Corporations get charged with criminal conduct from time to time. But seldom does the CEO at the time also get charged.
“Barclays Hit With Fraud Charges,” The Wall Street Journal, June 21, 2017 B1. Charges of fraud and illegal payments filed against the bank and its former CEO (and a few other executives) in the UK.
As usual, the shareholders get the bill for any fines (and any diminution in share value). Curiously absent were any charges against the directors of the Bank’s Board at the time. But maybe the failure of the Board to detect this level of criminal activity will result in civil suits against the directors for negligent supervision.
Maybe Shearman & Stirling can write another report. (See Wells Fargo posts, supra). Willie Sutton wasn’t the only crook who knew where the money is/was.
Filed under Board, Compliance, Compliance, Controls, Corporation, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Oversight, Oversight, Protect assets, Risk assessment, Supervision
Apparently, keeping the identities of confidential informants secret poses some challenges. Are there information governance lessons to be learned?
“Inmates Targeting Informants,” The Wall Street Journal, June 21, 2017 A3. “[C]lose to 700 witnesses and informants believed to have cooperated with the government have been threatened, wounded or killed” over three years. One source of information: online court records that provide clues as to who cooperated with the prosecutors. Some inmates may be posting their sentencing files to establish their bona fides.
Hard to classify this in this blog. Does this pertain to
- the value of accurate and complete information
- the risk in making information widely available
- the government’s duty to protect informants
- the government’s duty to have a transparent criminal justice system
- a defendant’s right to confront his/her accusers
- the need for security and the difficulty in providing it
- the proactive value of disclosure
- the fact that information can be misused
- the difficulty in creating effective controls
Filed under Access, Accuracy, Communications, Compliance, Controls, Data quality, Duty, Duty of Care, Governance, Government, Information, Internal controls, Oversight, Privacy, Protect assets, Risk, Third parties, Value
One of my common themes is the duty of directors. They get paid a lot of money to act as fiduciaries for the company’s shareholders.
“Warren Keeps Pressure on Wells,” The Wall Street Journal, June 20, 2017 B10. Senator Elizabeth Warren (D. Mass.) is leaning on the Federal Reserve (arguably an independent body) to remove 12 directors who served on Wells Fargo’s Board when the account- cramming scandal was going on. Other problems have emerged at Wells Fargo since then.
The shareholders didn’t/couldn’t vote them out in April, and so far (as I know) the directors haven’t been held personally liable for negligent oversight. So it’s nice that someone is still pursuing the people in charge at the time that (some of the) bad things were happening.
Some executives got fired or their bonuses were docked. The shareholders lost a bundle in fines and penalties paid by the company. It would be nice if the directors were held responsible and accountable — not just to penalize them, but to put other directors on notice of what they are getting paid to do, and for whom.
Would be nice to have a poster child for the director’s duty.
Filed under Board, Compliance, Compliance, Compliance Verification, Controls, Culture, Directors, Duty, Duty of Care, Governance, Inform shareholders, Internal controls, Oversight, Oversight, Protect assets, Risk Assessment, Risk assessment, Supervision
Do you have contractors who analyze your data for you? Do they use cloud storage? Do you know? How secure it that? Is that prohibited by your service contract?
“Data on 198 Million Votes Exposed Online,” The Wall Street Journal, June 20, 2017 A4. Deep Root Analytics, a Republican party consultant, used an online storage system that was reportedly open to the world for several days. Most/some of the information exposed was publicly available information on voters. A lot of voters.
Well, at least the Russians (or the DNC) didn’t hack it. Or did they?
What controls do you have that protect information your consultants are using and the opinions you are paying them to provide you? Do you care? It’s not like it’s money or anything.
Filed under Access, Board, Controls, Corporation, Duty, Governance, IT, Management, Oversight, Protect, Protect assets, Protect information assets, Security, Third parties, Vendors
What do you do when you discover who violated the law by leaking a classified document? You arrest them.
“Contractor Charged in Leak,” The Wall Street Journal, June 6, 2017 A4. Reality Winner, an employee of a contractor for the NSA, was arrested and charged for leaking a classified document to the news media. A criminal offense.
Interesting story of how the government found out. A news agency provided a copy of the document and requested the government to confirm its accuracy. The government could tell from looking at the copy that it had been folded, and concluded someone printed it out and sneaked it out. IT logs showed six people had printed it out. The computer of one of them showed email contact with a news agency. When questioned, Ms. Winner fessed up.
Common themes: the NSA needs to watch the employees of its contractors carefully; IT has a record, somewhere; criminals get arrested; a newspaper can inadvertently disclose confidential sources.
Filed under Access, Controls, Corporation, Duty, Employees, Governance, Government, Information, Internal controls, IT, Oversight, Ownership, Protect assets, Security, Third parties, Vendors
What can a shareholder do if the Board pays excessive executive compensation? He/She/They push a vote against the directors’ reelection.
“Pension Funds Decry Mylan Pay Packages,” The Wall Street Journal, May 31, 2017 B1. Four major pension funds band together, trying to oust six directors at the troubled maker of EpiPens over the executive pay packages they approved.
Lesson: to exert shareholder power, it helps to hold a lot of shares (even tough less than 1%). Did Mylan defraud the government in the years that led to the huge bonuses? Is there a derivative action coming?
I was otherwise engaged last week and missed posting. Here are some catch-ups.
- Comey – reportedly, former FBI Director wrote memos to the file on his conversations with the President. Two points: just because you write something, doesn’t mean it’s true – that’s why you have hearsay rules and cross-examination. Doesn’t mean it’s not true, either. Also, interesting question in the area of obstruction of justice: if what was written was not 100% accurate, are there implications for the former Director under 18 USC §1519? “Trump Asked Comey to Drop Probe,” The Wall Street Journal, May 17, 2017 A1.
- “Tests Show More American Workers Using Drugs,” The Wall Street Journal, May 17, 2017 B1. Does your company have a drug policy that your employees are violating?
- “Putin Says Trump Divulged No Secrets,” The Wall Street Journal, May 18, 2017 A6.
- “Cover-Up Alleged In Probe Of Attack,” The Wall Street Journal, May 18, 2017 A7. Criminal complaint by Berlin filed against police investigators, alleging documents were altered.
- VW (the adventure continues) – The VW CEO and a few others (including Board members) are being investigated over whether they intentionally withheld information about the diesel emission testing scandal from investors. “Inquiry Targets Volkswagen CEO,” The Wall Street Journal, May 18, 2017 B1.
- “Uber Threatens to Ax Executive,” The Wall Street Journal, May 20, 2017 B3. Company threatens to fire executive (hired from Alphabet) if he doesn’t turn over documents. No Fifth Amendment protections against getting fired?
Filed under Accuracy, Board, Communications, Compliance, Compliance, Content, Controls, Corporation, Directors, Discovery, Duty, Employees, Governance, Government, Inform market, Inform shareholders, Internal controls, Investor relations, Oversight, Privacy, Protect assets, Protect information assets