FCPA. Training. The REPORT. How to Choose Whom to Train

Transcription

1 Training Training That Works: An Interview with Jacqueline C. Wolff, Co-Chair of the Corporate Investigations & White Collar Defense Practice at Manatt, Phelps & Phillips, LLP By Nicole Di Schino This is the third article in our ongoing series on and anti-corruption training. Each of the articles in the series is based on a long-form interview with a thought leader from a different discipline. Collectively, the articles in this series provide a deep and multidisciplinary view of one of the most important processes available to companies to mitigate risk. Our goal in this series is to provide actionable insight recommendations, best practices and specific techniques that companies can use to improve the effectiveness of their training programs. To advance that goal, this installment includes our interview with Jacqueline C. Wolff, a Partner at Manatt, Phelps & Phillips, LLP, Co-Chair of Manatt s Corporate Investigations & White Collar Defense practice and former Chief of the Environmental Crimes Unit and Assistant United States Attorney for the District of New Jersey. Our interview with Wolff delved deeply into a wide range of relevant topics, including: special considerations applicable to training different categories of employees; when to train third parties; the role of outside counsel in training; the interaction between attorney-client privilege issues and candor during training; the risks of online training; appropriate training frequency; the role of hypotheticals; minimizing cost without sacrificing effectiveness; and training lessons from the November 2012 Guidance. The prior installment in this series included our interview with Billy Jacobson, Senior Vice President, Co-General Counsel and Chief Compliance Officer of Weatherford International, the global oil and natural gas services company. See Training That Works: An Interview with Billy Jacobson, Chief Compliance Officer of Weatherford International, The Report, Vol. 2, No. 8 (Apr. 17, 2013). And the first installment in the series included our interview with Joseph Spinelli, the head of Navigant s practice and former Inspector General of New York State. See Training That Works: An Interview with Joseph Spinelli, Global Leader of Navigant s Anti-Bribery & Corruption- Segment, The Report, Vol. 2, No. 7 (Apr. 3, 2013). How to Choose Whom to Train R: Who should be trained and what are the factors that go into that decision? Wolff: The best anti-corruption policies and procedures will mean nothing if no one in the company understands them or why they are important. Therefore, ideally, everyone in the company should be trained. But, in fact, when deciding who gets trained, companies have to do the same sort of risk analysis that they would do in designing any part of a compliance program. The reason I say ideally, everyone is that it is important that every employee with exposure to foreign government officials or other anti-corruption risks be trained. Training only individuals who are currently exposed to risks may

2 leave gaps in the company s training coverage. This is because in any company, people move to different positions. For example, imagine a company has somebody working purely domestically today and tomorrow they are shipped overseas. All of a sudden they are dealing with foreign officials. If the company conducts two annual training sessions and a job change happens between those sessions, the person wouldn t have gotten any kind of training and they are off to a foreign country knowing nothing about the. To address this problem, the company could train each person individually when they go abroad. However, if it is a large, multi-national company and people are moving around a lot from one country to the next or moving from working domestically to overseas, it is probably more cost-effective to train everyone annually rather than cherry-picking who should be trained. R: If a company chooses to do a risk analysis rather than train all employees, who should be trained? Wolff: If a company does a risk analysis and chooses to only train select employees, there are several basic groups it should train: First, companies should certainly train everyone who is on the ground overseas and the supervisors of those employees. Second, companies should always train the executive officers because a company has to have the right tone at the top and a culture of compliance. Third, anyone who supervises third parties who operate overseas, including distributors, should be trained. Fourth, companies need to train accounting and finance personnel to ensure accurate books and records and robust internal controls. In addition to these basic groups, I think companies and practitioners need to look at other factors to determine what resources should be spent on training. Is it a small company? Is it a huge company? Does it do most of its work primarily within the U.S.? Who are the company s customers? Are they government officials overseas? Are they entities that would need licenses overseas to function? If the company does very little overseas work and the overseas work that it does is essentially selling to private parties without any licensing or regulatory requirements, that would suggest low risk and perhaps the training does not need to be as frequent under those circumstances. R: Are there special considerations when you train different groups of employees, such as middle management, the sales force or the finance department? Wolff: The general considerations are the same, to make it very clear what the law is and how broad it is. But, there are different training steps for training different groups. For example, when training the accounting and finance personnel, it is important to make sure that they understand the anti-corruption red flags. They should understand that when they see cash generation that can t be explained, or isn t documented, it may be an employee stealing from the company but it also may be evidence of bribery. On the other hand, when training U.S. staff who supervise employees abroad, the trainer would stress different things. For instance, when training an individual sitting in the U.S. who supervises sales personnel that are operating overseas

3 when the sales personnel are in charge of hiring consultants and other third parties, it should be very clear in the training what types of questions the supervisors need to ask of their reports about why the sales personnel really want to hire a particular agent. What is it about this agent? Why do you need to hire them? Did a foreign official suggest this person? The trainer should emphasize the due diligence process for entering into a relationship with a third party. Those are two examples of why the areas emphasized in the training could be different because the day-to-day issues the employees will run into will be different. R: Is there a group that companies overlook when it comes to training when they are not training the entire company? Wolff: One group that often gets neglected is the accounting department. Companies will train the finance group but not necessarily the low-level accounting personnel. Sometimes those people get left out because they are viewed as clerks. But they can be very important. They are the last stop before the money goes out the door. It is extremely useful to teach the people in the accounting department who are issuing the checks, doing the spreadsheets and some very basic accounting work, about the. Their job is to dot the i s and cross the t s. They should be trained to review a payment request and ask questions. Do I have everything I need before I can issue this payment? Is it okay to issue this payment? Do I see anything unusual in the paperwork? These types of questions are easier to answer when the employee has a clear understanding of the law. R: In what circumstances do you recommend that companies train third parties? Wolff: As with most issues, the company has to do a risk analysis in terms of its third parties. Let s say the third party is a global, well-known, consulting company that has a robust anti-corruption program. The company wouldn t be rushing to train them. Let s say, instead, the third party is a one-man operation in a high-risk country and the company is offering services only to government agencies. It would be a very wise idea to train that one-man operation as fully as if he or she were one of the company s own employees. In certain situations, a company may engage a third party that might even have a more robust compliance program than it does. It certainly doesn t have to worry about training those entities. In those situations, the company should have certifications from the third party that it will abide by its own policies that should be part of the contractual framework. But to actually train them seems superfluous. No matter what third party agent a company is dealing with, if they do not have their own program and if there is a possibility that their responsibilities will bring them into contact with some kind of government agency or government official, the company should seriously consider training them. The Trainers Should Come from the Inside and the Outside R: Who should conduct the training and what factors does that decision depend on? Wolff: Training is best conducted by a combination of someone within the company, preferably a businessperson who has some modicum of power and credibility, and outside counsel. It is important to have both. Involving a respected businessperson sends a message that the company considers training important. The employees

4 are more likely to pay attention and less likely to consider the training something that the lawyers are bothering them about. A businessperson can explain that the training is good for the company from both a cost and revenue perspective. Additionally, the businessperson can assist after the training by being involved with the day-to-day operations and helping people understand things they may have missed in the training. It is also important to include outside counsel. I think it is preferable to using only the GC or in-house counsel, for the simple reason that it allows the company to preserve privilege. It is not necessarily important for the training presentation itself to be privileged. What is important is for the people in the training session, who have questions about ongoing day-to-day conundrums they may run into, to be free to ask questions and get advice and guidance during the training session. For that, preserving the privilege using outside counsel is key. My experience is, when I do the training that way, it is amazing how many questions I get about ongoing issues. It is a terrific opportunity to address those issues and for everybody in the room to understand how the and other anti-corruption laws apply to their daily business. It also reinforces the procedures the employees should be using to keep the company compliant. R: What are the risks and benefits of having either outside counsel or a consultant train an in-house person who then, in turn, trains the employees? Wolff: Companies like to do that for economic reasons. It allows somebody to travel around the world training without the company worrying about paying for the cost of outside counsel. The company, arguably, loses the opportunity to maintain privilege. It also loses the opportunity to have someone that can answer outlier questions on the spot. That s not to say the trainer can t call up outside counsel and then get back to the employee, but the company does lose the opportunity for everybody in the room to hear the response. One major upside to this method is that it provides someone inside the company that employees can call with questions. It puts a face to a name, the employees have met the person and they can call her. The Benefits of Live Training R: How important is it to have in-person training? Wolff: It is very important, but virtual training is better than no training. If the options are the company can either do virtual or none, obviously virtual is better than nothing. But in-person training is so much better. First of all, people pay more attention when there is a human being in the room and when their peers are surrounding them than when they are sitting in their office looking at their computer. Second, if the company has a tone at the top that really reinforces and supports the training, upper management comes to the training sessions and makes it very uncomfortable for any mid- or low-level employee not to pay attention. Everybody starts to pay attention and get involved. In the long run, it is more cost-effective to do live training. Even though it is costly at first, people pay attention and understand the corruption issues. Sometimes companies have a situation where there is live training but they can t get everyone flown in. They choose to have a video or conference call hookup. A video is a good solution because it is almost as

5 if it were live training the employees and trainer can actually see the people in the other offices. meeting the company can t carve out a period of time where there s compliance training. R: Do you recommend any type of online training? Do you think there are situations where those could be helpful? Wolff: For low-risk employees, online training can be fine. The company could do some kind of virtual training for a low-risk employee whose chances of being involved with a foreign official are slim, who isn t supervising anyone, and who is not in accounting or finance. A company could put people in tiers and decide the high-risk people need live training and someone who is extremely low-risk could have some kind of online training instead. Again, that s a risk analysis, and the analysis should include how likely it is a low risk employee could be moved overseas and become a high risk employee. R: Are there any risks to providing online training? Wolff: Companies can get a little complacent. They say, well, we ve given online training to all of our people, we don t really have to do the live training now, do we? Depending on the company and its risk analysis, that presumption could be wrong. Live training is the most effective. Frequency of Training R: What are some creative ways that companies can assure that training occurs on a regular basis? Wolff: Annual training shouldn t really be a difficult thing to do for most global companies. In most organizations, the sales force gets together at least once a year. Most organizations that have a sales force or marketing group have a once-a-year conference, a big meeting where everyone flies in to be together. There is no reason that in that same Similarly, certain industries require compliance training for something that is specific to the industry. For example, in the pharmaceutical industry, there is fraud and abuse training. When a company is offering industry-specific training, that is also an opportunity to have anti-corruption training. It s an easy thing to do because the company is not flying people in specifically for training. It is flying them in for required industry-specific training and taking an additional hour of time to train on anti-corruption. It shouldn t really do anything to the bottom line and can be the most costeffective way of training. Include Relevant Hypotheticals and Bring in Businesspeople to Make Training More Effective R: What are some strategies that you use when conducting training to ensure that the message is getting across? Wolff: Preparation is key. Before conducting any training, the trainer should know everything there is to know about the company. If the training is being conducted by outside counsel, he or she should sit down with the business and should interview as many people as he or she can without wasting time and energy. It is important to understand the problems the business faces day-to-day. Counsel has to understand the group he or she is talking to. Once the trainer understands that, it is imperative that the training include hypotheticals that would make sense to this particular group of people, in this particular industry, in this particular company that s the most effective way. For example, to talk to a company that makes widgets about the older pharmaceutical cases where the key was that doctors

6 were deemed to be foreign officials may not be that helpful. They re going to be interested in different types of cases, the cases that involve use of distributors for pass through payments, for example. to you? They are immediately engaged. I try to do that as soon as possible in the training session. Using meaningful hypotheticals provides something recognizable and gets people interested because it means something to them. The other thing I like to do is to bring the business in to discuss policies and procedures. We, as outside counsel, can discuss the law, what the law says, what the case history looks like, the types of things the employees have to think about, what can be considered an violation and what the penalties are. But it is very good for the businesspeople to be able to stand up and explain why particular approval procedures, reimbursement procedures and internal controls that support the program have been implemented, why they have to be followed and why these things are important. The most effective strategy is to marry both the law and the procedures that are used to support it, so people know what their job responsibilities are. It becomes about their job, what they are responsible for, and what s important to make the business run smoothly as opposed to a disconnected discussion about some law that may or may not apply to them. R: You mentioned using hypotheticals in your training sessions. How do you choose which hypotheticals to use? Wolff: Prior to conducting a training session, it is very helpful to draft up a whole bunch of hypotheticals and send them to the business. The business will come back and say, This is not a situation we really have, or Could we change the country, or Could we change the fact pattern as follows? That is very helpful because outside counsel can confirm that the hypotheticals will mean something to the audience When I ve talked to groups within larger organizations, the training session can be 50 people at a time in the room. I ve seen the people in the room looking at each other when I start covering the hypotheticals, thinking, Wow, didn t this happen R: How else do you encourage the audience to get involved and interact in the training session? What are some other strategies for making sure that people are participating and not just sitting and observing? Wolff: The trainer needs to be a dynamic speaker, that s an obvious one. The trainer should understand the company s business very, very well. It is helpful to actually know people in the training session. For example, if the trainer has worked with somebody in the audience before the training, he or she can tell her in advance that the trainer may call on her to get things going. If the company has the right tone at the top and there are high level people in the room who are engaged and asking questions, it will be a natural thing for the rest of the employees in the room to get involved. Training Efficiencies R: How can companies make training as cost-effective as possible? Wolff: Regularizing it is very effective. In other words, do it annually. HR should be aware that when a new person is hired, there needs to be some kind of training. Somebody has to track it and make sure that no one is falling through the cracks. I think, like I suggested earlier, that if you have an annual meeting that is happening anyway, that is a good place to put the training. The rolling out of a new training program is always going to be somewhat costly. The initial training is always going to be complicated because it might not be timed in such a way

7 that there is an annual meeting for anybody. The company may need to invest in a special training meeting to roll out the program, but once it gets going, training shouldn t be that costly. At the end of the day, the calculation has to be that the company will be avoiding or mitigating a criminal penalty, which would add up to more than any money it is expending on the program or training. The training should be viewed as preventative medicine. The Government s View on Training R: Should companies change their training in response to the November 2012 Guidance? Wolff: If a company has formulated and designed its training from a risk-based approach, then there is really nothing to change. In the past, I have suggested to companies that are designing a program and designing training that they should look at DPAs, NPAs and other settlements with the government to determine what the government is expecting for training. All of those things assume a risk-based approach. Similarly, the Resource Guide s biggest point is to spend time on what is important to your company. Don t spend tons of time training on hospitality and establishing good will with foreign officials when you should be concentrating on your third party vendors.