http://www.bulletproofblog.com The blog on crisis communications Tue, 07 Sep 2010 22:06:50 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 http://www.bulletproofblog.com/2010/08/30/bulletproof-interview-special-%e2%80%93-suzanne-rich-folsom-on-corporate-compliance-issues/ http://www.bulletproofblog.com/2010/08/30/bulletproof-interview-special-%e2%80%93-suzanne-rich-folsom-on-corporate-compliance-issues/#comments Mon, 30 Aug 2010 18:35:18 +0000 Michael Robinson http://www.bulletproofblog.com/?p=3645 continuing series of Bulletproof Blog™ video interviews with thought leaders across multiple disciplines and industry sectors, I recently sat down with Suzanne Folsom, the former Vice President, Chief Regulatory and Compliance Officer, and Deputy General Counsel at AIG, to discuss how companies can best navigate an increasingly tough regulatory environment.

Ms. Folsom was hired by AIG after the determination of the material weakness in 2008. Her primary responsibility was to coordinate and lead a team of multinational regulatory and compliance professionals in establishing, developing, and implementing a world-class global regulatory and compliance system that would mitigate overall regulatory, compliance, legal and reputational risks for AIG and its thousands of subsidiaries in more than 130 countries.

Ms. Folsom and her team were successful in creating and implementing this leading-practices global compliance framework and establishing a global regulatory function that dealt successfully with more than 500 regulatory oversight bodies throughout the financial crisis. Their efforts have been recognized by a number of key international financial and insurance regulators, most notably at the November 2009 IAIS conference in Brazil.

During our conversation, Ms. Folsom discussed the long-term value of a proactive and robust corporate compliance function; the myriad of reasons why companies can gain value when they build and maintain cooperative relationships with their regulators before a crisis descends upon them; the industries most likely to draw regulatory attention in the coming months; and the effects of the aggressive enforcement strategies that are being carried by governments around the world.

As a leading expert in global regulatory issues who played a key role in one of the most high-profile compliance matters in recent memory, Ms. Folsom shared these insights and many more with Bulletproof™.

Click the video above to view Ms. Folsom’s interview in its entirety.

Michael W. Robinson is a Senior Vice President and Chair of the Corporate Practice at Levick Strategic Communications, the nation's top crisis communications firm. He is also a contributing author to Bulletproof Blog.

]]> http://www.bulletproofblog.com/2010/08/30/bulletproof-interview-special-%e2%80%93-suzanne-rich-folsom-on-corporate-compliance-issues/feed/ 4 http://www.bulletproofblog.com/2010/08/04/financial-reform-incentivizes-whistleblowers-like-never-before/ http://www.bulletproofblog.com/2010/08/04/financial-reform-incentivizes-whistleblowers-like-never-before/#comments Wed, 04 Aug 2010 16:51:43 +0000 Michael Robinson http://www.bulletproofblog.com/?p=3502 signed into law by President Obama last month includes new whistleblower incentives that will dramatically alter the corporate anti-corruption landscape.

Under a provision in the Dodd-Frank Act, the Securities and Exchange Commission (SEC) is required to pay whistleblowers a cash reward of between 10 and 30 percent of any monetary penalties it recovers as a result of civil or criminal cases brought with the assistance of original whistleblower information.

While there is certainly historical precedent for government use of “insiders” in prosecuting alleged corporate offenses, this provision – which applies to violations of U.S. securities law, the Foreign Corrupt Practices Act (FCPA), and regulations overseen by the U.S. Commodity Futures Trading Commission (CFTC) – has essentially deputized thousands of investors and corporate employees and will incentivize them to report suspected violations as never before. As corporate corruption expert Richard Cassin recently told The National Law Journal, employees will have “their ear[s] to the ground and will be anxious to spot violations and report them to collect rewards.”

As a practical matter, this means that an already-burgeoning workload at the SEC is likely to get bigger in the months ahead – as increased instances of whistle-blowing are sure to generate further increases in the prosecutions, settlements, and monetary penalties assessed by the agency.

From a communications perspective, this upswing in scrutiny presents companies with a stark challenge – be prepared to engage in a dialogue about the robust compliance and other regulatory functions you wisely put in place in advance, or take your chances with a media and investor community that already doubts corporate sincerity.

Michael Robinson is Senior Vice President of Corporate and Finance at Levick Strategic Communications and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/08/04/financial-reform-incentivizes-whistleblowers-like-never-before/feed/ 1 http://www.bulletproofblog.com/2010/07/15/corruption-allegations-may-derail-australia%e2%80%99s-world-cup-hopes/ http://www.bulletproofblog.com/2010/07/15/corruption-allegations-may-derail-australia%e2%80%99s-world-cup-hopes/#comments Thu, 15 Jul 2010 13:54:49 +0000 Michael Robinson http://www.bulletproofblog.com/?p=3386 hundreds of millions of dollars in revenues that come with it.

For one of those countries, however, the dream of attracting hundreds of thousands of soccer fans from around the world may have ended before it ever really got off the ground.

Last month, soccer’s world governing body, the International Federation of Association Football (FIFA), announced that it was launching an investigation into corruption allegations related to Australia’s bid for the 2022 World Cup. Amid rumors of expensive gifts and travel lavished on FIFA officials by representatives of the Football Federation Australia (FFA), there is wide speculation that Australia’s hopes of hosting an event that could generate four times more spending than the 2000 Olympics have been irreparably damaged.

While FFA officials staunchly deny any wrong-doing and the outcome of the investigation has yet to be decided, business interests around the world have been provided another stark reminder of corruption’s growing capacity to put an end to new or existing business ventures.

With today’s global companies and organizations becoming increasingly sensitive to the reputational and bottom line risks that corruption presents, unethical practices that might be thought to provide a leg up in competitive bidding processes are now far more likely to have the opposite effect.

Michael W. Robinson is a Senior Vice President and Chair of the Corporate Practice at Levick Strategic Communications, the world’s top crisis firm. He is also a contributing author to Bulletproof Blog™. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/07/15/corruption-allegations-may-derail-australia%e2%80%99s-world-cup-hopes/feed/ 0 http://www.bulletproofblog.com/2010/07/01/anti-corruption-if-countries-feel-the-pressure-companies-will-too/ http://www.bulletproofblog.com/2010/07/01/anti-corruption-if-countries-feel-the-pressure-companies-will-too/#comments Thu, 01 Jul 2010 13:22:41 +0000 Richard Levick http://www.bulletproofblog.com/?p=3168 Organization for Economic Cooperation and Development’s (OECD) Working Group on Bribery reported that in the 10-year existence of the OECD’s Anti-Bribery Convention (to which 38 nations have signed on thus far), 148 individuals and 77 companies have been sanctioned for bribing or attempting to bribe foreign government officials. Of the 148 individuals prosecuted, 40 received prison sentences. To date, the monetary penalties incurred by companies have reached €1.24 billion.

While the statistics do demonstrate that signatories to the Anti-Bribery Convention are making progress in punishing corrupt business practices, they also show that some countries – such as the United States, Italy, Germany, and Hungary – have been far more active than others. In fact, only 13 of the 38 parties to the Convention have sanctioned any individual or company at all. In nations such as Spain, Australia, the Netherlands, and many others, it seems that anti-corruption enforcement still isn’t much of a priority.

But appearances can be deceiving. While some may see these numbers as a sign that companies and individuals can act with impunity in the countries whose progress in curtailing corruption is lacking, reports such as these – and the media attention they now generate – are putting pressure on all nations to step up their efforts. Add the fact that anti-corruption controls are fast becoming a key driver of foreign direct investment, and it’s not hard to see why many countries may soon be getting off the sidelines and into the game.

As such, companies operating in any corner of the globe would be wise to take steps to limit their exposure by ensuring that their own anti-bribery controls are up to snuff and publically disclosing the measures they have implemented. If countries begin to the feel the pressure, it’s a safe bet that the companies doing business in those nations will too.

Richard S. Levick, Esq. is President and CEO of Levick Strategic Communications, the nation's top crisis communications firm. He is also a contributing author to Bulletproof Blog. Connect with him @richardlevick.

]]> http://www.bulletproofblog.com/2010/07/01/anti-corruption-if-countries-feel-the-pressure-companies-will-too/feed/ 2 http://www.bulletproofblog.com/2010/06/24/corruption-poised-to-affect-corporate-ratings/ http://www.bulletproofblog.com/2010/06/24/corruption-poised-to-affect-corporate-ratings/#comments Thu, 24 Jun 2010 19:09:53 +0000 Michael Robinson http://www.bulletproofblog.com/?p=3122 Obama Administration officials, leading trade organizations, and high-profile NGOs have all articulated an intensified focus on corporate corruption issues. Now, credit rating agencies have jumped onto the bandwagon – and, in the process, they have provided companies with compelling reasons to demonstrate a commitment to honest and ethical business practices.

Earlier this month, Fitch Ratings, which saw three of the companies it rates (Avon Products, Hewlett-Packard, and BHP Britton) adversely affected by corruption allegations in April 2010 alone, announced that violations of the Foreign Corrupt Practices Act (FCPA) and other anti-bribery conventions could soon play a larger role in determining companies’ fiscal health. Citing ever-increasing fines, detailed reporting requirements, reputational risks, potential civil lawsuits, and other key distractions that management must face, Fitch made a strong case for downgrading companies who end up embroiled in corruption issues.

As a practical matter, this translates into a need for global businesses to develop and implement effective anti-corruption measures and aggressively communicate the full scope of these programs to internal and external audiences. Indeed, companies that opt not to make the fight against corruption a key element of their communications efforts may well end up costing themselves more (as the result of a lower rating) when they seek to raise the capital they need.

Through this initiative, Fitch had made it clear that they understand the anti-corruption sentiments articulated by global investors earlier this year, and the consequences of failing to meet those standards.

Michael W. Robinson is a Senior Vice President and Chair of the Corporate Practice at Levick Strategic Communications, the nation's top crisis communications firm. He is also a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/06/24/corruption-poised-to-affect-corporate-ratings/feed/ 1 http://www.bulletproofblog.com/2010/06/21/what%e2%80%99s-next-the-bulletproof-interview-%e2%80%93-susan-cote-freeman-on-the-role-of-communications-in-combating-corruption/ http://www.bulletproofblog.com/2010/06/21/what%e2%80%99s-next-the-bulletproof-interview-%e2%80%93-susan-cote-freeman-on-the-role-of-communications-in-combating-corruption/#comments Mon, 21 Jun 2010 12:59:14 +0000 Larry Smith http://www.bulletproofblog.com/?p=3073 Each week, Bulletproof Blog™ features exclusive interviews with thought leaders on issues of critical importance to companies and countries. This week, with public and private sector corruption issues making headlines and raising regulators’ ire like never before, we interview Susan Côté-Freeman of Transparency International.

Ms. Côté-Freeman is an expert in anti-corruption control mechanisms with a strong grasp of the best practices currently being utilized by companies and countries. As the manager of Transparency International’s Business Principles for Countering Bribery Initiative, who works with business to help combat unethical practices, she shared her insights with Bulletproof™:

What roles do internal and external communications play in an effective anti-corruption program?

Susan Côté-Freeman: That’s a great question because many companies still struggle with how communications can best support an effective anti-corruption program. Internally, you want your employees, contractors, subsidiaries, and other business partners to understand that there are anti-corruption controls in place and precisely what they entail. Providing training is also a key aspect of the effort because it outlines and formalizes the bounds of acceptable behavior.

Externally, companies must make their commitment to honest and ethical business practices known for several reasons. Investors and other stakeholders want to know that the company is taking action to protect itself in an aggressive regulatory environment. Potential clients need to know they can trust the entities they do business with. And having a strong anti-corruption program in place provides a strong fallback position that both regulators and the general public will appreciate if a violation does occur.

Last year, we at Transparency International published a study of 500 major companies around the world – and many in high-risk industries, such as oil and gas – to gain some insight into what information they publicly report on their policies and management systems to counter corruption. We found that the majority of companies were not communicating systematically on bribery and corruption. So, we’ve partnered with the UN Global Compact to develop guidance that companies can use to enhance anti-bribery reporting and make it more meaningful for stakeholders.

What are the most common mistakes companies make when seeking to establish and implement anti-corruption compliance programs? How can those mistakes best be avoided?

Susan Côté-Freeman: We haven’t done specific research in this area, so my answer is by no means scientific. But that being said, a big challenge companies often face is a misalignment between the spirit of the anti-corruption program and a company’s primary business objectives. The company policy may be “zero-tolerance” toward bribery and corruption, but at the same time, the sales force is rewarded based on the hard numbers and is often put in the difficult position of having to choose between the company’s commitment to ethical business practices and winning new business.

In this regard, the importance of a corporate culture that truly values and rewards honesty and integrity cannot be understated. Employees need to know that they won’t be punished for refusing to engage in corrupt behavior and that they have internal channels by which to report possible malfeasance. Simply put, they need to know that they can turn away from a deal if they have even the slightest inkling that it may be tainted.

What’s next on the anti-corruption landscape? Are there issues emerging on the horizon that all companies need to be aware of?

Susan Côté-Freeman: There’s no question that the anti-corruption enforcement environment is changing rapidly. In recent years, we’ve seen unprecedented regulatory activity in the U.S., in particular, and in Germany as well – and I think that, hopefully, we’re going to see that mirrored in other nations around the world. We’ve reached a point where global companies, no matter where they operate, need to take the issue seriously or face the prospect of ever-increasing government and marketplace penalties.

Click here to receive the Bulletproof Interview in your inbox each week.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/06/21/what%e2%80%99s-next-the-bulletproof-interview-%e2%80%93-susan-cote-freeman-on-the-role-of-communications-in-combating-corruption/feed/ 1 http://www.bulletproofblog.com/2010/06/15/the-business-case-for-communication-as-a-key-corruption-control/ http://www.bulletproofblog.com/2010/06/15/the-business-case-for-communication-as-a-key-corruption-control/#comments Tue, 15 Jun 2010 14:26:49 +0000 Richard Levick http://www.bulletproofblog.com/?p=3031 regulator and media scrutiny, it should be noted that there are a number of benchmarks against which any effective compliance program can be measured. There are U.S. Federal Sentencing Guidelines; Transparency International's Business Principles for Countering Bribery; the World Economic Forum’s Partnering Against Corruption Initiative (WEF PACI); the Organisation for Economic Cooperation and Development’s (OECD) Good Practice on Internal Controls, Ethics and Compliance; and the United Nations’ Global Compact's 10th Principle, to name just a few.

These leading organizations have outlined measures that not only mitigate risk in business operations; but also provide protection in both the courtroom and Court of Public Opinion should regulators spot a problem. For instance, corporate charging guidelines issued by the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) explicitly state that “the existence and effectiveness of the corporation’s pre-existing compliance program” should be among the factors considered when prosecutors determine whether criminal or civil charges are warranted.

Note the use of the word “effectiveness.” What that tells us is that merely implementing procedures to detect corruption – such as auditing, hotlines, and testing – isn’t enough to assuage prosecutorial prerogatives. The program must make a tangible impact on corporate culture – and more often than not, that comes down to what experts call “the tone at the top.” In other words, an essential element of any effective compliance program is communication – not only to ensure that employees, subsidiaries, and business partners know the rules of the road; but also to ensure that the organization is appropriately credited for its efforts by regulators, shareholders, and other external audiences.

Transparency International's Susan Côté-Freeman states that it is "absolutely essential for companies to communicate about their compliance programs because it demonstrates a commitment to transparency, which is key to good corporate governance.

PricewaterhouseCoopers’ Glenn T. Ware, one of the firm’s leading authorities on global anti-corruption programs, calls communication “indispensible,” because it “not only supports compliance, but articulates that the company is an honest and ethical entity that people want to do business with.”

Upon examination of the specific measures outlined by the benchmarking organizations listed above, it’s clear that they agree with Ms. Freeman and Mr. Ware’s assessments. In fact, communication is an express element of leading compliance program regimes the world over:

• The United States Federal Sentencing Guidelines state that “remedying harm from criminal conduct” requires that a company “take reasonable steps to communicate” the aspects of its “compliance and ethics program.”

 

• The Transparency International Business Principles for Countering Bribery state that:
       • “The enterprise should establish effective internal and external communication of the Program;”
       • “The enterprise should publicly disclose information about its Program, including management systems employed to ensure its implementation;” and that
       • “The enterprise should be open to receiving communications from relevant interested parties with respect to the Program.”

 

• The World Economic Forum, Partnering Against Corruption Initiative echoes Transparency International’s communications measures verbatim.

 

• The OECD Good Practice Guidance on Internal Controls, Ethics and Compliance dictates “strong, explicit and visible support and commitment from senior management;” and

 

• Similar guidance is also found in the UN Global Compact 10th Principle and the International Chamber of Commerce’s anti-corruption policy.

Simply put, communication is an essential element that, if absent from a company’s compliance strategy, limits the regulatory and brand benefits of having a strong anti-corruption program in place. Just as companies that have “gone green” articulate their efforts far and wide, the companies leading the global fight against corruption must do the same or risk losing an equally powerful market perspective that defines them as having the highest regard for business ethics and compliance.

Richard S. Levick, Esq., President and CEO of Levick Strategic Communications, sits on the board of the World Economic Forum’s Partnering Against Corruption Initiative (PACI). He is also a contributing author to Bulletproof Blog. Connect with him @richardlevick.

]]> http://www.bulletproofblog.com/2010/06/15/the-business-case-for-communication-as-a-key-corruption-control/feed/ 2 http://www.bulletproofblog.com/2010/06/14/bulletproof-interview-special-%e2%80%93-nick-allard-on-lobbying/ http://www.bulletproofblog.com/2010/06/14/bulletproof-interview-special-%e2%80%93-nick-allard-on-lobbying/#comments Mon, 14 Jun 2010 12:51:34 +0000 Michael Robinson http://www.bulletproofblog.com/?p=3015 continuing series of Bulletproof Blog™ video interviews with thought leaders across multiple disciplines and industries, I recently sat down with Nick Allard of Patton Boggs LLP to discuss the state of lobbying at a time of significant reputational focus for the industry.

With politicians and others (from late night comedians to think tanks) rarely missing an opportunity to criticize the lobbying profession in recent years, Mr. Allard is quick to remind us that the people’s ability to have their say in the policy decisions that impact their lives is essential to American democracy. When the government takes steps to restrict advocacy, the result is a government that is less transparent and much less accountable – especially to Main Street and every American who have a need to rely on government relations professionals to help them navigate the complex world of Washington, D.C.

As an expert in how legislative, regulatory, and administrative matters converge to shape public policy at the federal, state, and local levels of government – and a recent winner of the National Law Journal’s 2010 “Visionaries” award – Mr. Allard shared these insights – and many more – with Bulletproof Blog™.

Click the video above to view Mr. Allard’s interview in its entirety.

 Michael W. Robinson is a Senior Vice President and Chair of the Corporate Practice at Levick Strategic Communications, the nation's top crisis communications firm. He is also a contributing author to Bulletproof Blog.

]]> http://www.bulletproofblog.com/2010/06/14/bulletproof-interview-special-%e2%80%93-nick-allard-on-lobbying/feed/ 2 http://www.bulletproofblog.com/2010/05/31/bulletproof-interview-special-%e2%80%93-david-kennedy-on-harvard%e2%80%99s-institute-for-global-law-and-policy/ http://www.bulletproofblog.com/2010/05/31/bulletproof-interview-special-%e2%80%93-david-kennedy-on-harvard%e2%80%99s-institute-for-global-law-and-policy/#comments Mon, 31 May 2010 13:00:48 +0000 Larry Smith http://www.bulletproofblog.com/?p=2850 continuing series of Bulletproof Blog™ video interviews with thought leaders across multiple disciplines and industry sectors, I recently sat down with David Kennedy, the Faculty Director of the Institute for Global Law and Policy at Harvard University, to discuss the diverse challenges facing the international community.

In an increasingly interconnected and interdependent world, it is essential to understand how local policy objectives involving both public and private sectors fit into the global economic environment. The Institute for Global Law and Policy brings together leading scholars from Harvard and around the world to better comprehend these complex dynamics, and to explore solutions to problems in areas ranging from humanitarian assistance to economic regulation.

An expert in international law and economic policy who has studied and taught at Harvard for nearly 30 years, Mr. Kennedy shared his insights with Bulletproof™.

Click the video above to view Mr. Kennedy’s interview in its entirety.

On June 2, 2010, The Institute for Global Law and Policy at the Harvard Law School will convene more than 100 leading scholars from 60 countries for an intensive ten-day workshop to develop innovative and alternative approaches to issues of global regulation, economic policy, and social justice in the aftermath of the economic crisis. The workshop will bring young scholars and faculty from all regions of the world together for serious research collaboration and debate. Click here for more information.

]]> http://www.bulletproofblog.com/2010/05/31/bulletproof-interview-special-%e2%80%93-david-kennedy-on-harvard%e2%80%99s-institute-for-global-law-and-policy/feed/ 1 http://www.bulletproofblog.com/2010/05/20/communications%e2%80%99-vital-role-in-combating-corruption/ http://www.bulletproofblog.com/2010/05/20/communications%e2%80%99-vital-role-in-combating-corruption/#comments Thu, 20 May 2010 16:37:04 +0000 Richard Levick http://www.bulletproofblog.com/?p=2811 record-breaking prison sentence and evidence of massive increases in nearly every measureable enforcement metric related to the U.S. Foreign Corrupt Practices Act (FCPA). We’ve witnessed the enactment of the UK Bribery Bill 2010, which has been called the “toughest enforcement standard in the world.” We’ve heard global investors voice their desire for greater disclosure of corporate anti-corruption efforts. And we’ve even seen regulatory crackdowns in developing markets aimed at driving increased foreign direct investment.

In such an environment, it’s no surprise that we’ve also seen 145 global companies to date sign onto the Principles for Countering Bribery established by the World Economic Forum’s Partnering Against Corruption Initiative (PACI) back in 2004. In doing so, these companies have signaled a “zero-tolerance” stance against bribery and a commitment to the implementation of an effective anti-corruption program. And whether they yet fully appreciate it or not, they’ve also agreed to articulate their efforts to myriad stakeholders as aggressively as possible.

Of all the Principles for Countering Bribery put forth by the PACI, no less than 17 are directly related to communications – and nearly all of them involve at least a minimal communications component. From informing employees, contractors, subcontractors, and suppliers of anti-bribery policies and the consequences of unacceptable conduct to the public disclosure of the program and acceptance of third-party recommendations that may enhance its impact, the PACI views effective internal and external communications as vital to any anti-corruption initiative’s success. Because, after all, what good is a plan to combat corruption if no one knows that it exists?

Too often, private and public sector efforts to curb dishonest business practices fail because communications is the forgotten element. In a new era of enforcement and global attention to corruption issues, a policy gathering dust in the corporate compliance department is simply not enough to satisfy a growing roster of concerned stakeholders. In order to steer clear of trouble, or provide a strong fallback position should violations arise, companies must talk about their dedication to eradicating corruption often – and with as many audiences as possible.

It’s also important to remember that aggressive communications serve a powerful prophylactic purpose. At the end of the day, companies that have signed onto the PACI are saying there is a new sheriff in town. Violators – whether they are inside the company or in countries where they are doing business – need to understand that the rules have changed. Forewarned is forearmed – and  those that insist on old ways of doing business – be they individuals, companies, or government officials – will soon find that they are the tragic symbols of ever-more effective communications campaigns carried out by the companies doing right.

Richard S. Levick, Esq., President and CEO of Levick Strategic Communications, sits on the board of the World Economic Forum’s Partnering Against Corruption Initiative (PACI). He is also a contributing author to Bulletproof Blog. Connect with him @richardlevick.

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