Law Enforcement Focus on Energy Programs and Compliance

Transcription

1 Law Enforcement Focus on Energy Programs and Compliance Presented to: The Society of Corporate Compliance & Ethics Utilities & Energy Compliance & Ethics Conference February 24, 2014 Houston, Texas Presenters Lori Vassar, Director, Administrative Remedies Division, Office Inspector General (OIG) U.S. Department of the Interior (DOI) Ronald Gonzales, Assistant Special Agent in Charge, Energy Investigations Unit, DOI OIG 1

2 Presentation Topics Mission of OIG Why the interest in energy? Energy Investigations Unit Suspension and debarment and impact Value of a robust compliance & ethics program What should you do when you re in trouble? Make a compelling presentation & avoid the pitfalls of exclusion Administrative agreements & monitors Q&A The OIG Provides independent oversight over the U.S. Department of the Interior s programs, operations, and management Conducts criminal, civil and/or administrative investigations; Provides training and outreach with a focus on prevention; Identifies vulnerable areas to combat waste, fraud, and mismanagement; and Conducts audits, inspections and evaluations. 2

3 Why the Interest in Energy? Royalty collection: Second largest source of income for Federal Government DOI bureaus and offices are charged with administering, monitoring, and regulating various types of energy development and production activities on lands and in areas under Federal jurisdiction (oil, gas, and wind) OIG s authority extends to all DOI activities OIG Energy Investigations Unit (EIU) Created in November 2008, in recognition of a need for specialists to investigate highly complex energy and royalty matters Only Federal investigative entity that routinely works on matters involving the entire energy cycle environmental impact to production to royalty payments The degree and level of activities conducted throughout the energy cycle 3

4 Three Types of EIU Investigations Operational Compliance/Site Security and Safety Facilities and equipment Permitting and applications Environmental planning Production Verification Volume accountability Mineral Valuation Price and deductions EIU Investigation Example #1 Allegation: Platform experienced a large spill & attempted to cover up the incident Should have shut down platform after malfunction Allegedly created a work-around and continued production until the work-around failed Possible violations were referred to DOJ, United States Attorney s Office Result: criminal conviction; monetary civil penalties; facility statutorily debarred; company suspended & proposed for debarment 4

5 EIU Investigation Example #2 Allegation: Equipment manipulation and theft Two companies altered tank valves Smaller company welded valve handles backwards Larger company removed the internal mechanism (ball) from the valves Result: monetary civil settlements; negotiating compliance and ethics agreements in lieu of debarment 5

6 Mitigation of Potential Risks Operational Compliance/Site Security and Safety Activities specific to compliance and ethics programs Planning and prevention will mitigate risks The risks Prosecution and/or civil and administrative remedies Liabilities and exposure to employees Exclusion from future business opportunities Robust Compliance and Ethics Program Demonstrates company s commitment to provide a safe working environment and to comply with regulatory requirements & professional standards Provides guidance to company employees Prevents conduct requiring an investigation Identifies risks and vulnerabilities to formulate corrective actions May influence prosecution and civil administrative penalties in corporate cases and decisions regarding conduct 6

7 Suspension Action taken by an agency head or a designee to exclude a person or entity from participating in nonprocurement transactions for a temporary period, or an action to exclude a contractor temporarily from Federal Government contracting and Government-approved subcontracting. Debarment Action by an agency head or a designee to exclude a person or entity from participating in nonprocurement transactions for a specific period of time, or an action to exclude a contractor from Federal Government contracting and Governmentapproved subcontracting for a specific period of time. 7

8 How Does Exclusion Impact You? Loss of market share in public space Precluded from receiving awards of new mineral/wind leases, or assignment of leases by third parties, federal assistance, loans, benefits Loss of business reputation Loss of revenue Failed responsibility to employees and shareholders Potential loss of business Purpose and Authority Protect the integrity of Federal procurement and nonprocurement programs by conducting business only with responsible persons Inherent authority of the Government as lessor and as a consumer of goods and services Administrative remedy may not be used to punish, coerce, embarrass, harass or get even It s a business decision: Do you pose a significant business risk to Government as a potential participant or contactor? 8

9 DOI S&D Process OIG refers party to SDO with recommended action If SDO concurs, notice of proposed action/reasons sent Party has 30 days to respond and is afforded opportunity to present matters in opposition Party may request meeting with OIG OIG may recommend an administrative agreement or other actions If genuine dispute on material facts, SDO may refer matters for findings of fact before determination Prevention: What Should You Have? Effective standards of conduct, periodic training, and internal controls Designated Compliance Officer with day-to day operational responsibility, who reports to Board or highest executive Established standards and procedures to prevent and detect criminal conduct Hotline, non-retaliation policy, process to address complaints Risk assessments and process to remediate Monitor/audit compliance and ethics program 9

10 What Should You Do if You re in Trouble? Disclose to USG and Reach out to the SDO and OIG Provide results of a full investigation/review Cooperate with Federal authorities Restitution and remedy harm Address conduct/adjust C&E program to prevent and detect future criminal/civil/administrative misconduct Appropriate disciplinary actions against responsible persons Establish Present Responsibility Implement remedial measures Institute new/revised review and control procedures, policies, and ethics training programs Adequate time to eliminate underlying circumstances giving rise to action Show management recognition and understanding of the seriousness of the misconduct and implementation of programs to prevent reoccurrence 10

11 Make a Compelling Presentation Use 2011 Federal Sentencing Guidelines Manual, 8B2.1 Describe company, prior history of organization, and impact of administrative action Executive/board level acceptance of responsibility, appreciation of the gravity of any wrongdoing, and commitment to, and involvement in, improvement Use credible third-parties (assessments, investigations, monitoring/testing, training, compliance consultant, etc.) Administrative Agreements Between organization and Government (SDO) Terminates suspension or proposed debarment Heavy focus on corporate compliance & ethics program Multi-year term May require an Independent Monitor Specific corrective actions with deadlines and reports Training Breach provision 11

12 Independent Monitor Engaged by organization, but delivers reports to Government Does not investigate the underlying conduct Verifies the organization s timely and effective compliance with the terms of the administrative agreement Not a punitive measure, rather an asset to the organization and safeguard for the Government Independent Monitor (cont d) Reviews effectiveness of Corporate Compliance & Ethics Program and internal controls to prevent, detect and respond to issues in a timely and thorough manner Work together with monitor and be highly transparent 12

13 Focus Is on Present Responsibility Even after debarment, address issues raised by investigation/sdo s determination Present to SDO corrective actions and implemented policies and procedures Request reconsideration Questions? 13