Everything You Wanted to Know About Monitors-Part 2

By  Jay Rosen, CCEP Vice President, Business Development & Monitoring Specialist, Affiliated Monitors, Inc., USA

 

What is the Power of a Pre-Settlement Monitorship?

Most generally, a “pre-settlement monitorship” occurs when an organization engages an independent body to conduct any kind of a third-party review or assessment.  This may often be known as a “proactive monitorship.” In either situation, a company desires to assess its implementation of a compliance and ethics program on a proactive basis. Such a monitorship does more than simply focus on whether there is a compliance program in place but more fully assesses its effectiveness. This assessment can be used by a wide variety of end-user parties, such as the corporation itself, with its stakeholders, with regulators or even with the public to demonstrate compliance with a wide variety of issues.

Using this type of a proactive monitorship can help an organization to assess not only where they might be now but also work to create a road map to improve and strengthen their culture of compliance and ethics going forward.

Internal Cultural Assessment

A key piece of the pre-settlement monitorship is to assess the company’s culture of compliance. Using this type of a proactive monitorship can help an organization to assess not only where they might be now but also work to create a road map to improve and strengthen their culture of compliance and ethics going forward. Finally, another reason for performing a pre-settlement monitorship might be when a company wants to explicitly demonstrate its due diligence to law enforcement or regulators should something occur in the future that would result in action against the company.

Another way to look at the pre-settlement monitorship might be as a preemptive strike against a forthcoming punitive action.

Preemptive Strike/Preventing a Suspension/Debarment Action

Another way to look at the pre-settlement monitorship might be as a preemptive strike against a forthcoming punitive action on the part of government agencies. My company, Affiliated Monitors has had instances where companies subject to an action with one level of government, such as a US Attorney’s Office in one area of the country, will use the pre-settlement monitorship to avoid being suspended or barred by the federal government and from federal government contracts. The pre-settlement monitorship performs a complete review, then made recommendations for remediations. This led to positive resolution with the government in the form of declining a suspension or debarment action.

 

M&A Due Diligence

Another use of the pre-settlement monitorship is in the mergers and acquisition arena. We have had situations where companies will, as part of the merger and acquisition pre-acquisition due diligence process, hire an independent third-party monitor to review the target company to ensure that they in fact have a robust ethics and compliance posture and corporate ethical culture to be able to fully integrate into their organization if closing occurs. Once again, this scenario speaks to the breadth and scope of the pre-settlement monitorship as a tool.  

…Through the pre-settlement monitorship, the tool becomes not only proactive but prescriptive as you are using as an ongoing monitoring solution.

Powerful Prescriptive Tool

When viewed in the light of the three prongs of any best practices compliance program, prevent, detect and remediate, the power of a pre-settlement monitorship comes more clearly into focus. A monitorship has been traditionally viewed as an after-the-fact piece of an enforcement action. However, through the pre-settlement monitorship, the tool becomes not only proactive but prescriptive as you are using as an ongoing monitoring solution. It is even more powerful because of the independent nature of the monitor, which brings an unbiased eye to a compliance program.

In all these scenarios– internal cultural assessment, preventive strike, or M&A due diligence– it is critical that the monitor bring real value through the monitorship. The monitorship should provide insight through employing a variety of investigative techniques, including interviews, document reviews and forensic auditing. All of this can provide solid information to not only a Chief Compliance Officer (CCO) but also the leadership of an organization.

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