Corruption Crime & Compliance

Companies have to focus on compliance controls and non-material financial transactions to prevent fraud, bribery and other misuse of corporate funds.  One particular risky area is the control of gifts, meals, entertainment, and travel expenses.  In this new era of compliance, companies have to adopt proactive and automated strategies to mitigate risks of unauthorized GMET expenditures. In this episode, Michael Volkov discusses GMET risks and mitigation strategies.

Goldman Sachs' role in the 1MDB scandal continues to draw scrutiny.  Justice Department prosecutors are investigating the extent to which Goldman Sachs knew and participated in the 1MDB scandal, and what penalty, if any, Goldman Sachs should pay.  The recent indictment and guilty plea of two former Goldman Sachs officials represents a significant development in the ongoing investigation. In this episode, Michael Volkov discusses recent events in the 1MDB investigation.  

Stryker Corporation has suffered a second FCPA enforcement action, and will now bear the stigma of FCPA “recidivist.”  In reaching a settlement with the SEC and agreeing to pay a $7.8 million civil penalty, Stryker will now be subject to an SEC-imposed compliance monitor. In this episode, Michael Volkov reviews the facts surrounding the Stryker SEC settlement.

The Department of Treasury's Office of Foreign Asset Control (OFAC) recently settled a long-active enforcement action with Epsilon relating to alleged violations of the Iran Sanctions Program.  After a mixed decision from the US Court of Appeals for the District of Columbia Circuit, OFAC negotiated a $1.5 settlement for 39 violations of the Iran Sanctions Program.  Along the way, however, OFAC secured favorable rulings affirming application of its broad prohibition against third-party conduct where a company knows or has "reason to know" that a shipment intended to a third party may be shipped to a prohibited party. In this episode, Michael Volkov discusses the Epsilon case and the implications for third party risks in sanctions cases.

The Trump Administration has aggressively restricted commerce with Cuba and Venezuela.  With respect to Cuba, the Trump Administration has re-imposed strict regulations on commerce with Cuba, reversing several Obama-era regulations easing such restrictions.  At the same time, the Trump Administration has continued Obama era policies tightening trade with Venezuela and opposing the Maduro leadership in Venezuela. In this episode, Michael Volkov discusses recent updates to the Cuba and Venezuela sanctions regimes.

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.