The increasing number of settlements between companies and authorities over bribery-for-business cases usually include public promises to pay hefty penalties and clean up compliance programs. Added on top of the punishment is often an independent monitor to keep these companies in line.
What happens next occurs beyond the public’s view. In the following edited interview with CFO, Kevin Abikoff, a partner at law firm Hughes Hubbard & Reed who was recently appointed as Innospec’s compliance monitor, explains what companies can expect if they ever have to hire a monitor — plus how to avoid needing one.
Earlier this year, Abikoff was hired to keep an eye on Innospec, a chemical company that pleaded guilty in 2010 to wire-fraud charges related to kickbacks and violations of the U.S. Foreign Corrupt Practices Act (FCPA). As part of its $40.2 million settlement with U.S. and U.K. regulators, Innospec agreed to have an external compliance monitor for at least three years. The company expects Abikoff’s presence will cost it $3.9 million.
Abikoff has previous experience with FCPA investigations and served as an independent compliance monitor for a French inspection-services company. His appointment at Innospec comes as the U.S. Department of Justice considers FCPA enforcement a priority, new Securities and Exchange Commission rules could encourage more FCPA tips, and an FCPA-like law in the United Kingdom — the U.K. Bribery Act — goes into effect.
How did you get this new role?
I was short-listed as one of four potential monitor candidates by the company. I’d like to believe I was chosen because I bring to the engagement a deep and extensive background in anticorruption matters around the world. I’ve traveled extensively doing engagements for companies in every place you want to be and a lot of places you don’t. I was also a general counsel of a $23 billion company. You have to be able not only to understand what the U.S. Sentencing Guidelines and the new U.K. Serious Fraud Office [SFO] guidelines say, but you have to understand as a practical matter how to apply that in the context of a real operating company where people have to show up to work every day and actually live by the rules.
How much time do you spend in your monitoring duties? I assume you keep your day job, right?
I definitely keep my day job. Any client engagement is lumpy in that there are periods of intense activity and then periods of potentially diminished activity. There’s the creation of an initial work plan, the execution of that work plan, and then the preparation of a report. It’s worth mentioning I don’t execute this undertaking alone; I utilize the lawyers in the firm, including partner John Wood.
Whom do you ultimately work for?
The company pays my bills, but it’s not my client. There is no attorney-client relationship or privilege. On the other hand, I’m not paid by the Department of Justice or Securities and Exchange Commission or the SFO, but rather have to report to them. In a sense, I have no clients at all. We have obligations to the government and an obligation, indirectly, to the shareholders of Innospec to do a credible job to ensure going forward that this company is doing the right things.