Remarks on "the challenge of cooperation: consideration of the ethical and managerial implications of the organizational sentencing guidelines, Thompson memorandum, SOX, etc".

• Position: Sarbanes-Oxley Act of 2002 - Symposium: Corporate Criminality: Legal, Ethical, and Managerial Implications - Speech

On March 15, 2007, the Georgetown University Law Center hosted a Symposium on "Corporate Criminality: Legal, Ethical, and Managerial Implications." (1) The following transcribed remarks are excerpted from the daylong event.

INTRODUCTION

I am the Chief Compliance Officer at CA, formerly known as Computer Associates. We are under a deferred prosecution agreement, and I am going to hit two points for you. First, I will discuss the [obligations and] costs associated with a deferred prosecution agreement some of which are outside of what actually happened at CA, and second, what goes into what I consider to be an effective compliance program.

DEFERRED PROSECUTION AGREEMENT'S OBLIGATIONS AND COSTS

Under the deferred prosecution agreement, my obligation is tell you that we are under a deferred prosecution agreement. We tell all of our salespeople and all of our employees that they must never deny that we are under a deferred prosecution agreement because that is one of the tenets of the agreement. We also have an independent examiner who is much like a monitor. I am told that the difference between an independent examiner and a monitor is one of power. A monitor has real power [to dictate] whereas the independent examiner says "I think you should do this" and then we go ahead and do it anyway. We have a compliance committee; we put that into the audit committee of the board of directors. We have to have a chief compliance officer who is acceptable to the SEC and to the prosecutors. I came in September of 2005. The agreement was signed in September 2004, but it did not go into effect until March 2005, so I had a couple of months to get ready for the deferred prosecution agreement.

We have to have a comprehensive compliance program that has to be a "best in class" compliance program. I am not quite sure what that is, but I am sure when we are done we may be the model of the "best in class" compliance program that other prosecutors might be able to look to. We must have a comprehensive compliance and ethics training program, a comprehensive record and information management program, and a policy of cooperating with the government during investigations. We are required to have a new head of internal audit, and an increased staff. I found it interesting that there was nothing about audit in anything that went on with respect to the thirty-five-day month. For those of you that do not know about what Computer Associates did, it was that in effect they invented the thirty-five-day month. In order to meet the street's expectations of how they were going to do from quarter to quarter, they took October 1-5, which were real contracts, and in effect backdated them so they became part of September. Now, that meant about $150-200 million was moved into the quarter, and you had to do that...