FCPA Compliance and Ethics Blog

November 15, 2013

The Texans Are 2-7: What is Missing from Your Compliance Program?

I usually do not write about the Houston Texans because (1) unlike the sad sack Astros, they are not often relevant enough to care about and (2) they usually are relatively well-run. They continue to be not relevant this year, coming into this week’s game with a sterling 2-7 record. However, they showed themselves not be too well run this week when they summarily dismissed from the team  safety Ed Reed, after he publicly said that the Texans were “out-coached and out-played” last week following the team’s seventh straight loss. As my friend and colleague Richard Lummis is fond of saying “No sh– Sherlock.”

For those of you who do not know Ed Reed, he is in his 12th season of playing in the National Football League. He is a two-time Super Bowl Champion, a nine-time Pro Bowler, a former NFL Defensive Player of the Year and a sure-fired first ballot Hall of Famer. In other words, he not only knows pro football but he is winner. Reed played his first 11 seasons with the Baltimore Ravens and was signed as a Free Agent by the Texans to bring some professionalism and winning attitude to the club. He had surgery in the offseason which slowed him down to the point he longer started but he still has the attitude and credentials of a winner. So what does it say about the Texans when a player of Reed’s stature speaks the truth and is summarily cut the next day. How many top notch free agents or top talent would want to play with an organization that punishes people who publicly complain about losing?

I thought about Reed and the Texans when I read a post from the noted site JDSupra entitled, “What’s the One Thing Missing From Your Corporate Compliance Program?” They put that question to various compliance attorneys writing on JD Supra, asking each to commit to just one essential element that, in their experience, they regularly see missing from corporate programs; IE., programs that are required to address myriad regulatory issues to do with privacy and data security, insider trading, bribery and corruption, and other such matters across numerous jurisdictions. I found the replies quite interesting and perhaps some insights which the Texans can use.

From Jeremy B. Zucker, Co-chair, International Trade and Government Regulation practice at Dechert LLP: “For a compliance program to be truly effective, personnel must take ownership of their behavior and take pride in being part of the team. To achieve this, a truly effective compliance program must demonstrate that a values-based approach is relevant to the daily conduct of business…”

From Charles F. Connolly, partner in Akin Gump’s white collar practice in Washington, D.C.: “…the key question enforcement authorities ask when evaluating a company’s compliance program is ‘does it work?’  The only way to answer that question proactively is to review – and test – the program on a regular basis.”

From Joe Bermudez, partner at Wilson Elser: “Crisis management policies, protocols and procedures are a necessary element for any company’s compliance program. Often overlooked because companies refuse or fail to consider the contingencies involved with catastrophic or tragic events, an effective crisis management plan may be the difference between a company surviving a crisis event and not…The issue is not when a crisis will strike, the issue is whether the company is prepared to survive the event.”

From Peter Menard, senior partner in the Corporate Practice Group at Sheppard Mullin: “Forms of policies, procedures and contract provisions are widely available on the Internet to ensure compliance with such diverse regulations as FCPA and other anti-bribery rules, prohibitions on insider trading, protection of confidential personal financial and health records, and import/export controls…Lawyers can draft the most comprehensive policy, but only management can take the policy out of the file cabinet and make it an integral part of the corporate culture…”

From Chester Hosch, partner in the Corporate and Tax Group at Burr Forman: “The one thing lacking in most corporate compliance programs is a culture of unshakable commitment to integrity and ethics. The commitment has to be embraced and encouraged notoriously, unambiguously and completely by senior management. The commitment will manifest itself in adequate funding, effective training and consistent monitoring. In the end, the compliance officer will have absolute confidence top management will remain true to the commitment, no matter the consequences.”

From Bettina Eckerle at Eckerle Law: “In my experience, often companies do not treat their compliance program as living breathing organism that need to be tested, reviewed, changed, brought up-to-date as market conditions, business practices and the regulatory environment evolve.  One should never think one is ‘done’ with what is in place but rather incorporate compliance in the day-to-day ebb and flow of the business.”

From yours truly: Document Document Document

These observations bring to bear a different set of focuses which you should consider in the context of your compliance program. Take each point raised and ask yourself, do we have this concept or protocol in place? If you do, then ask yourself my mantra: Did you Document Document Document it so that if a regulator, from the US to China comes knocking you will be able to demonstrate that you did have such protocol or concept in place.

As to the Texans, I think the thing that they are missing is reality. They should ask themselves about now if they are dedicated to winning or something else. After losing seven straight games it is even obvious to my English wife that they are being out-coached and out-played. Fortunately she cannot be fired from her job for saying so.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2013

1 Comment »

  1. The comments of these compliance attorneys are great, since the single most important factor in establishing successful compliance programs is support by management. The commitment to compliance by management has to be backed up by example and rewards. If something is important to your boss, then it becomes important to you. If management mandates compliance training, then managers should be the first to attend and be responsible for ensuring that their employees attend. Perhaps more importantly, companies should make compliance part of an employee’s goals and a consideration in compensation. If failure to attend training or submit compliance reports on a timely basis means a reduction in a bonus, then the company is sending a clear message about the importance of compliance.

    Comment by Jaqueline Hummel — November 15, 2013 @ 9:50 am | Reply


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