOJ/SEC FCPA Resource Guide.  To assist companies in creating such a program and determining the optimal positive and negative incentives, The FCPA Report is publishing a best-practices guide to developing and implementing an incentive program that works.  This, the second article in the series, discusses the carrots and sticks a company can use to encourage compliant behavior.  The first article in the series discussed the risks and benefits of incentivizing compliance, outlined three steps a company should take before creating an incentive program, and discussed how a company should measure compliance.  See also “When, Why and How Should Companies Discipline Employees for FCPA Violations?,” The FCPA Report, Vol. 1, No. 8 (Sep. 19, 2012). 

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  • From Vol. 4 No.1 (Jan. 7, 2015)

    Guide to Creating an Effective Compliance-Based Employee Incentive Program (Part One of Two)

    Companies with established and nascent FCPA programs alike are looking for ways to further enhance a compliant culture for their employees.  The creation of an effective compliance-based employee incentive program that both encourages compliant behavior and demonstrates the company’s compliance commitment is a “cutting edge issue” with which more and more companies are grappling, Lucinda Low, a partner at Steptoe and Johnson, told The FCPA Report.  To assist companies as they consider and develop such a program, The FCPA Report is publishing a best-practices guide to creating and implementing an efficient and effective incentive program.  In this, the first part of the guide, we discuss the risks and benefits of incentivizing compliance, outline three steps a company should take before creating an incentive program, and discuss how a company should measure compliance.  The second article in the series will discuss how companies can review the compliance-related activities of its senior and middle management and will provide suggestions for carrots and sticks a company can use to encourage compliant behavior.  See also “When, Why and How Should Companies Discipline Employees for FCPA Violations?,” The FCPA Report, Vol. 1, No. 8 (Sep. 19, 2012).

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  • From Vol. 2 No.13 (Jun. 26, 2013)

    U.S. Attorney Loretta Lynch Discusses Morgan Stanley, Ralph Lauren and the Government’s View on Compliance Programs, Self-Reporting, Monitors and More

    Every year, multi-national companies spend great sums on anti-corruption compliance.  By building robust compliance programs, companies seek to decrease corruption and also to limit company liability if bribery occurs.  However, many companies struggle with not only creating and maintaining an effective compliance program, but also communicating that program to the government if there is a problem.  At a recent conference hosted by the Society of Corporate Compliance and Ethics, Loretta Lynch, U.S. Attorney for the Eastern District of New York, shared a prosecutor’s perspective on corporate compliance programs.  Lynch also provided insight into the government’s position on employee discipline, training, self-reporting and corporate monitorship, along with specific discussions of the Ralph Lauren and Morgan Stanley cases.  See also “Davis Polk Lawyers and Morgan Stanley Compliance Director Discuss DOJ’s Decision Not to Prosecute Morgan Stanley for FCPA Violations,” The FCPA Report, Vol. 1, No. 10 (Oct. 17, 2012); “SEC’s NPA with Ralph Lauren, the Agency’s First Ever, Modifies the M&A Due Diligence Requirements Traditionally Included in DOJ DPAs, and Outlines Specific Actions That Constitute Effective Self-Reporting,” The FCPA Report, Vol. 2, No. 9 (May 1, 2013).

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  • From Vol. 1 No.11 (Nov. 7, 2012)

    Specific Strategies from Pfizer, Barrick Gold and Other Leading Companies for Handling Actual and Potential FCPA Whistleblowers

    The SEC’s new whistleblower bounty program, promulgated under the Dodd-Frank Act, has altered litigation strategy and forced in-house counsel and compliance officers to revisit portions of their compliance policies to encourage would-be whistleblowers to report internally in lieu of, or before, going to the government.  On October 19, 2012, at the ABA’s Fifth Annual FCPA Institute in Washington, D.C., a group of in-house and outside counsel discussed how the whistleblower program has affected FCPA compliance policies, the challenges of handling and disciplining whistleblowers as well as recent caselaw interpreting the provisions.  For more on discipline considerations for anti-bribery professionals, see “When, Why and How Should Companies Discipline Employees for FCPA Violations?,” The FCPA Report, Vol. 1, No. 8 (Sep. 19, 2012).

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  • From Vol. 1 No.9 (Oct. 3, 2012)

    Anonymous Polling, Focus Groups and “Organizational Justice” Help Companies Avoid FCPA Violations While Growing Revenue

    The notion that anti-bribery compliance and revenue generation are at odds has a superficial appeal and a long tradition.  But the notion does not hold up under theoretical scrutiny, and it has been discredited empirically.  As a theoretical matter, it makes good sense that a culture of ethics and excellence leads to high long-term returns, while a culture of bribery leads to misallocation of resources, among other problems.  And as an empirical matter, deep research by CEB (formerly the Corporate Executive Board), along with CEB’s extensive advisory experience, highlight a strong correlation between long-term revenue growth and a corporate culture of integrity.  “Integrity capital,” as CEB calls it, is not just the right thing to do or, less charitably, applied sanctimoniousness.  Rather, it is good business and effective strategy.  Working from an interview with Tracy Davis Bradley, a senior director at CEB; a recent article by Dan Currell, an executive director at CEB, and Bradley in the Harvard Business Review; as well as research provided to The FCPA Report by CEB, this article sheds light on some of the footpaths connecting ethics and revenue.  In particular, this article outlines specific steps that companies can take to avoid FCPA violations while simultaneously driving business growth; why the shaky economy may be driving bribery in developing countries; how integrity capital can help businesses’ bottom lines; how companies can make their hotlines more effective; how anonymous polling and focus groups, if done well, can yield surprisingly good results; and why companies should not only consistently and quickly punish offenders, but give recognition to employees who report wrongdoing.

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  • From Vol. 1 No.8 (Sep. 19, 2012)

    When, Why and How Should Companies Discipline Employees for FCPA Violations?

    When a company discovers an FCPA violation, and is faced with formulating a strategy to remediate the problem, one of the important and delicate considerations it must make is how to discipline the employees involved.  There are competing interests at work – the company needs to show the DOJ and the SEC that it reacted promptly and decisively, but it also must induce cooperation from key individuals in order to get to the root of the problem.  Termination may be appropriate for some employees, but companies must do so properly so as not to trigger retaliation; and other forms of discipline may be appropriate for employees with a less central role in the prohibited activities.  Determining the best proactive procedures to prevent misconduct, as well as the best reactive procedures once there has been a violation, and remedial measures to prevent reoccurrence, are paramount to minimize liability.  The government, once it is involved, may also pressure the company to take disciplinary action.  A further challenge hinges on the fact that information being provided in cooperating with the company, since it is not privileged, may be provided to the government for use in a possible criminal investigation.  This article provides context and practical guidance to companies navigating the disciplinary process.  In particular, this article discusses the application of the FCPA to employee conduct and how the government has treated employee discipline in the FCPA context.  Based on insight from experienced FCPA practitioners, this article addresses how to balance discipline with cooperation from employees during an internal investigation; strategies for inducing cooperation during the investigation; the privilege implications of cooperation; and considerations a company should weigh in considering disciplinary action, including government pressure and scrutiny of decisions, seniority of management, as well as disciplinary challenges in different jurisdictions.

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