Editors

Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Bill Steinman
Contributing Editor

Compliance and enforcement trends from the 2019 TRACE Forum

TRACE held its annual U.S. Forum in Washington, DC, this week. More than 120 companies gathered to benchmark their programs and to hear from an extraordinary array of government, law firm and in-house speakers.

Deputy Attorney General Rod Rosenstein gave the keynote speech, which is likely to be one of his last in his current position. He noted the importance of corporations being able to adapt their compliance programs, saying that “complacency can be deadly when circumstances change, and circumstances always change.”  He paraphrased Nassim Nicholas Taleb, telling a story about turkeys — you should read it — that illustrates the danger of forgetting that past performance is never a reliable indicator of future outcomes. When asked at the end of the session what’s next for him, the Deputy Attorney General gave no indication of where he’s headed next. Instead, he said he’d be taking some time off before making any decisions.

Earlier in the conference, we heard from Leslie Backschies with the FBI’s International Corruption Unit. She discussed  the way the FBI and DOJ work together and noted that there is an almost one-to-one ratio between the 32 dedicated FBI agents and 30 dedicated prosecutors, which is unlike any other department and reflects the specialized expertise needed for these complex cases.

Speaking on the same panel, David Last, Assistant Chief of the FCPA Unit at the DOJ, fielded questions about the use by employees of ephemeral messaging apps and the DOJ’s expectation that companies will be able to explain their policies around record-keeping and data retention, the reasons behind those policies, and the steps taken to gauge and pressure-test employees’ use of these tools, to ensure that relevant records and communications are retained. Mr. Last also noted that there are business reasons as well as compliance reasons to manage this emerging challenge. He added in closing that there are five FCPA Unit trials on tap for 2019.

Guillermo Jorge of TRACE Partner Firm Bruchou, Fernandez Madero & Lombardi in Argentina spoke about the country’s new anticorruption framework and transition to meaningful enforcement. He shared startling details about the Notebook Scandal which was launched when eight notebooks were discovered documenting corruption schemes involving senior officials in Argentina’s government. The notebooks were kept by the driver of a government official who used them to record loads of money transported from construction companies to the bribe recipients. The sums were frequently so large that the quantity was estimated by the weight of the cash.

Carlos Ayres, Partner at Maeda Ayres e Sarubbi Advogados in Brazil, pointed out that anti-corruption enforcement in Brazil goes far beyond Operation Car Wash and that there has been intense scrutiny of compliance programs by Brazilian authorities in recent years. Carlos expects that enforcement of anti-corruption laws will continue and increase under Brazil’s new administration.

TRACE’s Sunny McCall moderated a discussion with Karen Benson (Associate Vice President. Assistant Chief Compliance Officer, Royal Caribbean Cruises Ltd.) and Kathleen O’Toole, (Senior Counsel, Global Compliance & Safety, McDonald’s) on innovative approaches to compliance training. Offering practical pointers for companies of all budgets and sizes, the panel provided insights for leveraging internal assets, encouraged the use of blended learning approaches and proposed behavioral “nudges” to keep ethics and compliance front and center. Driving home the point that an organization’s training initiatives should align with the evolution of the business, they said future compliance training would include predictive modeling, a continued focus on content “at your fingertips” and an increased emphasis on “real-life” situational awareness.

The two-day event closed with a lively discussion amongst four FCPA luminaries, Chuck Duross, Nat Edmonds, Tom Firestone and Richard Grime, offering predictions about compliance and enforcement trends for the next couple of years. These included an increase in whistleblower allegations and tips from foreign law enforcement officials, a “race to the top” with companies setting a higher bar for one another, and more creativity in disguising bribery schemes as typical commercial transactions.

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Alexandra Wrage is president and founder of TRACE. She is the author or editor of five books about anti-bribery compliance and the hidden costs of corruption, and the host of the financial crime podcast Bribe, Swindle or Steal

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