Internal Investigations Blog

As usual, Mike Volkov has solid points in a piece he posted this past Monday over at the Corruption, Crime & Compliance blog.  In it, he proffers five suggestions that smaller organizations should follow in order to make certain that they are doing all that they can in attaining compliance and ethics programs that are worth their salt.  One of them has some obvious implications on the internal inquiry front that nonetheless can’t  be overlooked.

In the wake of passage of the Dodd-Frank Act, the Securities and Exchange Commission expects to receive 30,000 whistleblower tips in the financial services industry each year and that roughly half of them could lead to claims for rewards, according to the Wall Street Journal.  Despite the non-mercenary motivations of most employees, a good-sized portion of that sector’s workforce will be cognizant of – if not, motivated by – the new potential rewards for being a tipster.  And whistleblowers lurking in such numbers should be cause for concern not only to CEO’s of publicly-traded, multi-national corporations, but the owners and managers of smaller companies doing business for or with them.        

Peel a Band Aid ^® off slowly or rip it off quickly?  When you were little, this was a major decision.  The first option required the pain to be endured for a much longer period of time, but in small, gradually-escalating increments.  The second choice usually hurt more intensely, but it was over in the blink of an eye.  The latter was usually better and if Dr. Mom secretly chose it for you and yanked away, the surprise of it all sometimes displaced the pain entirely.  While it can’t be said that Johnson & Johnson felt no discomfort from its recent FCPA scrape, it certainly took the grip-it-and-rip-it approach and felt less than it would have otherwise.

Yesterday, the Las Vegas Sands Corporation revealed in its annual Form 10-K filing that the company had received a document subpoena from the SEC on February 9, 2011 regarding its FCPA compliance efforts.  It also acknowledged that LVSC was under investigation by the DOJ and that both inquiries were believed to be an outgrowth of litigation currently pending in a Nevada state court.  If it is the inspiration for those investigations, the wrongful termination suit by former Sands China Ltd. CEO Steven C. Jacobs illustrates the danger of collateral FCPA damage posed by private tort litigation.  Before recently stepped-up FCPA enforcement, what were the odds on that?