Kusserow on Compliance: Achieving compliance support from the Board and CEO

Carrie Kusserow, has been working with and making presentations to Boards and CEOs for over 15 years. She highlights the need reinforce CEO and Board expectations for the compliance program—expectations then can cascade down through the entire organization. She finds that often Boards and CEOs played a major role in kicking off the compliance effort, but over time their interest and support wane. The real test is keeping the commitment, support, and spirit for the compliance program over time, which requires a concerted effort on their part of the compliance officer. Key to making this possible is for the compliance officer to hlep the CEO and Board understand their roles in the compliance program and what is needed from them to meet that obligation.

Al Bassett, J.D., has over 35 years in compliance including building and reinforcing dozens of compliance programs. He emphasizes the importance for the Board and CEO being directly involved in the hiring decision for the compliance officer. They need to select someone in terms of proven experience and competence, but ethical consideration should play a large role. Once appointed, there must be continued contact and monitoring of performance with the person reporting and accountable to the CEO on a day to day basis, as well as having direct access to the Board, as needed.

Steve Forman, CPA, has decades of experience as a compliance consultant as well has having served as compliance officer for a large system and as in an interim capacity for others. He makes the point that the compliance officer needs to provide the CEO and Board with evidence of what is needed to improve the program. This is the best way to keep communication channels open and ensure continued interest and support. A very important principle for the compliance program is open and ongoing communication with all the leadership, including gaining the attention and support of first and second line management.

Expert thoughts for compliance officers’ consideration:

  1. Develop a strategy to carry the compliance message from executive leadership to first and second line managers.
  2. Recruit compliance office staff possessing the character and competence to carry out the duties of the office and advance the compliance message to the entire workforce.
  3. Prepare meaningful briefings and education for the Board and executive leadership on what is required of them.
  4. Focus on creating education and training programs that reinforce the compliance message.
  5. Ensure that those reporting suspected problems are not made subject to any form of reprisal or retaliation that would undercut the entire compliance program ethos.
  6. The compliance culture of the organization is an important factor in establishing an effective compliance program and finding methods to document and measure it.
  7. Further away from headquarters, the greater the likelihood that something can get lost in translation, therefore pay special attention to business units or individuals that operate away from the shadow of the corporate leadership.
  8. Uniform enforcement of the rules is critical and any departure from this can seriously undermine confidence and support for the compliance program.

Carrie Kusserow is COO of Strategic Management and can be found at ckusserow@strategic.com, Al Bassett (abassett@strategicm.com) and Steve Forman (sforman@strategicm.com) are Senior VPs at Strategic Management.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2018 Strategic Management Services, LLC. Published with permission.

Former CEO indicted for $100M fraud that collapsed Puerto Rico bank

The former CEO of now-defunct Inyx Inc., was charged with eight counts of wire fraud in connection to a $100 million pharmaceutical fraud scheme. The indictment was filed on August 4, 2016, in the Southern District of Florida, and the former CEO was arrested and made his initial appearance Friday, September 30, 2016. The fraud scheme is alleged to have led to the collapse of Westernbank Peurto Rico (Westernbank).

Scheme

During the former CEO’s tenure, which lasted 2005 to 2007, he and other conspirators provided a security interest in Inyx’s assets, as well as its subsidiaries’ assets, in order to receive loans and lines of credit. To facilitate these loans, the former CEO allegedly submitted false and fraudulent invoices as collateral and made false representations about intended loan repayments and the value of the assets pledged as collateral. The government also alleges that he misappropriated $25 million in company funds to his personal accounts and $9.6 million to an associate’s account.

Inyx was previously traded on the Nasdaq Over-the-Counter Bulletin Board. In 2007, the company filed for bankruptcy.