Here are some notable things I heard, or overheard, at the SCCE’s Compliance and Ethics Institute in Chicago earlier this month.
M&A Safe Harbor
Deputy AG Lisa Monaco closed out the conference by announcing the creation of a new “safe harbor” via voluntary self-disclosures related to M&A activity that could lead to the presumption of a declination.
To qualify, companies must disclose the misconduct discovered at the acquired entity within six months from the date of closing and must fully remediate within a year of the closing date.
Talking to attendees at the conference after Monaco’s speech, there seemed to be a consensus that the timeline set out by the DOJ to obtain the presumption of a declination is extremely tight.
A panel of representatives from the State Department, CIPE, and GE discussed a new State Department initiative to “Galvanize the Private Sector,” or GPS. It’s going to be a forum to talk with businesses and apply solutions. Some of the topics discussed during the SCCE panel were infrastructure projects, incentives for compliance, and global standards for lobbying.
Particular focus was given to SMEs, who in the panel’s view could become a powerful force for change if they move in unison to promote compliance globally. The panel was circumspect, though, and discussed how SMEs in many countries face enormous pressures to engage in bribery and corruption.
The State Department also spoke about how the U.S. Government doesn’t always know how international business works, and how GPS is an effort to understand better the concerns and operations of businesses and the compliance challenges they face.
On the enforcement side, the State Department discussed using financial sanctions via the Magnitsky Act as well as visa restrictions through Section 7031(c).
In discussions after the panel, there was a lot of interest in how visa restrictions add a new dimension and deterrent by sanctioning not just corrupt politicians but also their families.
More will be shared at the upcoming 4th Anti-Corruption Academic Symposium.
The Lull in Enforcement
Around the water cooler, many folks at the conference expressed concerns about the lull in FCPA enforcement. The common theme was that it is harder to justify compliance budgets when the perceived threat of mega-enforcements is reduced. Deputy AG Monaco, responding to a question after her speech, addressed the lull, saying that there is a strong enforcement pipeline coming. I heard a number of attendees say they are waiting for this to materialize.
Is the carrot of voluntary self-disclosure safe harbors as powerful as the stick of enforcement? We’ll have to wait and see.
AI is on Everyone’s Mind
The conference opened with a superb general session on AI. A key point was how AI can help organize unstructured data during investigations. Much of the discussion was dedicated to anticipated legislation and regulations around the use of AI, and the risks associated with it.
One panelist made a great analogy about the obstacles companies face in assigning responsibility for AI. AI is like electricity, they said. Everyone in your company uses it, but who is responsible for it?
In discussions afterwards, many attendees expressed concern about the use of AI, though there were few ideas for concrete actions to be taken at the moment. AI is somewhere on the horizon, but it doesn’t feel like the shoreline is in view yet from a compliance perspective.
Remediation During Government Investigations
There was a general session and a panel on this topic. Here’s the bottom line from both: Communicate with the government.
Other key takeaways were to start thinking about remediation immediately, but take time to consider and develop a plan. When companies with investigations make changes to a compliance program, that doesn’t mean admitting guilt. Still, those companies should carefully identify process gaps and document all the changes they are making.
Billy Jacobson and Alexandra Wrage discussed how Unaoil “weaponized compliance.” It’s the fascinating idea that all of the published data about how to conduct due diligence and manage your third parties can also be used by third parties to game a company’s compliance system.
The Unaoil story is extremely compelling, and to hear it explored by two compliance legends was an absolute delight.
* * *
Congrats to the SCCE for putting on a wonderful conference and for generously providing the FCPA Blog with a pass to attend. The sessions, panels, and informal time all had good vibes.