In-House Counsel & Compliance in a Large Corporation
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Transcript of In-House Counsel & Compliance in a Large Corporation
In-House Counsel & Compliance in a Large Corporation
Stephen Maloy
May 9, 2006
Risk-Reward Analysis for a Compliance Violation in a Corporation
Add’l Sale
Add’l Sale
Small Company
Large Company
Reputation PenaltyReputation Penalties
Reputation impact Corp Penalties Business BusinessOn rest of Corp. Reputation Penalties
Gain from a Violation is Finite, Damage from a Violation is not.
Reputational Damage even when you do the right thing
If you believe that every employee is an equal Compliance Defect Opportunity, Large Companies are morelikely to experience Compliance Failures*
ECR X n = CCR, where
ECR = propensity of each employee to violatea compliance regulation
n = number of EmployeesCCR = Business Compliance Risk
*Unless large Corporations can reduce ECR below that in smallcorporations
The old approach to compliance:
“Its like pornography; You know it when you see it”
“Just be sure you’re right and then go ahead”
“Just say No”
“Try to get transferred to another posting before lightning strikes.”
Three Unfortunate Events:
1. Defective Charging System for Government Contractsleads to time spent on non-Government Contracts beingcharged to Government.
2. “Bad Apple” aircraft engine salesman colludes with “bad apple” head of procurement for middle eastern country to siphon off money for engine test equipment
3. A Japanese industry practice of sponsoring doctor’s trips to medical equipment shows is found to constitute bribery and four JV salesman are convicted.
Tools for Reducing the value of CCR
• Policies•Training•Metrics “If you can measure it, you can improve it”
•Computerized Training, Testing and Tracking•Scorecards & digital cockpits
•Controls•Process engineering – Removing defect opportunities
•Detection•Ombuds systems•Audits
•Root Cause Analysis of defects and process improvement•Communication
•Leadership and Organization Culture
Soft Side- "Walk the Talk"S & L Leadership Responsibilities EHS Responsibilities NBC Spirit & Letter Tape
Compliance Leadership Training
Ombudsperson Process Session D ProcessRole of Compliance Review BoardResourcing Compliance
Case Study - Break Out Debriefing session
Metrics for Employee Compliance- BreakoutOrganising a Compliance Calendar
What to do when things go wrongFeedback Survey
Kick-off TalkHeineman Boca TapeTitanic Tape
Mini CAP Process
Teamwork Skills
Soft Skills and Tools
More Tools/Process Overviews
Compliance Metrics & Performance Measurement
Handling problems
Targeted Compliance Training for GE Leaders
Compliance Leadership Training Course Outline
Four Continuing Concerns
• Inability to recognize potential for conflict between two laudable goals
• Creep
• Am I my brother’s keeper?
• Anticipating Compliance risk in a dynamic world
Creep
•Ambiguity in a Rule
•Multiple Possible Interpretations
•Lack of enforcement activity for long period
•Lack of understanding of the rationale for the rule
•Lack of “safe harbors”, “bright lines” or clear presumptions
Inability to recognize potential conflict between laudable goals
Example: “The Customer is always right”, The company’skey mission is to satisfy its customers.
Result: Unquestioning compliance with customer requests.
Am I my Brother’s Keeper?
•What is the Corporation’s responsibility for actions of:
•Customers, including OEM’s, Contractors, etc.
• Suppliers
•Other players in the industry, including competitors
An Asian Compliance Model
Business problems often stem from using a static experience model in a dynamic environment
Time
Standard of Conduct
Legal Standard
Today
Xinhua or SCMP Test
Yesterday Tomorrow