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Practical Applications of The Code of Professional Ethics for Compliance & Ethics Professionals (2014 Compliance & Ethics Institute P13)


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The presentation covers the following topics: compliance officer's fiduciary duty, compliance officer's Code of Ethics, and compliance officer as a whistleblower.

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Practical Applications of The Code of Professional Ethics for Compliance & Ethics Professionals (2014 Compliance & Ethics Institute P13)

  1. 1. Practical Applications of the Code of Ethics for Compliance & Ethics Professionals Art Weiss, JD, CCEP-F CCEP- I Joseph Murphy, JD, CCEP Urton Anderson, PhD, CCEP Marjorie Doyle, JD, CCEP ‑F Society of Corporate Compliance and Ethics 6500 Barrie Road, Suite 250, Minneapolis, MN 55435, United States | +1 952 933 4977 or 888 277 4977
  2. 2. Agenda • Why a Code of Ethics? • Structure of the Code • How the Code of Ethics for Professionals can help in making tough decisions • How others are using the Code • How to educate your team and your management on the Code • Case studies • The compliance officer as a whistleblower 2
  3. 3. Why a Code of Ethics? • Promotes an ethical culture for the compliance profession • Clarifies the compliance professional’s ethical responsibilities • Strengthens the compliance professional’s independence • Sets expectations for those who rely on the work of compliance professionals • Helps protect the public interest • Provides guidance in resolving ethical dilemmas 3
  4. 4. Where did the code come from? • HCCA Professional Code of Ethics (1999) • Code of Ethics Development Committee(2007) – JOE MURPHY – REBECCA WALKER – URTON ANDERSON – MICHAEL HOROWITZ – SHELLY MILANO – MARJORIE DOYLE
  5. 5. The Framework • Principles: broad standards 1. Obligation to Public 2. Obligation to Employing Organization 3. Obligation to the Profession • Rules of Conduct: minimum level of professional conduct for CEPs – 17 rules • Commentary: clarifies/elaborates on the Rules • Enforcement: primarily - CEP’s own understanding/voluntary actions secondarily - peers & general public.
  6. 6. Principle I Obligations to the Public Compliance and ethics professionals (CEPs) should abide by and promote compliance with the spirit and the letter of the law governing their employing organization’s conduct and exemplify the highest ethical standards in their professional conduct in order to contribute to the public good.
  7. 7. R 1.2 • CEPs shall take such steps as are necessary to prevent misconduct by their employing organizations. 7
  8. 8. “Misconduct” includes both illegal acts and unethical conduct
  9. 9. Principle II Obligations to the Employing Organization Compliance and ethics professionals (CEPs) should serve their employing organizations with the highest sense of integrity, exercise unprejudiced and unbiased judgment on their behalf, and promote effective compliance and ethics programs.
  10. 10. Principle III Obligations to the Profession Compliance and ethics professionals (CEPs) should strive, through their actions, to uphold the integrity and dignity of the profession, to advance the effectiveness of compliance and ethics programs and to promote professionalism in compliance and ethics.
  11. 11. The Case of the Fishy Fishing Trip An employee calls, reporting that he was invited by a senior VP to go on a fishing trip with him that was paid for by a major supplier. The general counsel says “it’s not illegal, so don’t let it distract you from the billing monitoring; just drop it.” 11 Case 1
  12. 12. Case 2 The Case of the Unknown Risk Over that past week you have had several meetings with the Head of Human Resources, the Controller and the CFO regarding a notice from the EEOC that a charge of discrimination has been filed regarding the promotion and compensation practices of the organization’s finance and accounting departments. The notice request of request asked that your organization submit a statement of position, supply information on personnel policies and permit an on-site visit. (continued) 12
  13. 13. Case 2 - The Case of the Unknown Risk As compliance officer you report periodically to the audit committee of the board and have in fact just meet with at their quarterly meeting three weeks ago. Give the need for the board to exercise reasonable oversight, which you recall from the Caremark case implies that “appropriate information as to compliance with applicable laws will come to its [the board’s] attention in a timely manner as a matter of ordinary operations,” you are concerned that you should immediately notify the audit committee chair regarding the EEOC notification. You asked the CFO and she says to wait and just include it in your next report to the audit committee. 13
  14. 14. Case 3 The Case of the Perilous Inquiry You are a lawyer in the compliance office. Senior management asks you to investigate an allegation, but not to second guess any of the prior judgments made about this matter, and not to investigate all the instances of alleged misconduct. You are also asked for advice on whether the person who reported this matter could be fired under the law. Your company’s code of conduct prohibits retaliation for reporting suspected misconduct. 14
  15. 15. Case 4 The Case of the Hackneyed CEP You are already overworked in your compliance position. Your boss says you are alienating some important people in the company by your aggressiveness. You are now told that you need to pick up responsibility for an additional, time-consuming area involving contract administration. A person from HR who has been doing benefits work in the 6 months he has worked for the company after graduating from college, will be reassigned to help with compliance work. 15
  16. 16. Case 5 The Case of the Compromising Spouse Your spouse underwent a procedure in your medical institution. A group of patients who had the same procedure now are threatening to sue because of side effects. Your spouse is having the same bad side effects. Company legal counsel tells you to stay out of it – it’s a legal matter. You request access to a management meeting on this subject and are told you are not necessary. Patients are claiming key information was concealed. You have seen some internal documents supporting this view. 16
  17. 17. Case 6 The Case of the Muffled Orator You are asked to speak at an SCCE program. Your boss says “no, we don’t want to draw attention to ourselves; the compliance program is strictly an internal matter.” 17
  18. 18. Case 7 The Case of the Twitters As compliance officer for a pharmaceutical company you are involved in the review of marketing practices for off label marketing. The marketing department has begun exploring social media such as Facebook and YouTube. Several of its efforts you have found to be questionable and have discussed them with senor management and general counsel. Specifically problematic have been their efforts to initiate viral, peer-to-peer marketing of several off-label usages of one of the company’s most profitable drugs. (continued) . 18
  19. 19. Case 7 - The Case of the Twitters The marketing VP is adamant that there are no explicit regulations or laws that they are breaking. Further, it is not the company that is sending this information but others over whom they have no control. You counter that clearly what they are doing would be violations if done in traditional media or presentations by sales reps. Senior management and the GC have sided with marketing and requested that you restrict your review to traditional marketing. 19
  20. 20. Case 8 The Case of the Broken Whistle Helen is VP of Fraud Risk Management for a large financial services organization. She supervised a group responsible for investigating mortgage fraud and reporting fraud and suspicious activity to regulators and the board of directors. Helen’s team opened an investigation of several branches of the northeast region after receiving a tip from a former branch employee who had been fired after objecting to fraudulent practices. They found widespread fraud and a number of branches were closed and over 40 employees terminated. Her team began to investigate other branches around the country and were finding similar results. Further she believes Employee Relations and Lending Managers were colluding to circumvent fraud reporting channels to conceal fraud perpetrated by high-producing loan officers and managers. Employees have been told by lending area executives to report observed fraud and wrongdoing to Employee Relations and not Helen’s unit. (continued) 20
  21. 21. Case 8 - The Case of the Broken Whistle Employees that report allegations to Employee Relations seem to be being transferred, demoted, harassed or even terminated. Helen has asked Internal Audit to investigate these allegations of retaliation. Meanwhile her company is being merged with another large bank. Helen’s concerns have been concealed from the acquiring bank and Employee Relations has been directed to investigate Helen. The new management has sided with Employee Relations and has offered her a severance package of $250,000 with the condition that she remain silent on her allegations. 21
  22. 22. Case 9 The Case of the Vanishing Whistle In-Teng was a compliance officer with ABE China Ltd., a the Chinese subsidiary of Q Corp - a large manufacturer of medical equipment. In-Teng raised objections to alleged kickbacks the company was paying related to equipment sales to army hospitals in China. He provided documentation to support the allegations to Q Corp’s China chief financial officer for healthcare. Two weeks have past – In-Teng has been notified that he shouldn’t report for work for the remaining three weeks of his employment contract and that his contract would not be renewed. 22
  23. 23. How others are using the Code How do you use the Code? 23
  24. 24. Educating your team and management on the Professional Code • Incorporate in compliance function charter • Refer in terms of employment or engagement • Incorporate into position description • Include the Code in organizational compliance training • Give copies of the Code to Board members and senior managers 24
  25. 25. Compliance officer as whistleblower??? • What does the law permit? • What is ethical? • What would you do? 25
  26. 26. Questions? Art Weiss Chief Compliance & Ethics Officer, TAMKO Building Products Marjorie Doyle Marjorie Doyle & Associates LL C Joseph Murphy Urton Anderson University of Kentucky