THANK YOU! Our One-Year Anniversary and Two Award Nominations

As my company is just mere days from our one-year anniversary, I’d like to say THANK YOU to our valued clients and friends. When I started Spark Compliance Consulting one year ago, I had no idea that it would grow so quickly and that I would get to work on so many fascinating projects with such marvellous people. 

We started in London, but in July we opened our Los Angeles office, with Spark Compliance’s new partner, Diana Trevley acting as West Coast Director. In October we brought on Jonathan Grant-Hart as a third partner, acting as Spark Compliance’s Director of Finance and Administration. In 2017 we expect to continue to grow and expand, and we can’t thank you enough for helping us to do that.  Here's the link to our full THANK YOU article.  

What's Your Theme For The Year?

Happy New Year!  Welcome to 2017.  When considering the new year, most people think about what they want to accomplish in the next 12 months, but how do you choose what to focus on?
 
When you’re a compliance professional there are always competing priorities.  Do you focus on getting out the new Gifts and Hospitality policy or should you be working on training and outreach?  Is it time to revamp your due diligence process, focus on obtaining ISO 37001 Anti-Bribery Management Systems certification or on the new European General Data Protection Regulation’s effect on your business?
 
In order to sort out competing priorities, I always choose a theme for the year.  One year my theme was collaboration.  Throughout that year I prioritized projects that allowed me to build more effective relationships with Internal Audit, Legal, Responsible Business and Human Resources.  Another year, when I hired several new team members, my theme was leadership.  I prioritized mentoring, training, planning and teaching that year.  I focused on leading both my team and the compliance initiatives throughout the business.
 
So what’s your theme this year?  Is this year going to be about communication and training?  Maybe this year’s theme is relationships, so you’ll prioritize getting invited to high-level strategic meetings, spending time at the water-cooler and going to happy hour with folks at your business after work. 
 
The best themes tend to have three characteristics:

• The theme should not be overly limited. 
  Themes like communication, relationships, third-party risk, and policy management are useful because they relate to many different activities, not one goal.  You may be re-writing your Code of Conduct this year, but Code of Conduct isn’t really a theme – Policies would be a better choice.
• The theme should be specific.
  You don’t want “good compliance” or “program effectiveness” to be the theme, because those aren’t specific enough.  You want to choose a theme around which you can make goals.  
• The theme should inspire you.
  You should be excited about your theme for the year.  You’re much more likely to work hard and to accomplish the goals associated with your theme if you’re excited about it.

As for me? My theme for the year is opportunity. May 2017 bring many opportunities to all of us in the compliance community. 

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When you’re unsure of yourself or you’re in an unfamiliar environment, it can often help to act as if you know what you’re doing and that you’re confident.  Many of us get flustered and frightened when going into give in-person training in an unfamiliar country or going to our first board meeting where we have to present.  By acting as if we are confident and taking on the stance of a confident person, we give ourselves the opportunity to feel what it is like to be confident, which in turn, tends to raise confidence.  Once you’ve acted the part long enough, you’re likely to naturally be confident. 

Women in Compliance Awards Shortlist Announced!

This week the Women in Compliance Awards finalist shortlist was announced, and I'm thrilled to report that I was shortlisted for the Compliance Innovator of the Year Award, while my company, Spark Compliance Consulting was shortlisted for Compliance Consulting Team of the Year!  I look forward to joining many of you at the awards this March in London! 

The press release about the event (a copy of which can be found here) reads:

The world’s best and brightest women in the compliance field will be celebrated once again on March 30, 2017 in London at the Women in Compliance Awards.  And this year, the guest list will include Kristy Grant-Hart and her company, Spark Compliance Consulting.

Spark Compliance Consulting was shortlisted for the Compliance Consulting Team of the Year, while Kristy Grant-Hart was shortlisted for the Compliance Innovator of the Year Award.  Ms. Grant-Hart is clearly thrilled.  “For Spark Compliance Consulting to be named in the same list as such established global firms as PWC and Baker McKenzie is incredible, especially as we have only been open one year.” Grant-Hart continued, “I’m deeply honoured to be nominated for the Compliance Innovator of the Year Award. I love the compliance community, and it is exciting to be included in the shortlist!” Spark Compliance Consulting is run by CEO Ms. Grant-Hart in London and West Coast Director Diana Trevley in Los Angeles. The dynamic pair met as first-year associates nearly a decade ago in the Los Angeles office of Gibson, Dunn & Crutcher. 

The annual Women in Compliance Awards are “the ultimate celebration of the achievements female compliance professionals make every day in the world of compliance and business. The Awards embody the very best initiatives, individuals and teams, bringing into sharp focus the united efforts of this innovative and dynamic sector” according to organizer C-5.  The black-tie event features a champagne reception, formal dinner and celebrity entertainment. 

Further information about the Women in Compliance Awards can be found here.
 

Three Critical Goals for the New Year

What is it about the new year that creates such optimism and excitement?  January 1 is not inherently different than May 1 or September 1, and yet it feels entirely more important.  The desire to start fresh is universal in human experience.  Within the compliance community we can use this energy to push our programs forward, to renew our commitment to our work and to set goals that pull us through the next 12 months. 
 
To make this the best year ever for your program and your professional development, try setting three specific types of goals.

1. Program Goals

If you haven’t written your compliance program goals for 2017, now is a great time to do it.  Try to make your goals specific and realistic, with a timeline associated with major milestones to keep you on track.  Program goals help to focus your energy so you don’t simply fight fires all year long.  You are much more likely to make major progress in one or two areas that you specify rather than make little progress in many areas when your energy is splintered and unfocused.  Try to pick areas about which you are excited, then envision how it will feel to have the goal completed at the end of the year.  Having a clear internal vision of the successfully completed goal will enable you to work toward it knowing that it can be done.

2. Corporate Influence Goals

In addition to program goals, make goals relating to getting to know the influencers within your company.  Influencers can have overt or covert power.  Overt power is denoted by title; for example, CEO, Manager or Owner.  As important as it is to have the ear of those with overt power, it is also critical to get to know those with covert power.  People with covert power may or may not have high-level titles, but they are important because of their influence.  Frequently these people are charismatic or they are people who have been at the company a long time, and usually they are emotionally close to those with overt power. 
 
Identify two people with overt power and two people with covert power you wish to get closer to over the course of the year.  Ask them to lunch, make a point to go to their coffee station, or try to set up in-person training for their group.  Making a dedicated decision to work with corporate influencers will help you to be more effective when you need support. 
 
3. Networking and Professional Goals
 
As important as it is to grow your program and your influence within the company, it is critical that in 2017 you also grow your professional network.  Write down at least one professional goal for this year.  Perhaps this is the year you get your CCEP or CCEP-I certification?  Is this is the year you write an article for Compliance and Ethics Professional Magazine?  Could this be the year you attend that academy or class on an area of compliance you’re not responsible for yet, like money laundering or data privacy?  Make a goal and work toward it. 
 
In addition to your professional goal, make a second resolution to meet at least one new person per month who works within the compliance profession.  If you meet just one person in the compliance field per month, by the end of the year you’ll have twelve new contacts.  That’s twelve more opportunities for people to refer you to your next job or promotion.  Meeting one person a month quickly leads to a network full of people you can introduce to each other, further expanding your influence. 
 
2017 will be a fantastic year for you and the profession, but it will be even better if you plan for it to be great through goal setting. 

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Be sure to set written goals at the beginning of each year or quarter.  When you commit to written goals and hold yourself accountable to a timeline, studies show that you are much more likely to accomplish what you set out to do.  Writing down your goals for your program helps you to focus on what needs to be done to accomplish those goals, and also allows you to use your time wisely.  Instead of simply fighting fires, you’ll accomplish more when you write down and commit to accomplishing your goals. 

FCPA Third-Party Risk: Budweiser, FIFA and the World Cup: Part 5

Note: This is a guest post by attorney and compliance expert Ramsey Kazem.   In this final part of the five-part series, we take the lessons of Budweiser’s sponsorship of the 2014 World Cup and offer suggestions for mitigating FCPA third-party risk in future transactions.

Looking Forward
 
Even if Budweiser dodges the FCPA bullet, the revelations of bribery and corruption within FIFA coupled with allegations of political corruption in Brazil should have been a major wake-up call for the organization.  While the business case for sponsoring high-profile events is obvious, sponsors like Budweiser must also consider the potential legal exposure and reputational risk from associating with organizations like FIFA.  Budweiser, and organizations like it, should take the lessons of the 2014 World Cup and apply them to future sponsorship negotiations.  The following are some suggested strategies for managing FCPA third-party risk:

• Risk Assessment. In evaluating a proposed sponsorship agreement, an organization should treat the sponsored entity like any of its third-party vendors, suppliers or agents.  That is, the organization should assess the degree of risk presented by the proposed contractual relationship with the sponsored entity.  The assessment should rate the risk of both the sponsored entity (e.g., FIFA) and the location where the sponsored event will take place (e.g., Brazil).     
• Internal Controls. After assessing the risk of a proposed sponsorship agreement, the organization should develop internal safe guards to mitigate risk and/or serve as an early detection system.  The organization should also consider developing training programs targeted at specific employees to introduce or reinforce related policies, procedures and processes.
• Contractual Terms. An organization should negotiate contractual terms and conditions that promote transparency, protects the sponsor’s investment, and limits corruption risk.  To those ends, an organization should consider including the following in the sponsorship agreement:  
• A detailed description of the benefits to be granted to the sponsor and the sponsored entity’s obligations to the sponsor.
• Contractual representations and guarantees that sponsorship fees are only for the performance of agreed to activities and services reflected in the agreement.  
• Contractual prohibition on making corrupt payments to foreign government officials.  The agreement should also clearly define key terms like “corrupt payments” and “foreign governmental officials” consistent with the FCPA and similar anti-corruption legislation. 
• Contractual representation and warranties that the sponsored entity and its employees and agents will comply with the FCPA, other applicable anti-bribery statutes and the local laws of the host country.  The agreement should also require the sponsored entity to execute periodic certifications stating that it is fully aware of its responsibilities under the FCPA and other applicable anti-bribery laws and that it has not engaged in any conduct in violation of these laws.     
• A contractual provision that authorizes the sponsor to terminate the agreement if the sponsored entity engages in conduct that may damage the reputation of the sponsor.  This morals clause should be tailored to specific conduct that could reflect poorly on the sponsor.  This provision should also specify the criteria for determining whether certain conduct violates the provision.  
• In connection with the morals clause or any other provision authorizing the sponsor to terminate the relationship, the sponsorship agreement should include a suspension clause.   As is suggested by its name, this clause allows the sponsor to suspend its obligations until it makes a final decision on whether to terminate the agreement.  
• A contractual provision that requires the sponsored entity to indemnify the sponsor for any violations of anti-corruption laws triggered by the sponsored entity.  The indemnification provision should be as broad as possible and include reimbursement for the costs of any internal investigations, legal fees, fines and penalties.  
• A contractual provision that allows the sponsor to clawback payments when the sponsored entity breaches certain provisions of the agreement.  The clawback provision can be tied to specific conduct (e.g., engaging in corrupt conduct) or to an unspecified breach of a material term of the agreement.  
• A contractual provision authorizing the sponsor to audit the sponsored entity to ensure compliance with the terms of the sponsorship agreement.  Depending on how the provision is drafted, these audit rights can trigger as a matter of right (i.e. sponsor has the right to audit sponsored entity’s books and records upon reasonable notice to the sponsored entity) or upon the occurrence of a specific event (i.e. sponsor has the right to audit sponsored entity’s books and records if it reasonably believes there is a material breach of the agreement).     

While these and similar contract provisions are desirable for the sponsor, the sponsored entity may push back and request mutuality in the obligations, seek to significantly limit the scope of the provisions, or flat-out reject the provisions.However, even if the sponsored entity has greater leverage in the negotiation, proposing the above contract provisions can provide useful insight into whether the business values of the contracting entities are aligned.For example, the refusal of a sponsor’s request for a moral clause is revealing – and should cause the sponsor to pause and reconsider whether to move forward with the agreement.
 

• Create Leverage.  Contract negotiations typically follow the “golden rule”:  if you hold the gold, you make the rules.  That is to say, the entity with greater leverage typically has more influence in deciding the terms of the agreement.  An organization like FIFA takes full advantage of its negotiating power and generally dictates the terms of its sponsorships agreements.  As such, it could be very challenging to obtain FIFA’s assent to any of the contractual provisions described above.  An effective way to counteract this disparity in negotiating power is for all of the major sponsors to take collective action to ensure that an adequate level of transparency and anti-corruption standards are included as standard terms in all sponsorship agreements. 
• Periodic Reassessment of Risk.  It is important to remember that a risk assessment measurers an organization’s risk at a given moment in time.  Accordingly, an organization – especially with its long-term business relationships and contracts – should periodically reassess its FCPA third-party risk (for each of its partners if feasible) to account for changing conditions and any new or emerging threats.    
• Action Plans.  Prior to any new engagement, a sponsor should develop an action plan to address high-risk scenarios that could trigger bribery and corruption issues.  These plans should detail a step-by-step course of action for confronting these issues and neutralizing the risk.  An organization should also develop training programs for key personnel so they are prepared to implement the action plans when the need arises. 

Conclusion
 
Many organizations face significant FCPA risk through their third-party business relationships.  Budweiser’s sponsorship of the 2014 World Cup presents an interesting case study of how changing conditions can transform a seemingly low-risk business opportunity into a high-risk venture with significant FCPA exposure.  While Budweiser may successfully sidestep the FCPA landmine in this instance, the story of the 2014 World Cup provides important reminders and lessons.   Namely, an organization confronted with this type of scenario must be vigilant in monitoring its third-party contract performance, identifying and confronting red flags and reassessing its risk as conditions change.  Moreover, as the threat becomes apparent, it must take immediate action to “stop the bleeding”, investigate whether, and to what extent, it violated the law, and take proactive steps to mitigate its FCPA risk in future transactions.   

Ramsey Kazem can be reached by phone at +1-404-872-5615 or by email at info@thethreetwelvegroup.com.

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When your boss or someone else in the business is critical of the compliance program or the way you’ve done your job, do your best to accept the criticism and to listen to the feedback.  Most people become defensive when feedback is offered, which stops the capacity to learn.  When we hear what the other person is saying, we can evaluate whether the feedback is useful, and incorporate the information to make ourselves and our programs more effective.