Day 2 at Gettysburg saw the fighting swing south of the village, along a ridge line that formed a fishhook at its end on an outcropping called the Little Round Top. This was the far south end of the Union line and its defense was made famous in the book, “The Killer Angels”, which focused on the last stand by the 20th Maine led by Joshua Chamberlain. However, for today’s post I would like to focus on one of the more fascinating characters in the Civil War; that being Union General Daniel Sickles.
Sickles was a New York politician, who became one of the most prominent political generals of the Civil War. Prior to the war, Sickles was involved in a number of public scandals, most notably the killing of his wife’s lover, Philip Barton Key II, son of Francis Scott Key. He was acquitted with the first use of temporary insanity as a legal defense in US history. His appointment as a Union General was controversial as he had no military experience. Unfortunately, this lack of military training showed on July 2, 1863, when after the Army of the Potomac commander Major General George G. Meade ordered Sickles’ corps to take up defensive positions on the southern end of Cemetery Ridge, anchored in the north to the II Corps and to the south on the hill known as Little Round Top. Sickles violated these orders by marching his III Corps almost a mile in front of Cemetery Ridge. This had two effects: it greatly diluted the concentrated defensive posture of his corps by stretching it too thin, and it created a salient that could be bombarded and attacked from multiple sides. His III Corps was virtually wiped out and this insubordination effectively ended Sickles military career.
I. Requirements for a CCO Position Under the USSG
There has never been an adequate explanation of Sickles departure from his clear orders. Was it insubordination or incompetence? We will probably never know. I thought of Sickles in particular and Lincoln’s general problem of the ‘Political Generals’ in the context of a compliance program under the US Sentencing Guidelines, which under §8B2.1. specifies that under Subsection 2 of an “Effective Compliance and Ethics Program” the following is required:
(A) The organization’s governing authority shall be knowledgeable about the content and operation of the compliance and ethics program and shall exercise reasonable oversight with respect to the implementation and effectiveness of the compliance and ethics program.
(B) High-level personnel of the organization shall ensure that the organization has an effective compliance and ethics program, as described in this guideline. Specific individual(s) within high-level personnel shall be assigned overall responsibility for the compliance and ethics program.
(C) Specific individual(s) within the organization shall be delegated day-to-day operational responsibility for the compliance and ethics program. Individual(s) with operational responsibility shall report periodically to high-level personnel and, as appropriate, to the governing authority, or an appropriate subgroup of the governing authority, on the effectiveness of the compliance and ethics program. To carry out such operational responsibility, such individual(s) shall be given adequate resources, appropriate authority, and direct access to the governing authority or an appropriate subgroup of the governing authority.
II. Requirements for a CCO Position under the Ten Hallmarks of an Effective Compliance Program
The Department of Justice (DOJ)/Securities and Exchange Commission (SEC) FCPA Guidance specifies that when appraising a compliance program, they will consider whether a company has assigned responsibility for the oversight and implementation of a company’s compliance program to one or more specific senior executives within an organization. Those individuals must have appropriate authority within the organization, adequate autonomy from management, and sufficient resources to ensure that the company’s compliance program is implemented effectively. Adequate autonomy generally includes direct access to an organization’s governing authority, such as the Board of Directors or an appropriate Committee such as the Audit Committee.
Further, depending on the size and structure of an organization, it may be appropriate for day-to-day operational responsibility to be delegated to other specific individuals within a company. However, the reporting structure will depend on the size and complexity of an organization. Moreover, the amount of resources devoted to compliance will depend on the company’s size, complexity, industry, geographical reach, and risks associated with the business. In assessing whether a company has reasonable internal controls the DOJ and SEC will typically consider whether the company devoted adequate staffing and resources to the compliance program given the size, structure, and risk profile of the business.
Debbie Troklus, Greg Warner, and Emma Wollschlager, writing in the Society of Corporate Compliance and Ethics (SCCE) “The Complete Compliance and Ethics Manual”, relate that as both anti-corruption compliance and Compliance are still relatively new fields many compliance officers will not have extensive previous experience in this field. Consequently, a Chief Compliance Officer (CCO) position “requires an individual who understands the nature of the business or industry, is capable of understanding and questioning financial and billing statements, is knowledgeable of applicable legal requirements and sanctions that may be imposed in the industry for wrongdoing, has strong written and verbal communication skills, and is firm yet approachable. Whatever the tenure or the educational level, the compliance officer, as “focal point” of the program, must be a figure respected and trusted throughout the organization. Strong interpersonal skills, good listening abilities, and discretion are mandatory.”
III. The SCCE Code of Ethics
They also note that CCOs are stewards of a public trust, and, therefore, the services provided must be of the highest standards of professionalism, integrity, and competence. To this, the SCCE has developed a Code of Ethics for Compliance and Ethics Professionals that addresses three principles, which are broad standards of an aspirational nature.
Principle I: Obligations to the Public — Compliance and ethics professionals 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.
Principle II: Obligations to the Employing Organization — Compliance and ethics professionals 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.
Principle III: Obligations to the Profession — Compliance and ethics professionals 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.
So what about General Sickles, the Political Generals and the CCO position? Did Sickles have the moral authority to command troops after the shooting of Key? After all he was acquitted so perhaps the answer is ‘maybe’. But as to his lack of military experience, by not obeying Meade’s explicit orders, Sickles risked both his III Corps and the army’s defensive plan on July 2 as the Confederate assault smashed the III Corps and rendered it useless for further combat. Gettysburg campaign historian Edwin B. Coddington assigns “much of the blame for the near disaster” in the center of the Union line to Sickles.
I think that the message from the DOJ/SEC in their collective FCPA Guidance is clear regarding the CCO position. They will evaluate the person, the position within an organization and the resources dedicated to the CCO, his department and his staff to determine if it is sufficient for the specific organization at issue. The US Sentencing Guidelines also make clear such an analysis will be made when making a determination of whether to or what sentencing should be for a Foreign Corrupt Practices Act (FCPA) violation. Don’t be a Dan Sickles.
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© Thomas R. Fox, 2013
Filed under: Best Practices, Chief Compliance Officer, compliance programs, Department of Justice, FCPA, FCPA Guidance, SCCE, SEC, US Sentencing Guidelines Tagged: best practices, compliance, compliance programs, Department of Justice, DOJ, FCPA, Foreign Corrupt Practices Act, SCCE, SEC