FCPA Compliance and Ethics Blog

June 14, 2012

MLB Standings, the Luxury Tax and FCPA Investigation Costs

The baseball season is nearly 40% complete and there are already several surprises. At least in the National League (NL) two of the biggest surprises are that the Washington Nationals are leading the NL East while the five time division champions Philadelphia Phillies are trailing the field in last place. Last week I was lucky enough to attend games at both teams’ home parks. The Nationals fans were fired up throughout and the Phillies had a matinee performance sell-out. Jim Crane, are you listening? Nothing puts fans in the seats like a winning team.

I thought about the collation between the amount of money spent on each team and their respective standings. Interestingly, I found that the Phillies have the second highest payroll in Major League Baseball (MLB) at just over $174MM, while the Nationals have the 20th highest at just over $81MM. The sad sack Houston Astros come in at 28 out of 30 with a total payroll spend of $60MM. Additionally, they are also the 28th worst team in MLB. Coincidence? Jim Crane, are you listening? To win you have to spend money, not just buy the team and then immediately cave in to MLB by agreeing to go to the American League (AL) West.

I thought about these overall team costs whilst reading a recent article by Jaclyn Jaeger in the Compliance Week Magazine, entitled “High Cost of Conducting Full FCPA Investigations”. In her article, Jaeger reported the costs of some very large and ongoing Foreign Corrupt Practices Act (FCPA) investigations, which are reflected in the FCPA Investigation Cost Box Score below, remember at this point we do not know what the Wal-Mart investigative costs are to-date.

Company Length of Investigation Reported Costs
Weatherford 2009 to date $123MM
News Corp July 2011 to date $191MM
Avon 2008 to date $247MM

While noting that not all FCPA investigations have such exorbitant investigative costs, Jaeger quoted “the costliest FCPA investigations are the ones that grab the headlines.” One way to hold down such costs is defining the scope. Attorney Claudius Sokenu was quoted as stating “The important question at the outset of the investigation is scope, because that drives the costs.” However, even if you can define the scope, one of the main reasons for these high investigative costs in a FCPA investigation is the dreaded question “where else?” If your company has had a complete failure of internal controls to allow a FCPA violation in one geographic region, the Department of Justice (DOJ) may want to inquire if it is a systemic problem worldwide. In other words, not mission creep but mission explosion. In addition to a systemic failure of internal controls, it may be that an employee caught paying bribes in one country, who previously worked in another country, may have engaged in similar conduct in his prior postings, meaning you will need to investigate those countries as well. Another red flag that could indicate the “where else” question is if an employee alleged to have engaged in bribery manages a regional office which overseas operations in several countries. This could require an investigation into countries other than the one which may have been the subject of the original investigation.

To understand how this question of “where else” can play out one need only look at the current Wal-Mart internal investigation. In an article in the Wednesday, June 13 Wall Street Journal (WSJ), entitled “Wal-Mart Review Includes India, South Africa”, reporter Shelly Banjo wrote about the expanding Wal-Mart internal FCPA investigation. The allegations originally arose from the company’s operations in Mexico. After the New York Times (NYT) broke the story, Wal-Mart instituted an internal investigation of its Mexico subsidiary and the investigation quickly spread to Wal-Mart’s operations in Brazil and China. This expansion increased again with Banjo’s report that Wal-Mart’s counsel has recommended the internal investigation further expand to include Wal-Mart’s operations in South Africa and India. Soon there may not be much of the globe where Wal-Mart operates which is not under investigation.

So what are some of the ways to hold down investigative costs? One sure way is to not self-disclose and face the “where else” question. Jaeger noted that “sometimes it could be just a matter of promptly implementing remedial measures and revising and enhancing compliance policies and procedures.” Jaeger quoted Sokenu who stated “Only in rare circumstances would I recommend to a client that self-disclosure is the way to go, because no good deed goes unpunished.” Sokenu went on to list some of the factors which he would consider when recommending self-disclosure to the DOJ and Securities and Exchange Commission (SEC).

  • Awareness of a potential whistleblower reporting an incident to the government because “You want to go to government before that whistleblower does.”
  • The conduct in question is “systemic and involves senior management-such as the chief executive, chief financial officer, general counsel or heads of business units.”
  • The incident requires a disclosure which is “required under securities laws anyway.”
  • That the company’s auditors “will not sign off on filings with the Securities and Exchange Commission.”

I have heard Mike Volkov provide a similar list of issues when he discusses the factors you should consider when making a decision to self-disclose. It is certainly not one to be taken lightly. However, Jaeger’s article provides some key elements to consider when evaluating whether to self-disclose a potential FCPA investigation.

Of the costs reported so far only Avon is north of the New York Yankees annual payroll of $197MM but News Corp is closing in quickly. Wal-Mart has not released its costs for its investigation, as yet, but it may well exceed both Avon and News Corp. In MLB, there is luxury tax put on the aggregate payroll of a team to the extent that it exceeds a predetermined guideline level set by the league. For 2011 the MLB cap is $178MM so only one team currently pays this luxury tax (the Yankees with a payroll of $197MM). Now how about the investigative fees paid by companies for failing to have an effective FCPA compliance program?

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, 2012

February 16, 2012

Attorney-Client Privilege for In-House Counsel

The question of attorney-client privilege (herein “the privilege”) for in-house counsel can be a vexing one, yet one that has significant implications for investigations and enforcement actions under the Foreign Corrupt Practices Act (FCPA) or other anti-corruption legislation. There is a split decision between the US and countries in the European Union (EU) on whether in-house counsel may engage in privileged communications with corporate employers. In a recent article, entitled “In-House Counsel and Corporate Client Communications: Can EU Law after Akzo Noble and U.S. Law after Gucci be Harmonized? Critiques and a Proposal”; published in Volume 45, Number 3 of the International Lawyer, author John Gergacz explored this dichotomy and proposed a simple, yet clear rule to put in place to foster ease of determination of the privilege and promote the goals behind the existence of the privilege.

This question of whether the privilege exists for communications will certainly increase due to the increase in international enforcement actions in the area of anti-corruption and anti-bribery under laws such as the FCPA and UK Bribery Act. It will also arise in investigations involving any other activities which might be subject to both EU and US laws, such as EU competition law and US anti-trust law.

European Union Countries – Status of counsel test

In EU countries, the primary test involves what is the status of the lawyer making the communication. Following a 1982 decision, styled “AM&S Europe v. Commission of European Communities”, the privilege is limited to communications conducted with independent lawyers. Initially, a determination must be made if an attorney is independent, this being defined as to whether or not an attorney was “bound to his client by reason of employment” for example an employee. However, the court decision did not use the term “in-house” counsel but broader formulation of “independent counsel.” While recognizing that this may have left room for interpretation the practice seems to be to deny the privilege when the advice emanates from in-house counsel. Gergacz says that to apply the privilege in the EU is determined by following a two-step process. If this initial threshold of independence is met the analysis turns to the substance of the communication. That is, whether the “communications concerned legal advice and related to the client’s right of defense.”

United States – Type of communication

In all reported jurisdictions in the United States, both in-house counsel and outside counsel communications are eligible for privilege protection. However, within certain states in the US, the analysis is largely centered on the substance of the communication, whether it involves legal advice or more general business advice. This analysis recognizes that in-house counsel may have several “corporate capacities” all of which do not necessarily involve providing legal advice. Gergacz notes that “in practice, in-house counsel may communicate about a number of activities, even though his formal corporate position is to provide legal advice.” He believes that such sentiment has led to a greater scrutiny of in-house counsel communications than those made by outside counsel to a client. This has led courts to be “wary of inadvertently extending privilege confidentiality too far,” when business advice is provided or there are mixed business-legal services delivered.

EU/US Harmonization

Gergacz concludes his article with a proposal to harmonize these two rules for privilege. He believes that both views have merit, with the US recognizing the “equivalence of in-house and outside counsel” and the EU “the concept of counsel independence is noteworthy.” Gergacz’s proposal is that communications with in-house counsel would be privileged if the attorney involved is (1) admitted to a relevant Bar; and (2) has Bar membership status intact that allows him to practice law at the time of the relevant communication.

Gergacz listed three general reasons for his proposal. First, he believes that the proposal is easy to administer as there should not be either court intervention to determine privilege or court review of the communications involved. Simply put, does the lawyer have a license and is it up to date to allow him or her to practice law? Second, he believes that the privilege should be broad enough to encourage candor in communications between attorney and client in the corporate setting, but not so broad as to expand the cloak of confidentiality to “thwart just decisions from being rendered.” Third, and finally, Gergacz writes that in-house counsel often has two roles to fulfill. One is certainly as a lawyer providing legal services, however, it may be that a person who has graduated from a law school or holds a law degree may not be licensed to practice law and may have other roles inside of a corporation. As a practicing lawyer is held to ethical and disciplinary standards whether they are in-house or in private practice, the requirement for Bar membership should satisfy the AM&S line of cases which speak toward ‘independence’ as the key concept for privilege.

I would commend Gergacz’s article to you for a more complete review of the US case law and other issues related to attorney-client privilege. His proposal is certainly an intriguing one and one which deserves rich consideration to simplify this knotty area. In this era of multi-jurisdictional enforcement of laws such as the FCPA and UK Bribery Act, the certainty of whether a communication is privileged or not is an important point for businesses.

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, 2012

December 7, 2011

Is Water Wet or is Jack Webb Still ‘The Man’?

I am often asked where I come up with my ideas for blog postings. I respond that there are innumerable sources and resources in the compliance arena, in some ways perhaps too many. Today I will attempt to integrate three of these resources into one coherent article. The first comes from my ‘This Week in FCPA’ cohort Howard Sklar. It is that well known Sklar maxim “water is wet”. This is not simply a plug for Howard (as if he needed a plug) but a useful entree into the next source of inspiration which I found in this month’s Business Ethics column in December issue of the ACC Docket, entitled “Just the Fact, Ma’am”, by James Nortz.  This a reference to the signature line of Jack Webb as Sgt. Joe Friday in the multi-decade running police procedural television standard, Dragnet.

So how do Howard Sklar and the Nortz article tie in together? They converge in one of the areas of a minimum best practices compliance program as set forth by the Department of Justice (DOJ). This convergence is found in best practices No. 9, Ongoing Advice and Guidance, which requires that a Company should establish or maintain an effective system for (c) responding to any reports of violations of a company’s compliance program, i.e. investigations. Nortz says that in responding to such questions, one of the most important things is “understanding the facts”, he  goes on to add that it “is so obvious that it is hardly worth making the observation. But, here’s the point, both our business colleagues and our companies often fail to do so.”  It is so important (and obvious) that Nortz posits that in any investigation, a compliance professional’s first ethical obligation is that it is important to understand the facts before making a decision.

All of the above brings me to my third inspiration for today’s posting, which is an advertisement in the same issue of ACC Docket, where there is a lighthouse, under which is the title “Shine a Light on Compliance Issues”. I am impressed enough with the graphic to identify the advertiser, “WeComply”. I find that Sklar’s maxim, Nortz’s use of the Dragnet adage and WeComply’s lighthouse all tie into 9(a) of the DOJ’s minimum best practices which says that that a Company should establish or maintain an effective system for “(a) Providing guidance and advice to directors, officers, employees, on complying with the Company’s anti-corruption compliance policies, standards, and procedures…” One of the constant refrains for any compliance officer during the day is responding to employees’ compliance based inquiries. These questions come in all shapes and sizes and from all over the world. So continuing the above themes, the compliance professional must try to ascertain the facts to give an intelligent, coherent and, hopefully correct, response. This does not mean a full blown investigation but as any lawyer who has worked in-house either in a corporate legal department or compliance department will recognize, the clients need an answer.

As we lawyers all believe, many business guys will ‘shoot from the hip’ so while all the other facets of a best practices compliance program are important, so is listening, gathering facts and trying to use these facts to provide coherent guidance. This may require you to ask for an email explanation so that an employee can get a comprehensible picture in front of you. However, listening may help provide the simple guidance, as sometimes that is all it takes. If you need to ask a colleague for some advice do so, if only to bounce your proposed solution off them.  Even if a short turnaround time is required, do not let the business guys bully you telling you they need the answer “yesterday”.

So the WeComply lighthouse implies to me that you need to shine a light on the facts. As obvious as this may sound, or as wet as water may be, Nortz reminds us that the first thing to do in responding to inquiries or investigating a compliance issue is to garner the facts before responding. So to answer my own question found in the title of this posting, Jack Webb is still ‘The Man’. Cue the iconic opening Dragnet theme by clicking, here.

Ed. Note-we note the passing of Harry Morgan at the age of 96. For those of us who grew up in the 60s will always be remembered as Jack Webb’s partner, Detective Bill Gannon. For a later generation,  Morgan is well-known for his role as Col. Sherman Potter in M*A*S*H.

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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, 2011

November 21, 2011

Don’t Get Lost in [FCPA] Translation

Filed under: FCPA,Investigations — tfoxlaw @ 1:58 am
Tags: , ,

Jay  Rosen

Ed. Note-today we have a guest post by Jay Rosen.

In late October, a colleague and I were having breakfast with Tom Fox in Houston. We were in town to participate in an FCPA event which we were hosting with Akin Gump and Deloitte. While we were trading war stories about past and ongoing investigations, Tom proposed the following scenario:

“You’ve just stepped off the tarmac in Beijing and you are speeding in a SUV to your client’s headquarters to begin collecting documents. What do you need to know before you walk through that door and what steps could you have taken ahead of time to prepare for that day?”

While the answer to his question could take many different angles (depending on your role in the investigation), my response was focused on best practices for managing the foreign language portion of a case. Clients often reach out to me for advice on managing translations for FCPA and white collar investigations, cross-border litigations and related matters. Though each translation matter posses its own unique set of challenges, the common denominator is “What is the most cost effective way to match the proper translation solution with the needs of this case?”

Many clients consider translation to be something they can handle in-house since:

  • “Becky down the hall speaks Spanish”
  • “I’ll use Google Translate”
  • “The associates in our Paris office can handle this”
  • “The forensic accountants in Beijing or the document reviewers in Shenzhen can translate this information on the fly.”

In certain circumstances, all of these options have some validity, but for a mission critical project where accuracy and deadlines are key, these are not typically the best choice.

FCPA matters demand a different level of sophistication and execution. By engaging a professional Language Service Provider (LSP) at the front end of your investigation, you can leverage filtering and translation solutions that will result in a more cost and time efficient language management process. These solutions include:

  • Language Identification
  • Foreign Language Key Word Search
  • Machine Translation
  • Summary Translations
  • Human Translations

This method of filtering foreign language data utilizing technology solutions (Language Identification, Foreign Language Key Word Search and Machine Translation) ensures that you only translate those documents that are absolutely necessary. For example, in a recent Turkish FCPA matter, Merrill Brink’s filtering tools reduced the number of translated documents to 3,000 out of an initial universe of 1,000,000.

While it is tempting to employ the least costly solution, or utilize “boots on the ground” instead of hiring professional translators, the end result of this decision often requires professional translators (who should have started the process in the first place) being brought in to salvage the job and finish it correctly.

In circling back to our initial question — “What do you need to know before you walk through that door and what steps could you have taken ahead of time to prepare for that day?”

Any company with global operations, if they do not already have a trusted translation provider, must seek out a LSP with the capabilities to employ both technology and human translation solutions to minimize the ultimate number of words (pages) to be translated and to match the most cost effective level of translation with each individual stage of the investigation. This is important not only from an investigation and auditing perspective, but these same translation resources can be leveraged to localize compliance, training, eLearning and code of conduct content throughout the organization.

All of these tools should be utilized to reduce the amount of data that require full translation. Thus the only documents requiring full translations are those that must be presented to an official body (DOJ, SEC).

By knowing this information in advance, the team in the speeding SUV can concentrate on the job at hand — securing the location, collecting the data and interviewing employees. After all this information has been collected, and a LSP has been engaged, they can begin to leverage the above mentioned tools and filtering processes to match appropriate translation solutions to each step of the investigation , contain the costs of human translations and most importantly produce the highest quality translations from professional linguists.

Jay Rosen is a Vice President, Language Solutions at Merrill Brink International, based in Los Angeles, where he advises businesses and law firms on translation solutions for FCPA, Compliance, Code of Conduct and eLearning. He can be reached via email at jay.rosen@merrillcorp.com and via phone at 310-729-6746.

August 12, 2011

WHO Should Handle Serious Internal Investigations?

In the most recent issue of the SCCE, Compliance and Ethics Professional Magazine, Issue 08/2011, is an article entitled “Foxes and henhouses: The importance of independent counsel”, in which author Dan Dunne discussed what he termed a “critical element” in any whistleblower response, which is a “fair and objective evaluation.” Dunne wrote that a key component of this fair and objective evaluation is the WHO question; that is, who should supervise the investigation and who should handle the investigation? Dunne’s clear conclusion is that independent counsel should handle any serious investigation.

Dunne list three factors which he believes should cause a company to retain independent counsel for internal investigations of serious whistleblower complaints. First, for any corporate ethics policy to be effective, it must be perceived to be fair. André Agassi was right, perception is reality. If your employees do not believe that the investigation is fair and impartial, then it is not fair and impartial. Further, those involved must have confidence that any internal investigation is treated seriously and objectively.

Secondly, if regular outside counsel investigates their own prior legal work or legal advice, Dunne believes that “a plethora of loyalty and privilege issues” can come up in the internal investigation. It is a rare legal investigation, where the lawyer or law firm which provided the legal advice and then investigates anything having to do with said legal advice, finds anything wrong with its legal advice. Dunne also notes that if the law firm which performs the internal investigation has to waive attorney client privilege, it may also have to do the same for all its legal work for the company.

The third point Dunne raises is the relationship of the regular outside counsel or law firm with regulatory authorities. If a company’s regular outside counsel performs the internal investigation and the results turn out favorably for the company, the regulators may ask if the investigation was a “whitewash”. If a regulatory authority, such as the Securities and Exchange Commission (SEC) or Department of Justice (DOJ) cannot rely on a company’s own internal investigation, it may perform the investigation all over again with its own personnel. Further, these regulators may believe that the company, and its law firm, has engaged in a cover-up. This is certainly not the way to buy credibility.

Jim McGrath, writing in his Internal Investigations Blog, noted that despite the fact that using specialized investigation counsel is a best practice that is worth the money, one of the more difficult things is convincing decision-makers of the this advantage. This is particularly so when speaking with mid- or small-sized companies that are part of larger supply chains. While general counsels and compliance officers may be up to speed on outsourcing critical inquiries, managers in business segments often are not and frequently reply that they’ve “got someone” in the company who “takes care of that stuff.” However, it is clear that such an approach will be more costly to a company in the long run. McGrath emphasizes the need for independent counsel for serious corporate investigations.

I would add a couple more reasons to those listed by Dunne and McGrath. If there are serious allegations made concerning your company’s employees engaging in criminal conduct, a serious response is required. Your company needs to hire some seriously good lawyers to handle any internal investigation. These lawyers need to have independence from the company so do not call your regular corporate counsel. Hire some seriously good investigative lawyers.

I believe that there is another reason to hire outside counsel. It is also important because, no matter what the outcome of your investigation, you will most probably have to deal with the government. If the investigation does reveal actionable conduct, your company will need legal counsel who is most probably an ex-DOJ prosecutor or ex-AUSA to get your company through that process. Even if there is a finding of no criminal activity, you will need very competent and very credible counsel to explain the investigation protocol and its results to the government.

One need only look at L’Affair Renault to see the hazards of not following the WHO approach of Dunne, McGrath or myself.

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, 2011

June 29, 2011

Four Steps to Resolving Your FCPA Compliance Issues

As regular readers of this blog know I often cite the three maxims of Paul McNutly as the basis for a good compliance program. They are the questions that the government will ask when they come knocking: (1) What did you do to prevent it?; (2) What did you find when you looked into it?; and (3) What did you do when you found out about it?. One of the keys of these ideas is that if you look for something, through investigation or audit, you cannot be afraid to find something, recognize that it is a problem, then move forward to remedy the problem and use it as a lesson learned going forward. I recently saw an advertisement in the Harvard Business Review for the Columbia Business School which was entitled, “How to realize leadership potential” it occurred to me that it was a way to think through and act upon McNulty’s point 3. So with some modification I present a practical method to implement McNulty.

1.     Recognize Compliance Problem

The key here is to provide the tools to company employees through training that allow them to recognize when a compliance problem has arisen. Your compliance program must have a written Code of Conduct or other formation document which clearly articulates what is expected from the compliance perspective. However, because compliance programs also have a requisite financial controls component, as required by the books and records portion of the Foreign Corrupt Practices Act (FCPA), there also needs to be a clear policy statement which employees can read and understand. This does not mean a compliance policy written by lawyers for lawyers, with lengthy citations to the FCPA, direct cut-out quotes from the US Sentencing Guidelines and other terminology on a lawyer can read and understand. The compliance policy needs to written in plain English or at least in language that a business person can understand. There should also be a detailed statement of the compliance procedures which explain the financial process by which your company will manage the compliance risk.

All of this should be encapsulated in a training program. There are various and numerous approaches to training. It can be live, via video, through a Webex, via audio, computer based or any combination thereof. The key is to provide sufficient training to allow employees to recognize compliance problems. I tell employees that they do not have to understand all the nuances of FCPA law or make a decision on whether the FCPA has been violated. I ask them that if something strikes them as wrong; their gut tells them its an issue; or the hair on the back of their neck stands up-recognize this as a problem and move to Step 2…

2.     Call for Help

So what should you do if you recognize a compliance problem? I train employees to raise there and escalate the problem. Tell your boss, call the compliance or legal department, use the hotline or do something to escalate the problem so that it can be investigated. Here the actions of the company are critical. A company must provide the training for an employee on what they are to do; where they can go. This message must be reinforced by emails, posters, reminders by management and any other form of media to communicate and keep communicating this message.

But this next part is absolutely critical. Your company must be absolutely, positively committed to accepting the employees concern and there must be NO RETALIATION. I know that every company in America will swear up and down that they embrace this basic of compliance; just as they do for all other areas where employees can bring claims, such as harassment, discrimination, SOX concerns or a myriad of others. But if there is one hint or even a whiff of retaliation, it will end, for all time, employees bringing compliance concerns up the line. All of which leads to Step 3, which is…

3.     Address the Issue

There must be a thorough and competent investigation. Do not wait one or two months to perform the investigation. In addition to the mundane concern of evidence becoming stale or disappearing, the reporting employee or other witnesses being harassed; you will lose credibility the longer you wait. Employees who make such reports expect, and I believe reasonably so, for their concerns to be taken seriously. Here I do not mean have the President of your company go in front of the national press to announce the termination of the alleged wrong-doers, well before your President has the correct facts in hand, such as was the case with the recent Renault matter.

My colleague Jim McGrath, author of the Internal Investigations Blog, writes about the use and need for specialized investigative counsel to assist a company at this juncture. Even if you do not follow Jim’s advice, you must get a lawyer on the ground as soon as is possible. This lawyer should be trained in how to investigate; he/she must have an investigation protocol and a good understanding of the facts through a comprehensive review of all documents, before the interviews begin. So perhaps you do need specialized investigative counsel as Jim suggested so as not to any conflict of interest in pursuing any leads in the compliance investigation. With that we move on to Step 4, which is…

4.     Apply Resolution

Here your company must be fearless. It must be not afraid of what may be found in the investigation, it must not be afraid to remedy the issue. Remember McNulty’s Maxims? The third question the government will ask is “What did you do when you found out about it?” You must follow your compliance policy. If discipline is warranted, you must administer it. The discipline must be administered fairly but equally across the globe. I once was at a company which fired Brazilian employees for making mis-statements on their expense accounts but gave a US employee a “Letter of Warning”. What kind of message do you think that action sent?

There may be other resolutions which may not require the administration of discipline. It may be that your internal controls need to be strengthened. Although not in the compliance world, how do you think Citigroup is feeling about its internal controls today; as it had an ex-employee charged with embezzling over $19MM for over a year before he was caught? But the key is to resolve the matter. Use it as a lesson learned and as a teaching tool. Do not hide the issue and if it is a FCPA violation, consult with counsel regarding a self-disclosure to the Department of Justice (DOJ) and Securities and Exchange Commission. If all this happened in your UK subsidiary and your complete your investigation after July 1st, self-disclose to the Serious Fraud Office.

I hope you can use these four steps to assist you in implementing McNulty’s Maxims. This is what the DOJ wants to see if they come knocking.

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, 2011

May 3, 2011

Warren Buffet, Berkshire Hathaway and the End of Armageddon-Some Lessons Learned

We have previously written about the importance of getting your investigation right before publicly announcing the results.  In other words, do not allow your CEO, as Renault did, to go on national television and decree that three (former) executives had foreign bank accounts filled with money from the sale of company trade secrets, unless you have such facts in your possession. This lesson has been recently driven home here in the US by the Oracle of Omaha, Warren Buffet with his remarks at the time of the resignation of company executive David Sokol.

As quoted in the Wall Street Journal, on when company executive David Sokol resigned back on March 30, Buffet said that he thought Sokol’s actions were not “in any way unlawful” when Sokol purchased stock in a company, Lubrizol, that he later recommended that his employer, Berkshire-Hathaway, purchase. However, the WSJ reported that this past Saturday, Buffet said that Sokol’s purchases violated the company’s insider trading rules and its own Code of Conduct. Further, Buffet was quoted as saying the company had found some “very damning evidence, in my view” about the trades and had turned this over to the Securities and Exchange Commission (SEC). According to today’s New York Times, Sokol’s lawyer denied this claim and was quoted as saying, “At no time did Mr. Sokol violate any law or any Berkshire policy.”

What caused Buffet to change his view on this matter? As reported in the New York Times, on April 27 the Board of Directors “released a scathing report accusing Mr. Sokol of misleading Berkshire about his Lubrizol trades and violating the company’s ethics and insider trading policies.” In other words, it appears that Buffet’s initial statement back in March was made before the facts had been fully investigated. Sound familiar?

So how does all of this relate to the compliance world? We believe that there are at least three lessons to be learned from this matter.

1.     Aim Before You Fire Off

As with L’Affaire Renault, we believe that a company needs to get the best handle on the facts that it can before going public or disclosing to the SEC any allegation of violations of US Securities Laws. Any allegation of conduct by any senior management official, which violates US laws, must be taken seriously but a thorough investigation must occur. Just as Renault fired off too early by proclaiming facts that have never been found to exist, here Buffet claimed there was nothing to be concerned about less than one month before his own company’s Board came to the opposite conclusion after an investigation.

2.     Process and Procedure Apply to Everyone

As also noted in today’s New York Times, this matter “reveals a lack of appropriate corporate governance and controls nonetheless.” My friend Francine McKenna has written an excellent piece on this matter which is entitled, “Slippery People: Corporate Governance at Berkshire Hathaway.” One of her points is that with the decentralized governance and control structure present at Berkshire Hathaway, the company operates “at low levels of internal controls.” In any best practices compliance program, internal controls are a key mechanism to detect violations. Even if a company’s business model is successful due to lack of internal controls, it may fail a compliance examination if there is no oversight of senior executives.

3.     What Did You Do When You Found Out?

Fairly early on in my compliance career I heard Paul McNulty speak and provide his thoughts on how the Department of Justice (DOJ) looks at Foreign Corrupt Practices Act (FCPA) issues. His remarks have stuck with me. He gave his perspective on the three general areas of inquiry the DOJ would assess regarding an enforcement action. First: “What did you do to stay out of trouble? Second: “What did you do when you found out?” and Third: “What remedial action did you take?

So what did Buffet and by extension, his company Berkshire Hathaway, do when they found out. Initially, they announced Sokol was resigning and Buffet made the statements of support. This is certainly not what the DOJ or SEC expect. If there is evidence of misconduct which could violate Securities Law, they expect that the company would self-report the incident and there would be company sanctions against the employee.

This second point is also critical in setting the “Tone at the Top”. Buffet is viewed by many literally as the “Oracle of Omaha” but the message he sent in his supportive statements in March may well have sent the wrong message to company employees. This message may have been corrected by the release of the Board report last week and by the actions of the company going forward. However the damage may have been done. Berkshire Hathaway may have to work very hard to remedy the company’s own internal perception now.

We can only hope that all of this will drive home to all company’s the need for rigorous enforcement of its own Code of Conduct as a first line defense against FCPA violations. However, this episode shows the vital role that internal controls plays in an overall compliance program. I am always reminded of then President Reagan’s words to General Secretary Gorbachev regarding the agreement to reduce and dismantle each country’s nuclear arsenal, “Trust – but verify.”

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If you are in Phoenix or San Diego, the World Check FCPA Tour will be in your city this week. Please come out and here about the most current FCPAbest practices.

Tuesday, May 3 from 8-10 AM PDT at McCormick & Schmick’s Seafood Restaurant, in Phoenix, AZ. For information and registration details click here.

Wednesday, May 4 from 8-10 AM PDT at San Diego Marriott Del Mar: Santa Fe Ballroom, in San Diego, CA. For information and registration details click here.

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My colleague Howard Sklar had an interesting idea. It was that he and I do a video chat each week on the past week’s stories from the world of compliance. We have begun this journey and the results are “This Week in FCPA“; which can be found here.

Every week, Howard and I will get together and talk about the week’s events in FCPA. This week, we talk about the UK Bribery Act, and how companies should react; we discuss the Johnson & Johnson deferred prosecution agreement and J&J’s added undertakings; and we discuss the recent challenges to the idea that state-owned entities can be foreign officials. We also talk about what contract provisions should be in every contract, and whether audit rights are a good thing or not.

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, 2011

April 26, 2011

Documentation Can Provide Credibility in a FCPA Investigation

Filed under: FCPA,Investigations — tfoxlaw @ 1:42 am
Tags: , , ,

I am privileged to speak across the country on current Foreign Corrupt Practices Act (FCPA) best practices with Stephen Martin, General Counsel of Corpedia. The FCPA Tour is sponsored by World-Check. For those of you who do not know Stephen Martin, he is a former prosecutor in the Department of Justice (DOJ) and has worked at some of America’s largest corporations while handling significant compliance matters. This background allows him to bring a substantial white collar prosecution and defense perspective to our presentations as I have only practiced on the civil side.

All companies which come before the DOJ when an incident or investigation arises claim that they have the best compliance program that they can afford in place. However, if a company cannot demonstrate the ‘robustness’ of its program it might as well be for naught. I have written several posts on three of the most important components of a FCPA best practices compliance program; which are: documentation, documentation and documentation. I believe that it is true that the only manner in which to gage the overall effectiveness of your compliance program is through documentation. Put another way, if you don’t document it, you cannot measure it and if you cannot measure it, you cannot refine it. Nevertheless, there is one more important aspect to documentation. It is through the access of this documentation that a company put forward support that its compliance program is robust.

One of the points which Stephen emphasizes is that when dealing with prosecutors, whether from the DOJ; Securities and Exchange Commission (SEC) or state prosecutors, you and your company’s credibility are paramount. This means more than simply self-disclosure and cooperation. Stephen drives home this point when discussing your company’s documentation of its compliance program. In addition to your documentation, documentation, documentation; your company must be able to access your documentation and then be able to produce it in a reasonable time upon request. This means that if it takes your company four weeks to produce a list of agents, distributors and other sales representatives; you will lose credibility with a DOJ prosecutor because the lengthy time it takes to round up such information is a clear sign that a company does not have robust books and records.

Whether your company is a multi-billion dollar entity or one with $250 million annual sales, you must be able to access the documentation of your FCPA compliance system. It certainly helps if your database is computerized and you can access it via several different search parameters. However, if your company keeps all its agents, distributors and sales agent due diligence in a binder, tabbed and indexed on a shelf of the office of the General Counsel or Chief Compliance Officer, that should enable you to quickly and efficiently produce the information. As I have heard Mike Volkov say, “companies are usually not penalized under the FCPA for the quality of their due diligence but for the lack of doing any due diligence.” So if you can produce your results you will go quite a long way towards establishing credibility with a DOJ prosecutor.

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I am speaking at the upcoming webinars and World-Check FCPA Road Show events:

I. Webinars
Thursday, April 28 at 12 EDT, I am co-hosting a webinar with Mary Shaddock Jones, Assistant General Counsel and Director of Compliance at Global Industries, Ltd., on “Current FCPA Compliance Program Best Practices: Lessons Learned from Recent DPAs”. For information and registration details click here.
Thursday May 12 at 11 AM EDT, I am a co-panelist with Scott Moritz, Managing Director of Navigant, on a webinar hosted by Dow Jones, entitled, “Risk Assessment: The First Step in Any Compliance Program”. For information and registration details click here.

II. World-Check FCPA Road Shows
Co-presenting with Stephen Martin, General Counsel of Corpedia, on “Anti-Corruption/FCPA Developments & Best Practices”
Tuesday, May 3 from 8-10 AM PDT at McCormick & Schmick’s Seafood Restaurant, in Phoenix, AZ. For information and registration details click here.
Wednesday, May 4 from 8-10 AM PDT at San Diego Marriott Del Mar: Santa Fe Ballroom, in San Diego, CA. For information and registration details click here.

I hope you can attend the webinars, and if you are in Phoenix or San Diego, come out to hear and meet to myself and Stephen Martin.

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, 2011

April 7, 2011

A Modern Fairy Tale: The Company Which Cried Wolf or Lessons Learned from L’Affaire Renault

Once upon a time there was a boy who went to the town square and cried “The Wolf is coming to steal our secrets!” The townspeople all gathered ‘round and asked him how he knew this. “A person named NoMan told me,” he declared. But there was more, as the boy told the now rapt townsfolk “And he said if you give me some money to help pay his ‘expenses’, I can find out when and how the Wolf  will steal our secrets.” As this town was in France, they immediately gave the boy €450,000 (or €700,000 depending on the version of the fairy tale) and he and the money were never seen again.

I. The Tale

Most people in the compliance world have by now heard about L’Affaire Renault. As reported  extensively in the Wall Street Journal (WSJ), the affair became public in January of this year, when Renault fired three top officials for allegedly selling secret information regarding the company’s electric car program. These allegations were based upon information which came from an unknown informant who claimed that the three terminated officials had large Swiss bank accounts funded by monies which came from the sale of this information. This unknown informant was paid for his information, by two Renault security department employees, and then allegedly onto another party, who eventually passed along some or all of the Renault payment to the informant.

If all of this sounds confusing, well it is. The inquiry began last August with an anonymous letter to company officials stating that one of the now terminated employees was overheard “negotiating a bribe”. By December, the company’s security department had “assembled elements pointing to the existence of bank accounts in Switzerland and Liechtenstein.” The accused employees were terminated in January, 2011. On March 14, the WSJ reported that “state prosecutor Jean-Claude Marin on Monday said his investigation showed that the three didn’t have bank accounts in those countries.” On March 15, the WSJ reported that the Chief Executive Officer (CEO) of the French car maker Renault apologized on national television for the wrongful termination of three company officials for improper allegations of industrial espionage. In addition to this apology, he offered to meet the men and propose that they rejoin the company. They also would be offered compensation, “taking into account the serious hurt that they and their families have suffered…” This case (and the introductory fairy tale) presents several very large ‘Lessons Learned’ for any company which engages in an anti-corruption, anti-bribery or fraud investigation and then disciplines or terminates employees based upon the investigation.

II. The Moral

Look Before You Leap

Our colleague, Lindsey Khan wrote about Fraud Investigation Preparation in a two part series posted on her blog isight.com. Over this two part series, she reviewed author Stephen Pednealut’s book, “Anatomy of a Fraud Investigation”, in which he outlined the steps a company should take when preparing for a fraud investigation. Imagine where Renault might be if they had read Lindsey’s blog. I digress to say you should bookmark and read Lindsey’s blog as she regularly writes on investigations and even provides an investigation template on a complimentary basis.

The first thing to emphasize is that a company cannot over-prepare for such an investigation. With this in mind, here are seven steps he suggested a company should take before they begin a fraud investigation:

1. Timing. If the target(s) know you are on to them, they will have absconded so make this initial determination.

2. Strategize. Figure out who needs to be involved in the investigation and meet as soon as possible to explore options and discuss how they will move forward with the investigation, as each one differs based on the goals, circumstances and people involved.

3. Review laws, policies and other documents. Obtain everything of significance before you start the investigation and then secure it.

4. Available information. If your company uses outside investigators, make certain that they understand company structure, infrastructure and relationships.

5. Whistleblower protection and confidentiality. Although this information or source may need protection, the identity must be known and verified.

6. Lock down evidence. Physical and electronic evidence need to be gathered and secured as soon as possible.

7. Resource allocation. Make sure your company has the tools you need to gather evidence and label it properly for storage.

You Leapt, Now What?

Your actions after you have followed Pedneault’s seven preparation steps will be equally, if not more important. First and foremost your investigation must be thorough. In other words, if the key part of the allegation is that bribes were being funneled into a Swiss bank account, your company had better make certain this information is correct before you go and make that public pronouncement. You should endeavor to make certain that your company CEO does not, as reported in the WSJ, proclaim the statement made by the CEO of Renault when he said publicly “that the company had evidence against them” regarding the existence of foreign bank accounts. Over two months after this public statement, neither Renault nor the French Prosecutor’s Office had discovered such evidence to back up this allegation.

Keep A Sense of Balance

Attorney Stephen Pearlman, quoted in the WSJ, noted that a company must approach any such allegations “with a real sense of balance” and not “over-react.” Mr. Pearlman said he recently had a client who received an anonymous tip on some alleged wrongdoing and wanted to act before the investigation was done. “I told them, ‘You’ve got to take a deep breath, don’t overreact” he recalled.

Robert Fatovic, the chief legal officer at Ryder System Inc., also quoted in the WSJ, said “Renault is the poster child for why you want to approach these situations with a sense of balance, and not have people rush to judgment.”  Fatovic also noted that “By ending an investigation prematurely, you run the risk of a frivolous issue going public too soon.” Or having your CEO go on national television and personally apologize to those wrongfully accused.

Get Some Serious Advice

So how does a company tread through this minefield? If there are serious allegations made concerning employees engaging in criminal conduct a serious response is required. The first thing to do is hire some seriously good lawyers to handle the investigation. These lawyers need to have independence from the company so do not call your regular corporate counsel.  Do not send down Internal Audit or HR to take a look at things and report back. Attorney Jim McGrath, writing in Internal Investigations Blog, drives this point home by stating, “Despite the fact that using specialized investigation counsel is a best practice that is worth the money, one of the more difficult things is convincing decision-makers of the same… The Renault scandal reiterates the need of companies of all sizes to go outside to specialized counsel for sensitive inquiries.”

The hiring of outside counsel is also important because you will most probably have to deal with a government. If the investigation does reveal actionable conduct and you are in the US, your company will need legal counsel who is most probably an ex-Department of Justice prosecutor or ex-US Attorney to get your company through that process. Even if there is a finding of no criminal activity, you will need very competent and very credible counsel to explain the investigation protocol and its results to the government. If you are in the UK you need to hire someone with credible Serious Fraud Office- type experience or an ex-Crown Prosecutor. If you are in France, well you are in France.

There is a very good list of attorneys who specialize in the FCPA provided by my colleague Howard Sklar in his blog entitled “Getting Advice”. He knows the folks he listed personally and tells you their strengths. It is a great resource and now would be an excellent time to use it.

Don’t Pay Bounties to Unknown Persons for Unsubstantiated Rumors

A very troubling aspect of this case is the payment for the information. The payment itself has reportedly ranged from a high of €700,000 to €450,000 down to €250,000. It is not clear as to the timing of this payment but apparently the payment was handled by two security department employees, who handed it over to a third person, not the informant, who resided in Algeria. This third party in Algeria now cannot be located and the WSJ reported that initially “an employee in the security unit refused to disclose to Renault who ultimately received the money…” Reuters has reported that French criminal justice officials are now investigating the two security department employees regarding whom this anonymous source was and where the money went. The WSJ later reported that this employee, who has been in custody for a couple of weeks, has finally named this anonymous source.

Many US companies are worried about the impact of the Dodd-Frank Whistleblower provisions. However, a clear difference is that Dodd-Frank requires substantiated securities violation, as in an admission by a company, settlement agreement or judicial finding, for payment of any bounty rewards. In L’Affaire Renault, the company apparently paid a bounty to an unknown source, for unsubstantiated information, which did not result in any criminal finding or even a civil wrong. Whatever your company does DO NOT PAY BOUNTIES TO PERSONS UNKNOWN.

The moral of the fairy tale that started our piece and L’Affaire Renault is that your company needs to get it right. The costs for not doing so are simply too great.

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, 2011

March 15, 2011

Ready, Fire, Aim: L’Affaire Renault

As reported in this morning’s Wall Street Journal (WSJ), the CEO of the French car maker Renault apologized today on national television for the wrongful termination of three company officials for improper allegations of industrial espionage. In addition to this apology, he offered to meet the men and propose that they rejoin the company. They also would be offered compensation, “taking into account the serious hurt that they and their families have suffered,”. Although L’Affaire Renault is not (at least not that we are aware) a case involving the Foreign Corrupt Practices Act (FCPA), it does present several very large Lessons Learned for any company which engages in a FCPA investigation and disciplines or terminates employees based upon the investigation.

In January, Renault fired three top officials for allegedly selling secret information regarding the company’s electric car program. These allegations were based upon information which supposed came from an unknown informant. This information claimed that the three terminated officials had large Swiss bank accounts funded by monies which came from the sale of this information. This unknown informant was paid for his information, by two Renault security department employees and then allegedly onto another party, who eventually passed along some or all of the Renault payment to the informant.

If all of this sounds confusing, well it is. As reported in the Saturday Wall Street Journal, the inquiry began last August, with an anonymous letter to company officials, that one of the now terminated employees was overheard “negotiating a bribe”. By December, the company’s security department had “assembled elements pointing to the existence of bank accounts in Switzerland and Liechtenstein.” The accused employees were terminated, in January, 2011. Today’s WSJ reported that “state prosecutor Jean-Claude Marin on Monday said his investigation showed that the three didn’t have bank accounts in those countries.” What are some lessons a US company might learn from L’Affaire Renault?

Do Your Homework

First and foremost is that your investigation must be thorough. We have written several blogs on FCPA investigation: protocols and tools that can and should be used. In the protocol area, it is always best to thoroughly investigate any allegation, before firing employees or going public with accusations. In other words, if the key part of the allegation is that bribes were being funneled into a Swiss bank account, your company had better make certain this information is correct before you go make that public pronouncement. You should endeavor to make certain that your company CEO does not, as reported in the Wall Street Journal, make the statement made by the CEO of Renault when he “said publicly that the company had evidence against them” regarding the existence of these foreign bank accounts. Over two months after this public statement, Renault has discovered no such evidence. In the investigation tools area, there are several software products which can assist in any such investigations. In fact, we blogged on Catelas, which uses interpretive software to analyze cyberspace relationships. Just think how that would have assisted in the Renault investigation.

See Howard Sklar’s Blog on “Getting Advice”

If there are serious allegations made concerning your company’s employees engaging in criminal conduct, a serious response is required. The first thing to do is hire some seriously good lawyers to handle the investigation. These lawyers need to have independence from the company so do not call your regular corporate counsel. Hire some seriously good investigative lawyers. Attorney Stephen Pearlman, quoted in the WSJ, noted that a company must approach any such allegations “with a real sense of balance” and not “over-react.”

Outside counsel is also important because you will most probably have to deal with the government. If the investigation does reveal actionable conduct, your company will need legal counsel who is most probably an ex-DOJ prosecutor or ex-AUSA to get your company through that process. Even if there is a finding of no criminal activity, you will need very competent and very credible counsel to explain the investigation protocol and its results to the government. There is a very good list provided by my colleague Howard Sklar in his blog entitled “Getting Advice”. He knows the folks he listed personally and tells you their strengths. It is a great resource and now would be an excellent time to use it.

Don’t Pay Bounties To Unknown Persons for Unsubstantiated Rumors

A very troubling aspect of this case is the payment for the information. The payment itself was €250,000 or about $346,000. It is not clear as to the timing of this payment but apparently the payment was handled by two security department employees, who handed it over to a third person (not the informant) who resided in Algeria. This third party in Algeria now cannot be located and the WSJ reported that “an employee in the security unit refused to disclose to police or Renault who ultimately received the money…” Reuters has reported that French criminal justice officials are now investigating the two security department employees regarding who this anonymous source was and where the money went.

Many US companies are worried about the impact of the Dodd-Frank Whistleblower provisions. However a clear difference is that Dodd-Frank requires a substantiated securities violation, as in an admission by a company, settlement agreement or judicial finding, for payment of any bounty rewards. In L’Affaire Renault, the company apparently paid a bounty to an unknown source, for unsubstantiated information, which did not result in any criminal finding or even a civil wrong. Whatever your company does DO NOT PAY BOUNTIES TO PERSONS UNKNOWN.

While a lawyer in the corporate world I used to think the worst thing that could happen was for your CEO to be surprised or unprepared for some event. I may have to revise that advice to now say it should be that your CEO does not have to go on national television and try to explain how the company wrongfully fired three employees…

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, 2011

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