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An Interview with Dr Klaus Moosmayer, Chief Compliance Officer, Siemens
5 September, 2014 by Ben Sharples (firstname.lastname@example.org), Senior Conference Producer, Legal Division, C5 Communications
Q1. – What would you say have been the key changes in the compliance officers’ role in the last 12-18 months?
What I see in Europe, and the US to an extent, is the growing topic about the potential liability of compliance officers. The question is how are compliance officers protected in companies and what is their level of personal liability. In Europe, the role of a compliance officer was not known as a profession 10 years ago, and has now significantly developed. So this has raised new questions as to what is the status, role, protection, and liability of compliance officers? Do we need a specific insurance protection? This is a big point of discussion currently.
Q2. – Have you encountered any challenges in getting buy-in of the value of compliance from top to bottom?
What I always say is for me, the famous “tone from the top” concept is a prerequisite for any effective compliance culture in a company. If this is not there we won’t even talk about operational compliance and business partner issues. The major day-to-day challenge of a compliance officer, and many colleagues agree with me, is getting support from middle management. They have challenging business targets in decreasing markets, and are close enough to their employees to set the tone day to day of the operations. Given the current economic situation where companies are certainly facing challenges in places such as China and Russia, there is I think a great need for attention on this issue (getting the backing of middle management).
Q3. - In your opinion, are companies now taking compliance more seriously and seeing the value it adds to their business?
We are on the way. I am optimistic, but I’m not naïve, so we are certainly not at the end of the way to achieve this fully. It has developed significantly over the last 10 years, but this is largely due to pressure from the outside; court rulings, famous cases like the Siemens case, changing level of expectations from shareholders, analysts, investment funds, and also journalists. For example, anti-corruption has picked up all over the globe – if something happens in – for example and with no prejudice – Bangladesh it can really affect the headquarters in Munich or London. But the question of whether it is seen as a business value is a developing topic, and again, you have to convince the middle management of the value of compliance and the support it gives the business.
Q4. – AML seems to be increasingly on the radar for non-financial sector companies. How are companies in this space dealing with regulations that were often written with the financial sector in mind?
This is certainly a developing risk that I see. Traditionally it was only considered for the financial sector, but now there are new authorities appointed who are now focussing on AML in Germany. It is a risk in transactions from real estate to M&A transactions, and my assessment is that the authorities are increasingly taking this up. With the prosecutors if there is an AML investigation, they have a huge level of power, and can do things like secret taping because there is a severe crime. So you have all the tools as a prosecutor to investigate and prosecute, and this is new for the industry. It has to be discussed and is definitely an emerging risk.
Q5. – What are you currently busy with?
From October 1 we have a new company structure in Siemens and are completely adapting our compliance structure, so I am extremely busy with this new set-up. We at Siemens have put a much bigger focus on the analytics of risks in the compliance organisation, with a special focus on risk assessment and strategies. Taking a “Compliance 2020” approach, the question is how can we better prevent or mitigate risk in difficult markets such as Asia? Another key focus is on the professional development of our compliance officers, making sure we promote and develop our compliance experts internally
Q6. – In light of this, what are the main objectives you are setting for yourself and your team in the next 12 months?
The goal is to really make this new organisational setup work, and offer our compliance people in the company encouraging career paths and a future of compliance. This will enable us to even better support our board and management to prevent risks in difficult markets.
As a result, legal counsel and compliance officers whose responsibility it is to report to, adequately inform and protect the board are increasingly challenged to answer to their CEO, board, regulators, and investors.
What does this mean for the compliance officers who are now viewed as the watchdogs of their company? Are they really all that stands between the company and potentially costly compliance breaches?
Comprehensive industry research recently conducted by C5’s legal division with compliance officers and legal counsel from across Europe’s leading multinational and up-and-coming SME companies delved into the evolution of the compliance role, revealing the key challenges keeping them awake at night.
“Under-Resourced and Over-Exposed”
The rapid development of the compliance role has led compliance officers to question the remit of their job description in light of increased responsibilities, liabilities, and internationally accepted standards.
Speaking on condition of anonymity, a senior compliance officer from an MDAX-listed company expressed concern that they are “under-resourced and over-exposed”.
“We are increasingly being seen as a proactive job function, whereas in prior years it could be said that the role of the compliance officer was to react to legal and regulatory developments.”
This is the result of ever-expanding responsibilities that have seen them tasked with managing and harmonising a diverse range of corporate governance issues such as “human resources, environmental, human rights, data protection, anti-trust, and anti-bribery”.
The international nature of modern business only exacerbates the problem, having to work through a myriad of potential regulatory issues in “every country they operate in”.
Top 5 Challenges Keeping Compliance Officers Awake at Night
As a key focus of the research, over 50 cross-industry compliance officers and legal counsel were asked: “what are the top 5 compliance challenges keeping you awake at night?” Their revealing answers and select quotes are below:
- Anti-trust and competition: “This area is very interesting because of the level of enforcement and penalties potentially exceeding that of FCPA breaches”
- Data privacy: “The NSA scandal has heightened awareness of this issue in Germany, and it is an area we could use extra definition and discussion”
- Personal liability of compliance officers: “This really hits where it hurts… extradition is possible!”
- Labour law & HR compliance: “Arguably the biggest issue on the horizon, and we still don’t know who in the company wears responsibility for it”International trade sanctions: “We have recently begun exploring operations in Russia, so this is currently an incredibly problematic issue to determine what we can and can’t do”
An over-arching challenge faced by compliance officers was revealed to be establishing the critical importance that compliance plays within a company, and therefore securing buy-in from a board questioning whether compliance really does create additional value; “without the board taking this seriously, how do we get the financial and internal support we need?”
Implications for Compliance Officers?
With the avoidance of reputational damage a key motivating factor for companies, it is absolutely business critical that risk assessments are conducted and robust compliance programmes are implemented as a result. These programmes need to reflect a broad range of diverse regulations, and must translate a company’s values and principles into day to day operations and behaviour.
However, this process requires a business-specific tailored approach, and when compliance officers are faced with limited resources and budget, how can you efficiently install a compliance programme without sacrificing any efficiency?
Unsurprisingly and unfortunately, there are no easy answers. What works for any given company will differ based on size, geographical scope, and inherent corporate cultures and values. Simply put, benchmarks vary.
The good news is that companies are increasingly seeing the value in a robust compliance programme, if for no other reason than to protect against the heightened risk of individual liability for board members.
Based on our research, the role and responsibilities of compliance officers and legal counsel have expanded quicker than expected, and it will be some time until the support afforded them matches what is expected of them. In the meantime, they will be left looking for insight wherever they can find it, with a hope to establishing a best practice approach suitable for their company.
Recent enforcement activities by the UK’s Serious Fraud Office (SFO) and FCPA are signaling a new era of relentless investigation and prosecution of corrupt practices. The cases involve investigations for individuals and companies such as GlaxoSmithKline, Alstom UK, Airbus Group NV, Sweett Group and others. In this article we review the recent bribery and corruption cases brought against Scandinavian companies.
The Transparency International Perception index ranks Scandinavian countries as “least corrupt countries”: Denmark (1st), Finland (2nd), Sweden (3rd), Norway (5th) and Iceland (12th). However, companies from most of these countries have been involved in corruption scandals. Some cases are settled others are on-going for alleged violations in overseas markets.
In the majority of the cases, the industries targeted include: Defense, Pharma, Chemical, Oil & Gas…the activities involved include: exports, cross-border transactions, bribing senior foreign government officials to gain/retain business and the companies involved are partially owned by the local government.
Local anti-corruption enforcers have been involved in some of these cases but other enforcement agencies such the U.S. DOJ and the U.S. SEC have brought cases against these companies including:
- “In 2004, Oil Company Statoil has been found guilty of bribery and fined 20m Norwegian kroner (£1.6m; $2.8m) for paying bribes to secure contracts in Iran”.
- “Oil for Food scandal: In late summer 2005, the public was shocked by revelations that about 20 named Danish companies had allegedly paid money under the table in connection with contracts entered into with Iraqi companies and authorities. The contracts had been entered into in connection with the oil for food programme, after the UN had relaxed the total embargo previously imposed on Iraq because of its occupation of Kuwait.”
- “On 11th May 2009, Novo Nordisk (Novo) entered into a deferred prosecution agreement for their involvement in a bribery scheme involving the Iraq government as well as the Oil-for-Food program. Novo is a global healthcare leader in diabetes, hemophilia, growth hormone therapy, and hormone replacement therapy based out of Bagsvaerd, Denmark. They have agreed to pay roughly $18 million in fines and penalties as well as meet other conditions set by the deferred prosecution agreement.”
- “In July 2012, The Norwegian state controlled Statoil (70%) has been involved a number of corruption scandals.
- In January 2014, “The Norwegian chemical fertilizer company Yara International has been ordered to pay a fine of 295 million Norwegian kroner (48 million U.S. dollars) for three gross corruption cases abroad. The Yara International issued a statement on Wednesday, accepting the fine for the bribery cases the company committed in Libya, India and Russia. After a prolonged investigation, the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (ØKOKRIM) has come to the conclusion that a large sum of bribe money was paid by Yara International over a period from 2004 and 2009 to senior officials in Libya and India and suppliers in Russia, according to the NTB report.”
- “In February 2014, Kongsberg Gruppen, the Norwegian defence contractor, is under investigation by Norwegian authorities for corruption related to sales of communications equipment in Romania from 1999 to 2008. Kongsberg’s contracts in Romania are said to total 1.4 billion NOK (233 million USD).
- In March 2014, “Telenor, Norway’s majority state-owned phone company has been pulled into the corruption case surrounding Russian phone company Vimpelcom in Uzbekistan, with Norwegian investigators visiting its offices.”
- Kongsberg has disclosed that it conducted an internal investigation in 2012 to 2013 and did not find enough evidence to inform the Norwegian authorities. According to the CEO Walter Qvam, Kongsberg “heard in the spring of 2012 through different vague signals that there could be suspicion that the business practice wasn’t quite as it should be in parts of the business,” and so initiated the investigation with the help of PwC.”
With all these states already being through the OECD Phase 3 Evaluations (Finland in October 2010), Iceland (in December 2010), Norway (in June 2011), Sweden (in June 2012) and Denmark (in March 2013), their respective governments are expected to enforce local anti-corruption laws.
Recent enforcement activities by the UK’s Serious Fraud Office (SFO) are signaling a new era of relentless investigation and prosecution of corrupt practices. The cases involve individuals and both domestic and foreign companies such as GlaxoSmithKline PLC under investigation for possible criminal violations; charges against Alstom UK unit for alleged overseas bribery; Airbus Group NV employees under investigation into possible corruption at a subsidiary; the formal investigation of survey and construction services firm Sweett Group; the closure of the Innospec prosecution with final two individual convictions.
It is clear, that conducting business, in regions that have traditionally rated poorly on the global transparency perception index, it is critical that multinationals have a robust management compliance programme in place. In this era of increased enforcement the compliance programme must be capable of assessing and mitigating all low, medium and high risks to constantly demonstrating commitment to compliance.
PwC 2014 Global Economic Crime survey is one of the broadest and most comprehensive economic crime surveys the company has ever conducted, collecting feedback from over 5,000 global respondents.
The below infographic is based on the responses related to anti-corruption. To read PwC’s full report visit: www.pwc.com/crimesurvey.
Source: Presented at C5′s 2nd Forum on Anti-Corruption, West Africa. Full presentation available here.
Essential elements of a Corporate Compliance programme
Organisational leadership & culture
•Tone from the Top
•Compliance and Controls structure (FTE and non-FTEs)
•Incorporating compliance objs into coy-wide objs
Standards & Procedures
•Internal policies, procedures and SOPs
Training & Communications
•Trainings deep diving into high risk areas
•Innovative communications e.g. Internal newsletters, weekly tips, branded items
Enforcement & Incentives
•Robust consequence mgmt protocols
•Incentives (internal and external) e.g. Awards, acknowled-gements, endorsements
Due care in delegating authority
•3rd Party due diligence
•Extending mandatory trainings to key 3rd parties
•Annual compliance certification for key 3rd parties
Monitoring, auditing & reporting
•Enhanced whistleblower reporting platforms
•Backend and front-end monitoring/compliance reviews
•Robust breach management processes
Response & continuous improvement
•Feedback employee compliance surveys
•Annual certifications (internal & external)
Organisations whether, public or private, should strive towards moving from awareness to repetoire/embedding these pillars in their Compliance programme.
What: Anti-Corruption West Africa
When: Tuesday, June 10 to Wednesday, June 11, 2014
Where: Mövenpick Ambassador Hotel, Accra
More info: Click here to receive your free brochure.
What: Corporate Fraud West Africa
When: Thursday, June 12, 2014
Where: Mövenpick Ambassador Hotel, Accra
More info: Click here to receive your free brochure.
Live Industry News
Simply emails us at email@example.com to receive your free brochure.
Meet them this June, in Ghana – Keynote and Government Speakers:
• Olaoulo Adegbite, Director of Operations, EFCC (Nigeria)
• Charles Ayamdoo, Director, Anti-Corruption section of the Commission on Human Rights and Administrative Justice (Ghana)
• Abbia Udofia, Deputy Director of Operations, ICPC (Nigeria) Shannon Bullock, Programme Officer, Corruption and Economic Crime Branch, United Nations Office on Drugs and Crime (Austria)
• Hon. Aliou Barry, Guinea MP and Member of the Audit Committee of GOPAC
• Samuel de Jaegere, Anti-Corruption Advisor, Regional Office for West and Central Africa, United Nations Office on Drugs and Crime (Senegal)
• Amos Sakaba, CEO, One Stop Shop Investment Centre (Nigeria)
Expert speakers from leading companies across West Africa share their experiences and lessons, including:
• The Anti-Corruption Enforcement Scenario in Nigeria and Ghana: an Address from the Investigators
• Managing the Compliance Department while Developing a Sustainable Corporate Governance Model
• A Practical and Business-Oriented Approach to Risk Management in West Africa to Conduct Third Parties’ Due Diligence and Operate Investments
• Detecting and Mitigating Internal Frauds and Conducting Internal Investigations in a Non-Supporting Environment
• Third-Party Liability: How to Mitigate Your Exposure in case of Your Business Partner’s Wrongdoing
Learn how these companies implement compliance requirements in West Africa:
|ABB (Nigeria)||Oando (Nigeria)|
|Access Bank PLC (Nigeria)||Siemens (Nigeria)|
|Atlantic Energy (Nigeria)||Total (Nigeria)|
|Diageo (Cameroon)||UT Bank (Ghana)|
|Ecobank (Cameroon)||Unilever (Nigeria)|
|Ghana National Gas Company (Ghana)||Volta River Authority|
Free brochure and more information available: firstname.lastname@example.org
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How to benefit from PPPs to strengthen mutual anti-corruption compliance
Complimentary presentation from C5′s 2nd Forum on Anti-Corruption, West Africa Edition
Highlights of the presentation:
- Relevance of public-private partnerships (PPPs) in driving Internal and External Compliance
- The PPP Scorecard – how effective have these been and why?
- PPPs Solutions that Work
What: C5′s Third Forum on Anti-Corruption West Africa Edition
When: 10-11 June, 2014
Where: Mövenpick Ambassador Hotel, Accra
To receive a PDF version of the complete brochure and for more information email email@example.com
Turkey learns how to fight against corruption from Singapore, By SERKAN DEMİRTAŞ, Posted on Hurriyet Daily News
The number one item on Turkey’s agenda since Dec. 17 are the massive corruption and graft allegations against senior government members, including Prime Minister Recep Tayyip Erdoğan and his family. Four ministers had to resign after prosecutors argued that they had received bribes from an Azeri origin businessman, Reza Zarrab, who was arrested along with the sons of two ex-ministers. [Read More...]
The European Commission has launched an investigation into allegations that a Turkish government agency misused EU funds. The probe follows reports in Turkish media of tender-rigging and illegal recruitment at the Centre for EU Education and Youth Programmes in Ankara under former EU minister Egemen Bağış. [Read More...]
Are Africa’s politicians value for money? By By Olivier Monnier in Abidjan, Billie Adwoa McTernan in Accra, Monica Mark in Abuja, Jeff Mbanga in Kampala, Patrick Gathara in Nairobi and Crystal Orderson, Posted on the Africa Report
The dusty streets of Ouagadougou teemed with people last August protesting against President Blaise Compaoré’s plans to create a Senate alongside Burkina Faso’s 111 seat National Assembly. One of the demonstrators carried a sign reading: “Some are eating. Others are watching. This is how revolutions are born.” [Read More...]
Addition of forensic accounting and investigations experts bolsters strong global team. LONDON–(BUSINESS WIRE)–March 05, 2014– Today, Navigant (NYSE: NCI) announced the addition of four senior professionals to its Disputes & Investigations (D&I) practice in London, strengthening its existing team and enhancing the Firm’s presence in the UK. [Read More...]
Economic crime is continuing to threaten businesses across Africa, with firms at risk of “secondary damage” from fraud and corruption, such as revenue losses and tarnished corporate images, according to two new surveys. [Read More...]
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