Tag: Thomas O’Neil

When the Government Comes Knocking

I am attending the Global Ethics Summit 2010, hosted by Dow Jones and Ethisphere. Here are my notes, live from this session:

What’s the best course of action when addressing a regulatory inquiry? Many have suggested that having a better than average compliance program to showcase will certainly help your case. But what are some strategies for engaging with your lawyers in these unique cases? And how distant or directly should a company be involved in the discussions with DOJ or other regulators?
When the Government Comes Knocking panel
Panel:

  • Ty Cobb, Partner, Hogan & Hartson
  • Thomas O’Neil, Advisor, Wellcare Health Plans
  • Eric Feldman, Senior Advisor to the Director for Procurement Integrity, National Reconnaissance Office
  • Hank Bond Walther, Assistant Chief, U.S. Department of Justice
  • Brady Long, Vice President, General Counsel & Secretary, Pride International

Hank started off by sharing his thoughts. It is always good to have a compliance program. When the DOJ comes in, they don’t look at the paper program for compliance, they want to see how it works in execution. The DOJ looks behind the facade. They want to know about training, they want to know what the risks are and how they addressed those risks. Off-the-shelf compliance will not make the DOJ happy.

Eric pointed out the the new Federal Acquisition Regulations require the agency to include ethics and compliance programs as part of their evaluation of potential contractors. Everyone focused on the mandatory disclosure requirements. The government is focused on the due diligence prior to entering into the contract. They want to prevent problems from occurring.

Thomas pointed out that abroad, they think about fear peddling. Largely because the US approach to compliance has not made its way abroad.  You need to have integrity, you need effective self-policing and you need to engage in responsible self-reporting. You need to integrate that into the “marrow” of your enterprise.

The problems at Pride came from acquisitions years earlier. Those organizations were not properly integrated into the overall organization.

Hank agreed that enforcement abroad is not as strong as the US. However, the US is no longer the “only sheriff in town.” Enforcement for corporate misdeeds is on the rise and sharply on the rise in some areas and some jurisdictions.

Hank also pointed out that he sees significant differences between the outcomes for companies that self-disclosed as opposed to those who got caught. (It sounds like there is room for some empirical studies on the treatment. Maybe there are some and I have not seen them yet.) Eric agreed that the end result would be dramatically better if they self-disclosed as a government contractor.

Thomas put a challenge back to Ty about how are big laws positioning themselves to really help companies, in-house counsel and compliance officers be better. The days of talking about waiving privilege and whether to report are over. Law firms need to prove their that their advice is an effective part of the compliance program.

Hank chimed in and agreed with Thomas’s take on the use of outside law firms. The DOJ sends FBI agents to interview executives, to seize records and run stings. They are less likely to do so when you self-disclose.

Tone at the Top: The Board’s Role

I am attending the Global Ethics Summit 2010, hosted by Dow Jones and Ethisphere. Here are my notes, live from this session:

Understanding and supporting a prudent ethical and compliant tone throughout an organization is a core responsibility of the board of directors. Board actions are more transparent than ever to employees, investors, regulators, media and the general public. This session will discuss the challenges and keys to success for today’s boards. What are the responsibilities and associated liabilities of the Board for a company’s compliance? How can a board become actively involved in assuring employees, stakeholders and regulators that their organization is being proactive about ethics and compliance?

Speakers:

  • Thomas O’Neil, Advisor, WellCare Health Plans
  • C. Turney Stevens, Dean, College of Business, Lipscomb University
  • TK Kerstetter, President & CEO, Corporate Board Member

Turney started off by a need to focus on the tone throughout the organization. It is great to have the board of directors focused on integrity and ethics. But it is useless if that message does not reach down throughout the organization.

Thomas pointed out the need to view and get involved in company operations. They should not limit their involvement to meeting in the boardroom.

Watershed Events

The test of company’s culture is during a crisis. TK used the example of Wal-Mart, when the vice-chairman was found to be abusing gift cards. They had to set the culture and discipline that person (terminate?).

Overload

It can be overwhelming for a board to oversee all of the operations. They need to have faith in the organization. Directors need to get comfortable that the company is doing the right thing. Turney mentioned the work of Ben Heineman and his book  High Performance with High Integrity. It is important to create some metrics to measure the process and the compliance program. Heineman came out of GE and its culture of measurement.

Cutting Corners

With the pressure of hitting budgets and performance goals, how do you temper this with the need to operate with integrity. The board needs to show that the employee was a rogue and that the company had the culture, operations and monitoring in place that would normally prevent the rogue employee from succeeding. You need to show that you were a reasonably prudent director. (Of course the standard for being a reasonably prudent director is a continually increasing standard.)

You need to temper “missing the numbers” and the need for integrity. How to reconcile these competing forces? It’s tough.

Going Public

Private equity firms need to do a better job on compliance, ethics and the “tone at the top” when preparing their portfolio companies to go public. There are the regulatory issues of course. But there is an increased pressure to make the numbers in the public markets.