How Odysseus Can Inform Compliance Enhancement

by Thomas Fox
Contact

What are your thoughts on Odysseus? Is he a villain or a hero? The ancient philosophers had many differing views on him. One view that struck me was held by Antisthenes, a disciple of Socrates. Antisthenes used the actions of Odysseus as a defense against those who attacked the discipline of philosophy as mere sophistry; that is focusing on words not deeds. Antisthenes presented Odysseus as someone whose words themselves were good deeds. Further, the actions of Odysseus showed his abilities as a team player, a cooperative hero. Recently, I thought about the concept of Odysseus and words as good deeds in the context of the post-acquisition requirements of the Foreign Corrupt Practices Act (FCPA).

Although not specifically stated in the recently released Department of Justice (DOJ)/Securities and Exchange Commission (SEC) FCPA Guidance, enforcement actions from 2011 and 2012 would seem to indicate that a company should have an integration completed in 12-18 months after the underlying transaction is concluded. I considered the post-acquisition integration issue when reading an article in the MIT Sloan Management Review Winter 2013 issue, entitled “Building Your Company’s Capabilities Through Global Expansion”, by authors Donald Lessard, Rafael Lucea and Luis Vives. The thesis of the article was that for companies to create and sustain global competitive advantages, they need to adopt a systematic approach to exploiting, renewing and enhancing their core capabilities.

While the focus of the article was on marketing and sales, as I read the article I came to believe that it has implications beyond marketing into the post-acquisition integration required by the DOJ under the FCPA. I believe that the framework which the authors have developed can be a way for companies to think through both FCPA post-acquisition integration but also which compliance enhancements need to be introduced in foreign operations. This second point is significant because one issue that seems to bedevil compliance practitioners is how to integrate and enhance your compliance program across the globe. There are both language and cultural differences which make a ‘one-size-fits-all’ approach sometimes problematic. The article also provides some valuable insight into how a company might make its US centric FCPA compliance program a value add for its foreign operations.

The authors provide a framework under which they believe a company can evaluate the potential for enhancing its current sources into capabilities for development in foreign markets and work for post-acquisition integration. So using the authors’ framework, I will adapt it into the compliance space.

  1. Are the compliance capabilities developed relevant to the users in the foreign jurisdiction or in the acquired entity? Do the compliance enhancements or post-acquisition integration bring value to these diverse entities?
  2. Are the compliance capabilities you are using as the basis for the enhancements or post-acquisition integration appropriate for these internal markets? Do they help or hinder the capture of value in the company?
  3. Are the compliance capabilities that you have develop in the US transferrable to the foreign operations or acquired entities? Can you deploy these compliance enhancements to foreign operations or post-acquisition integration without sacrificing too much value creation?
  4. Are the new enhancements that the company will develop through acquisition or foreign operation expansion of its compliance program complementary to existing capabilities within the company?
  5. Are any of the compliance capabilities, that will be used in the enhancements or post-acquisition integration, complementary to existing compliance capabilities that currently exist in either of those two groups?
  6. Are any of the compliance capabilities that currently exist in the foreign operations or acquired entities, transferable back to the US?

The initial goal should be that any compliance program augmentation, whether for an acquired company or a foreign operation, should result in “an overall enhancement of the company’s capabilities” and global position. This means that while it may initially appear that the compliance group of a company is the Land of No; such should not the case for the compliance enhancement or integration to succeed. The authors believe that a company should build on its existing capabilities to show that the new processes or policies will create greater value. The example I give in training is expense reports. I ask whether anyone does not have to fill out an expense report to be reimbursed. The answer is always the same; everyone has to fill out an expense report. I then go on to explain that the FCPA will require you to list who you took to dinner or provided a gift to, what their title is and how much you spent. In other words, the obligation of an individual employee to provide the basic information to be used by others is not much in addition to the information they are currently providing.

My colleague Jay Rosen of Merrill Brink often says that translation services are only part of the equation when his company translates a compliance program or policy. It is important to understand not only the cultural context but have cultural sensitivity to issues. The classic examples are mooncakes or the tradition of giving small gifts when meeting a person for the first time in the Far East. It is viewed as a ritual which has deeper and and greater meaning more than simply a handshake. While many companies worried about this issue or even prohibited the giving of such small gifts, the FCPA Guidance has made clear that the DOJ/SEC are not looking for violations relating to such small gifts unless they are a part of an overall systemic failure of your compliance program.

In the business world it is not always words v. deeds. Another way to look at it might be consider entrepreneurial people v. process people. Entrepreneurial people tend to make things happen in an organization. They can wear many hats at once. Process people tend to have a deeper focus in a particular area. You need a balance of both in an organization.

The authors have provided a framework for you to consider in your post-acquisition compliance program integration. Further, it provides a context for you to enhance your compliance program in foreign operations. Much like Antisthenes views on Odysseus, you can translate the words of compliance into the doing of compliance

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Thomas Fox, Compliance Evangelist | Attorney Advertising

Written by:

Thomas Fox
Contact
more
less

Compliance Evangelist on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!