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Chief Compliance Officer

CCOs: Expert Problem Solvers – Corruption, Crime & Compliance

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If you follow my blog, you know that I am passionate about the compliance profession.  Chief compliance officers have unique talents, expertise and leadership qualities.  CCOs are committed ethics warriors.  No one else can claim that same mission.

CCOs are the natural stewards of a company’s ethical culture.  Of course, a company can appoint a separate chief ethics officer to distinguish between the ethics and compliance functions.  There is nothing wrong with that so long as responsibilities are made clear. 

If the CCO is also responsible for ethics, the CCO title should be transformed into Chief Ethics and Compliance Officer (“See-Co”).  And ethics should always be listed before compliance.  A company’s program should be an “ethics and compliance” program. I know that sounds like a trivial detail, but I think the symbolism is significant.

CECOs have significant responsibilities and a unique vision across the organization.  The success of a CECO turns on his/her ability to lead on ethical decision-making, line-of-sight across the organization, and a mission to embed and promote ethical conduct in every aspect of the business.  This latter point places CECOs in the role of a problem solver.

Perhaps most importantly, CECOs are familiar with the design and implementation of company-wide controls that have to be owned, managed and maintained by the business.  Ethics and compliance, by definition, has to be the responsibility of the business.  CECOs do not have enough resources, time and authority to supervise every employee, every activity, every transaction.  CECOs are experts in building a team effort to ensure corporate ethics and compliance.  They have the expertise needed to lead the business in taking responsibility for ethics and compliance.  It is their job and they know how to do it.

When an organization faces real operational challenges, CECOs can provide effective leadership, given their unique role and perspective across the organization.

ESG is a new and important challenge for every company.  It is gaining steam because it links together two important but interdependent trends – the need for corporations to adopt a broader vision of success and the desire for corporate action and accountability. Naturally, companies are looking to CECOs to play a significant role in ESG. Again, that makes sense.

CCOs have to contribute to ESG and can leverage their own roles to gain resources and improve their own ethics and compliance programs.  But CECOs cannot take on full responsibility for ESG.  It is too large a responsibility and would only dilute a CECO’s ability to manage and maintain an effective ethics and compliance program. CECOs have the skillset to help a company achieve ESG objectives.  While that may be true, CECOs have to preserve their position in the corporate governance world.


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Certification

Episode 239 – DOJ’s New CCO Certification Requirement

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The Department of Justice continues to respond to the compliance community’s concerns about the new certification requirement adopted as part of the Glencore FCPA enforcement action. DOJ has adopted this new requirement to “empower” CCOs and to ensure that CCOs have a “seat at the [senior management] table.” While these are all laudable goals, CCOs continue to question whether DOJ’s new certification requirement will undermine their authority by opening CCOs to internal pressure to execute a certification despite concerns about the status of a company’s compliance program.

In this Episode, Michael Volkov reviews DOJ’s new CCO certification requirement.


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bribery

Episode 238: 2022 FCPA Enforcement Trends . . . So Far

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In following the Justice Department and the Securities Exchange Commission FCPA enforcement actions, I am always reminded of the popular phrase — “reading the tea leaves.” (or “tasseography,” a fortune-telling method based on tea leave patterns in tea sediments). Despite a slow initial year in 2021, the Biden Administration’s stamp and push on FCPA enforcement is becoming clear. 

Keep in mind, DOJ and SEC officials have promised a new, tougher approach to FCPA enforcement. Change in government enforcement policies and results take time. However, no one expected the changes to take this long. In addition, the initial enforcement push has raised some interesting questions concerning the specific steps taken by enforcement officials.

In looking at the most recent FCPA enforcement actions (i.e., Stericycle, Glencore, and Tenaris), there are significant new trends and some important issues.

In this Episode, Michael Volkov reviews the important trends and issues surrounding FCPA Enforcement in 2022.


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AAG Kenneth Polite

DOJ Criminal Division AAG Underscores Role of CCOs and Announces CCO Certification Requirements

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In a homecoming speech, DOJ’s Assistant Attorney General Kenneth Polite gave a rousing speech to a room full of compliance professionals at the annual Compliance Week meeting in Washington, D.C.  AAG Polite, who has served as a CCO himself, embraced the mission of compliance officers as a critical part of corporate governance systems.

AAG Polite specifically recognized the importance of the compliance functions and the challenges that CCOs face in the corporate governance landscape. He specifically referenced the difficulties posed by lack of adequate resources and stature within an organization.  He labeled as misguided the notion that compliance is a drain or cost center in the overall corporate landscape. Instead, he warned that companies that fail to invest adequate resources in compliance will definitely pay in the event that they are subject to a DOJ enforcement action.  In this respect, AAG Polite noted that companies “that make a serious investment in improving their compliance programs and internal controls will be viewed in a better light by the Department of Justice and by my Criminal Division.”

AAG Polite specifically warned that “Chief compliance officers should have true independence, authority and stature within their organizations.”  AAG Polite emphasized CCOs should be empowered by having adequate access to and engagement with business functions, management and the board of directors.

AAG Polite mentioned a specific example when during a presentation by a company on proposed resolution of an investigation, the general counsel answered a question directed to the CCO.  In response, AAG Polite observed “That single act gave me all the information I needed.  That one act demonstrated, literally and figuratively, that CCO had no voice in that organization.”

AAG Polite continued that companies that do not invest in compliance will face a greater risk of prosecution and will be more likely to have an independent corporate compliance monitor imposed as part of a resolution.  AAG Polite referenced the recent Stericycle FCPA settlement which included appointment of an independent corporate compliance monitor for a two-year term. 

In a major announcement, AAG Polite observed that CCOs will be required to certify that the company’s compliance program is reasonably designed and implemented to help detect and prevent violations at the end of the term of a settlement agreement and, if applicable, the service period of the independent compliance monitor.

AAG Polite explained that this new requirement is not intended to be punitive but is a new tool in DOJ’s arsenal and will ensure that CCO must have appropriate stature in corporate decision-making.  The requirement is intended to “empower our compliance professionals to have the data, access and voice” in organizations to ensure that the company is properly focused on its ethics and compliance program.

In an interesting note, AAG Polite stated that DOJ is “interested in how a company measures and tests its culture and how it uses the testing” to and improve its control environment and compliance program.


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