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Speak up for Corporate Counsel

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Speak up for Corporate Counsel

  1. 1. FOR CORPORATE COUNSEL S P E A K U P A N I M A H K O S A I 19 APRIL 2017 MALAYSIAN CORPORATE COUNSEL ASSOCIATION KUALA LUMPUR REGIONAL CENTRE FOR ARBITRATION
  2. 2. W H AT D O Y O U N E E D T O S P E A K U P O N ? Have your say! join www.slido.com with #2643 “ ”
  3. 3. ANIMAH KOSAI I wondered whether corporate scandals were due to rogue employees (like Nick Leeson) or was something deeper at work? How many people really knew something was wrong but stayed silent? Why? I discovered fear was common in corporations. People look to leaders to make things right. But if leaders are complicit? It is us Lawyers, the Reluctant Heroes. We have incredible Power to make things Right. M Y I N Q U I RY
  4. 4. A C O U N S E L’ S N I G H T M A R E https://www.youtube.com/watch?v=mquop7Dyveg
  5. 5. W H E N C O U N S E L D I S C O V E R S W R O N G D O I N G …
  6. 6. • I N H O U S E L A W Y E R & L A W F I R M B R I B E D M E X I C A N P U B L I C O F F I C I A L S S A C K E D I N H O U S E L A W Y E R W H I S T L E - B L O W S T O L E G A L H Q H Q L E G A L I N F O R M S B O A R D H A L F B A K E D I N V E S T I G AT I O N C L E A R I N G M E X I C O B U S I N E S S H E A D T H E L A W Y E R D I D I T ! Photo: Brainvire
  7. 7. WOAH! OK, HOW DO WE CLEAN THIS UP? https://www.youtube.com/watch?v=0RHCGfZhheM
  8. 8. V W V U S A D O J P L E A A G R E E M E N T
  9. 9. Pic: ITV “The group has always had as a core element of its global policy, a focus on both letter and spirit of laws and regulations. Not just what is permissible but what is prudent and responsible. In hindsight as I reflect…. we all sometimes allowed a focus on what was lawful and compliant to obscure what should be best practices for a global bank. Transparency is a priority that HSBC and every bank should always make a top priority even when it is legally not required.” David Bagley HSBC Head of Compliance W E J U S T D I D N ’ T D O E N O U G H https://www.youtube.com/watch?v=36_kcLs8xTU start at 2 mins
  10. 10. "HSBC is being held accountable for stunning failures of oversight – and worse," said Breuer, "that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries and to facilitate hundreds of millions more in transactions with sanctioned countries.” Lanny Breuer, Asst AG Pic: ITV The US Senate said the bank had operated a "pervasively polluted" culture that lasted for years, allowing HSBC to move billions around the financial system for Mexican drug lords, terrorists and governments on sanctions lists. HSBC's Mexican operations moved $7bn into the US operations, for instance, which the Senate was told was tied to drug money.
  11. 11. YAHOO REGULATORY FILING FOR YE 2016 W E J U S T D I D N ’ T D O E N O U G H
  12. 12. HUH? WHAT HAPPENED?
  13. 13. C O U RT E S Y O F S TA R T R I B U N E
  14. 14. W E L L S FA R G O : W H E R E W E R E T H E L A W Y E R S ? Ben Heineman: • And, yet again, we must ask the question, "where were the lawyers," the damning question first formulated by Stanley Sporkin about corporate misdeeds decades ago when he was head of the U.S. Securities and Exchange Commission Enforcement Division in the 1970s and then as federal district judge from the mid-80s onward — and repeated in virtually every major corporate scandal since. • But can they not have been responsible, in some part, for fundamental failings in prevention and in the failures to respond swiftly and comprehensively when wrongdoing was detected years go? • The [independent] investigation should undertake a complete assessment of causes and the accountability of top management, including the lawyers, in failing to create the proper culture, systems and processes for addressing blatantly improper actions by thousands of Wells Fargo employees under a compensation system which rewarded "new" accounts and which lacked checks and balances to prevent self-aggrandizing fraud.
  15. 15. WE DID WRONG. LET’S OWN UP
  16. 16. LORD LEVESON, SFO V ROLLS ROYCE “There were many and varied attempts to conceal misconducts and obstruct detection through the use of emails and memos with conversations not recorded or kept off email; auditors who were best placed to detect misconduct were not provided with a complete picture, and the Board was increasingly kept out of correspondence.”
  17. 17. One of the 12 charges: “failure to prevent the provision by Rolls-Royce employees of inducements which constitutes bribery in its civil business in China and Malaysia between the commencement of the Bribery Act 2010 and December 2013”
  18. 18. R E D F L A G S • Whistleblowing, reports • Competent people fired without due process, contracts not renewed • Use of intermediaries, agents • Unable to respond to Authorities queries • Same contractors winning bids/same clients, favouritism to contractors • Lack of valid certification • Lavish gifts/entertainment of officials and clients • Culture: Bullying, closed • Legal/Compliance is kept out of strategic/business discussions • Lack of Diversiy - Group Think, Wilful Blindness, Normalised Deviance • Connected to Government - conflict of interest, influence by people in power
  19. 19. S T E P S T O TA K E C U LT U R E S T R U C T U R E S Y S T E M S P O L I C Y
  20. 20. S T E P S • Top Level Commitment • Structure: reporting line, Ethics/Audit Committee to Board, bypass management Policies and Procedures, regular review • Hotlines, investigation process, independent • Risk Assessment Framework, e.g. use of agents • Due diligence of intermediaries, terminate offenders, review commissions • Training: compulsory, include third parties • Dedicated and independent Audit, Compliance team with resources • Audit on anti-corruption • Procedures on entertaining govt officials, clients, receiving gifts (FCPA, MACCA) • Disciplinary action - fair • HR: vigilant over hiring, firing, follow process, job rotation
  21. 21. In their role as technical experts, general counsel and inside lawyers should call out and reject certain courses of action underlying numerous corporate scandals. • It is wholly inappropriate to ignore the law and hope the corporation can get away with it, sometimes through bribes. • It is wholly inappropriate to be Holmes’ “bad man” and decide whether to follow the law based on a cost-benefit calculation: Do the benefits of disobedience outweigh the costs of being caught? • It is wholly inappropriate to look solely at the “face of the documents” and render a hypertechnical judgment on legality that not only is outside the range of reasonable discretion but also fails to ask hard questions about what is the real purpose of the legal arrangements and what are likely, or even possible, consequences. – B E N H E I N E M A N J R . E X G E N E R A L C O U N S E L O F G E C O U N S E L A N D T H E L E T T E R O F T H E L AW
  22. 22. –BEN HEINEMAN JR. EX GENERAL COUNSEL OF GE “At the end of the day, in-house counsel are guardians first and business partners second. The fundamental tension [for in-house lawyers] is between being partner to the business leaders and the guardian of the business," he said. "The core role is to be guardians and that can never be compromised to be a good partner, although there is plenty of pressure to do that.".” http://bigthink.com/videos/the-ethics-of-global-sourcing
  23. 23. ANIMAH KOSAI ON LINKEDIN ANIMAHSPEAKUP@GMAIL.COM A N I M A H K O S A I S P E A K U P A D V O C AT E

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