We have seen an explosion in the attention paid to legal, compliance and operational risks companies face in supply chain operations. Depending on the industry, companies have to address a wide-swath of supply chain risks, identify those issues that need to be mitigated and promote transparency and management of supply chain functions. Legal and compliance risks have increased with heightened focus on due diligence, export...
The U.S. Securities and Exchange Commission (“SEC”) recently instituted proceedings against Deere & Company (“John Deere”), a leading global manufacturer of agricultural and heavy machinery, for multiple violations of the Foreign Corrupt Practices Act (“FCPA”). These violations arose from improper activities undertaken by its wholly owned subsidiary, Wirtgen Thailand. The underlying misconduct—which occurred between late 2017 and 2020—included the provision of illicit payments and other...
This week I attended the Diligent Elevate annual meeting in Houston, Texas. For those of you who don’t know Diligent, it is a great event, and you can meet risk and compliance professionals, board members, and lawyers. Diligent conducted numerous board education sessions at which board members spoke about new and significant risks; these included increased stakeholder expectations and the burdensome review of education and...
I did not expect to return to this issue. This was an “old” issue that was resolved many moons ago. The issue was a professional debate over the reporting relationship between the chief compliance officer (CCO) and the chief legal officer (CLO)/general counsel. After 20 years of debate, CCOs managed to sway the professional community: CCOs have to operate independently, without improper interference by the...
On August 30, 2024, the U.S. Department of State’s Directorate of Defense Trade Controls (“DDTC”) announced the settlement of a record $200 million administrative enforcement action with RTX Corporation—a multinational aerospace and defense conglomerate—for 750 separate violations of the Arms Export Control Act (“AECA”) and accompanying International Traffic in Arms Regulations (“ITAR”). As described in the context of a charging letter released by DDTC, RTX Corporation...
DOJ is pushing hard for voluntary disclosures and urging companies to take advantage of its Voluntary Disclosure Program. The carrot is significant — a declination in exchange for cooperation, remediation and disgorgement. We often hear about the benefits of voluntary disclosure involving FCPA case. But the program extends to other crimes — fraud being a significant area. In a significant fraud case, Proterial Cable America,...
The Securities and Exchange Commission is catching up to DOJ. Not in enforcement but in transparency. After years of criticism, the Justice Department has set the gold standard for transparency and providing guidance on enforcement and compliance. The SEC needs to elevate transparency and offer new guidance to the public and industry. It is even more important for the SEC to provide guidance given the...
The Justice Department is encouraging companies to voluntarily disclose criminal violations — “Come in and confess” and DOJ offers promises of a declination. But even a declination comes with a requirement — the company has to pay disgorgement. DOJ has done everything it can do to incentivize voluntary disclosures — many companies are balancing the pros and cons and often deciding NOT to disclose. Such...
Compliance lessons are life lessons. Compliance professionals are, by their nature, optimistic people. They see challenges as new opportunities to strive closer to an ideal. Compliance professionals live in the shadow of the ideal — some may call it the compliance curse. Like the famous artist curse, compliance professionals suffer from an internal struggle — the obsession with perfection, an effective compliance program, and the...
DOJ’s Antitrust Division has been relatively quiet in prosecuting criminal cartel or bid-rigging cases. Since 2015, the Antitrust Division’s criminal enforcement has fallen from the billions in penalties each year to the lower hundreds of millions. Most of this may reflect the end of the large, Japanese auto supplier investigation. While the Leniency Program was a significant source of enforcement actions, it appears the Program...
