The GM debacle over its handling of the ignition switch defect continues. GM’s CEO Mary Barra and the rest of GM’s leadership just do not seem to be getting the message. It is not unusual for C-Suite executives to lead from an ivory tower. In the face of a dramatic governance breakdown, GM has failed to take extraordinary steps to demonstrate that it understands the...

Chief Compliance Officers who lament the challenges of their jobs should be thankful they are not in charge of compliance for higher education institutions. The culture of compliance has extended into many high-risk areas but one area where compliance is catching up is higher education. Universities and colleges face a myriad of regulatory requirements, many of which are imposed by federal and state governments in...

The Justice Department recently read through the United States Code and discovered something important — a statute that authorizes the government to issue administrative subpoenas to build massive civil fraud cases that carry huge penalties. For some reason, the Justice Department never used the statute until recently as a weapon against companies in the financial industry. The statute was adopted in 1989 during the savings...

The Justice Department has a penchant for disclosure – they tell you what they are going to do in advance and then they do it. Companies have tried to claim they were “shocked” or “surprised” by the Justice Department’s actions but their claims have a hollow ring to them. For example, in 2009, the Justice Department told the pharmaceutical and medical device companies they were...

Many companies do not realize the importance of creating a “Speak Up” culture and how to deal with whistleblowers. Too many companies say they want to hear about problems but when employees raise the issues they become defensive. This is particularly true when dealing with whistleblowers. The natural response to a whistleblower is to deny any claims of wrongdoing or misconduct. After denial, companies tend...

Chief Compliance Officers have to recognize one immutable fact – if a company does not make money, compliance does not matter. I know this is hard to fathom but a company’s purpose is to make money. The issue boils down to an important question – how does the company want to make money? CCOs cannot sit back and say yes to this strategy and no...

Recently, Attorney General Holder and DAAG Marshall Miller from the Criminal Division delivered important speeches (See Holder Here and Miller Here) on the Justice Department’s initiative to increase individual criminal prosecutions. The initiative was mainly political – the Department claimed that legislation was needed for one part of the proposal. The policy change announced by the Department was not really much of a change from...

Cynics can easily dismiss FinCEN’s August 11, 2014 Advisory on Promoting a Culture of Compliance (Here). In fact, FinCEN’s Advisory contains several important messages, which need to be emphasized. FinCen’s motivation for releasing the Advisory is clear – FinCEN is frustrated by the systemic breakdowns in compliance underscored in recent enforcement actions against financial institutions, including HSBC, BNP Paribas and others. It is apparent to...

The purpose of a due diligence system is not to identify and prevent hiring of a third-party who will commit bribery. To the contrary, no one can predict with accuracy who will commit bribery, unless they truly have mind-reading capabilities. Instead, the purpose of a due diligence program is to build a documentary record that can protect the company from an enforcement action under the...