1) Compliance News – Do not get on the wrong page with FCPA
The FCPA Today reports that in 2016, payouts for corporate settlements reached a whooping $570,053,000 (compliance news). To add to the 2017 treasury, Las Vegas Sands Corporation has agreed to pay a whooping $7 million as penalty for violating a federal anti-bribery law. This law relates to company compliance with the Foreign Practices Corrupt Act and U.S. Department of Justice on February 27th, 2017.
To summarize the six year investigation which began in 2011, the company was accused of paying (bribing) $5.8 million to a business consultant in Asia without any legitimate business purpose. Sands accepted the charges of paying approximately $60 million (SCCE) to a consultant in China. This was done without keeping accurate books or maintaining internal controls that would have prevented misconduct. Payments to the consultant included $7.5 million so the gaming company could indirectly buy and operate a Chinese basketball team. This was a violation of the local rule that gaming companies cannot have ownership in China. Furthermore, the Securities and Exchange Commission (SEC) has also imposed a fine of another $9 million on Sands in regards to the same case (Fortune: compliance news). As a result Sands Corp. signed a NPA (Non-Prosecution Agreement) in which the U.S DOJ has outlined the important compliance standards specific to Sands.
2) Compliance News -“Filip Factors”
In light of the above circumstances, it becomes especially relevant to highlight the elements of an effective compliance program. Furthermore, the U.S. Department of Justice has published a guideline, commonly known as the ‘Filip Factors’ to assess the viability of the compliance process in any corporation (US DOJ). It is important to note that all these factors pertain to how a business operates and how effectively the company integrates compliance into its business functions. In addition, these factors do not place importance on legal issues and laws.
Yardstick for evaluating compliance process
The Principles of Federal Prosecution of Business Organizations in the United States Attorney’s Manual has included the following precepts that the DOJ considers as significant yardstick to evaluate a corporation’s compliance management process:
- In case of any misconduct, what actions did a company undertake in order to gauge and track the root cause of the issue at hand. The remedial measures adopted to rectify the problem and ensure it doesn’t occur again,
- How did senior and middle management guide their commitment towards the compliance. The level of expertise they have exercised to audit and monitor the compliance process,
- What was the turnover rate for compliance and internal audit over the past time period. Also, the efficient use of resources available at the company’s disposal,
- How effectively has the corporation integrated the policies and procedures into its day-to-day conduct of operations. whether their usefulness is being monitored and continuously updated,
- How viable are the risk assessment and reporting mechanisms so as to warrant the information and analysis so provided.
- What are the methods in place for continuous improvement, internal audit and review.
The above points lay the groundwork for conduct of compliance processes in the organization rather than drawing attention to the compliance program. It is about building effective systems to prevent, find and fix problems that are integrated into business processes.
3) Compliance News – Forecasting: Planning Yesterday’s Tomorrow
We need to have a sense of where we are going and what it might look like. It gives us some direction. Risk and trends analysis, keeping track and record of all compliance related activities etc help in providing this future direction. Forecasting typically will raise risks and opportunities which an organization might consider going forward. At the same time, for any forecast there must be preparedness for consequences.
A company needs to strategically evaluate all the alternatives available in the market before implementing a compliance program. Hence, assessing the applicability and effectiveness of all the aspects of a particular compliance program has long term effects on a company’s strategy and growth.
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