Q&A With Morgan Stanley's Chatterjee
Wednesday, May 23, 2012 at 4:28AM
Benjamin Kessler in Effective Compliance Program, Morgan Stanley, Profiles, Promotional Expenses, Training

Raja Chatterjee, creator and global head of Morgan Stanley’s Anti-Corruption Group, is riding high.

Last month, the DOJ and SEC declined to prosecute or charge the company in an FCPA case involving a former high-ranking Morgan Stanley executive in China. Both agencies took the unprecedented step of singling out Morgan Stanley’s compliance program as a key exculpatory factor.

Before joining Morgan Stanley, Chatterjee was a prosecutor of fraud cases at the DOJ. Prior to that, he was an assistant district attorney at the New York County District Attorney’s Office.

He kindly answered our questions about some of the most common compliance challenges.

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If a company suspects there may be a "rogue employee" within the organization paying bribes, what steps should its compliance department take?

Given the complex nature of international business transactions, these types of scenarios are almost always more complicated than they initially appear to be. All such allegations must be fully investigated and the findings of the investigation appropriately memorialized. Of course, potential self-disclosure to government authorities is a decision that will have to be made after consultation with outside counsel. A compliance department should follow up on the investigation’s findings and incorporate any take-aways into improving procedures, training, and controls.

What areas should organizations concentrate on when updating their compliance training?

In order for compliance training to be effective, it must be interesting and have the ability to engage the trainee. Therefore, a company should not conduct the same training, whether web-based or in-person, time after time. A cost-efficient way to keep training interesting is to share or trade training programs and ideas with industry peers. There is no substitute for in-person training, not just for effective delivery of your message but also for the trainer to learn about what is happening on the ground in a particular country.   Substantively, training resources should be focused on addressing what I believe is the number one corruption risk for most companies: business partner relationships.

What are your hopes and expectations for the upcoming FCPA guidance from the DOJ?

I have tempered my expectations because criminal law enforcement authorities, given their mandate, cannot be prescriptive in offering compliance guidance. There is no silver bullet solution to the challenges faced in creating and maintaining an anti-corruption program. That being said, well-intentioned companies spend an inordinate amount of time on defining “government officials” and pre-clearing business hospitality expenses. Any guidance in this area would be welcome.

How do you and your team determine appropriate levels of due diligence when vetting a potential business partner?

We have developed an automated system that assists in risk-ranking prospective business partners. An employee who wishes to retain a business partner must answer a series of detailed questions about the business partner. Those answers receive a scored risk rating, which helps us determine the appropriate level of due diligence that is needed. The system also facilitates and memorializes appropriate approvals for the retention and serves as a repository for business partner contracts.

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Benjamin Kessler is the managing editor of Ethics 360 Media, publisher of the FCPA Blog and ethiXbase. He can be contacted here.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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