One of the things that any compliance program should have baked into it is independent oversight. Indeed there should be multiple levels of oversight. This requirement for oversight did not arise from the world of anti-corruption compliance but from process engineering, which mandates that for any process to be valid there should be independent oversight, or as my wife would say “a second set of eyes.” The Man From FCPA considered this requirement for additional eyes after seeing that the mobile phone manufacturer Samsung self-tested its Note 7 batteries.
The Wall Street Journal, reported that whereas Apple and other cell phone manufacturer used third-party laboratories certified by the U.S. wireless industry’s trade group CTIA, “to ensure compliance with standards set by the Institute of Electrical and Electronics Engineers.” It reported that Samsung is the only cell phone manufacturer “using in-house battery-testing facilities.” In other words, there was no independent testing or evaluation of the batteries. All of this would seem to provide even more bad news to Samsung, as if this multibillion dollar loss from these phones is not enough.
Yet for the compliance professional, the lesson from this part of the Galaxy Note 7 battery disaster, could not be clearer. Anti-corruption compliance programs, policies-procedures, and internal controls are all designed around providing an independent “second set of eyes” to make sure that a violation does not slip through the cracks. From the most basic requirement that any customer gift, travel, or entertainment spend on a person subject to the FCPA go through a corporate compliance department, the concept of “second set of eyes” is burned into your compliance program.
Indeed a large portion of internal controls are around segregation of duties and independent oversight. These most basic concepts are in place to allow a dispassionate and non-biased view of what is being requested. As the risk profile goes up, the layers of review should increase as well to help to manage the risk. For a component as critical as a non-fire starting battery, Samsung should not have bucked the industry and had its own certification of the battery. It may turn out to be a fatal flaw for Samsung.