Gavin_Solmonese
February 2017
A Message from Ted Gavin

Ted Gavin

Is time moving faster? I know it defies logic, but it sure feels like that this year. The pace of change can be dizzying, but we're here to help you keep up. Starting today, we'll be coming to you every month with updates and information you need to make smart decisions in these rapidly changing times.

Whether you're following the restructuring world, regulatory shifts, economic policy, business news, politics, or the intersection of them all, Gavin/Solmonese has got you covered. It's all original material straight from our brains.

Each month we will provide you with up-to-the-minute information and personal insight of this new world order, and how it could directly impact your business. If you have any ideas about where we should train our focus in the coming months, I heartily encourage you to send us your thoughts. Drop us a line at info@gavinsolmonese.com.

Corporate Responsibility in the Age of Trump
by Joe Solmonese

Joe Solmonese

Opportunities in a Fluid New World 

Wherever you stand politically, everyone agrees that the 2016 election heralds a period of dramatic change. Many in the corporate world expect to reap profits as regulatory, trade, and tax policies change to reflect the ideology of those in charge in Washington, DC.

We are also likely to see a shift in the expectations coming out of Washington for corporate responsibility. And here, I believe, lies a tremendous opportunity for businesses to step up and lead the way.

Through example and regulation, the Obama administration called on American corporations to meet a high standard for social responsibility and diversity. Many businesses adopted progressive policies on LGBTQ equality, environmental stewardship, pay equity, and other issues some time ago, but during the last eight years, we've seen even more companies strive to meet these higher standards.

You might expect corporate America to abandon these high standards in the age of Trump, but that's not happening. In fact, many corporate leaders are reaffirming and even showcasing their commitment to diversity and inclusiveness. There is growing recognition that these values have an important place in our culture and society - and a positive impact on the bottom line -  even if elected leaders don't share or promote them. As one insurance executive told Bloomberg News after the election, "Businesses that don't invest in diversity efforts will increasingly be at a competitive disadvantage, regardless of the political landscape."

Marriott is a great example. After the election, Marriott CEO Arne Sorenson published an open letter congratulating Donald Trump for his victory and praising him for his magnanimous election night speech. Then Sorenson urged Trump to follow the GOP philosophy of less government to its logical conclusion by keeping government out of citizens' private lives.

"The government has no business in our bedrooms - or our bathrooms," wrote Sorenson. "Everyone, no matter their sexual orientation or identity, has a right to live without interference in their private lives. Similarly, everyone, no matter their sexual orientation or identity, gender, race, religion, disability, or ethnicity should have an equal opportunity to get a job, start a business, or be served by a business. Use your leadership to minimize divisiveness around these areas by letting people live their lives and by ensuring that they are treated equally in the public square."

Long before Obama set foot in the White House, Marriott cleared a high bar for diversity and inclusionary policies. But with this widely publicized letter to the newly elected president of the United States, Sorenson set a new standard, and confirmed Marriott's status as a modern leader on fairness and equality.

Businesses large and small are smart to communicate their commitment to diversity and inclusion. But as they do, I caution them to choose their words - and the medium used to deliver them - carefully, because communication is changing just as rapidly as the leadership in DC. We've seen how willing this president is to take an issue directly to the people via Twitter. It's a safe bet that leaders in your community, including state legislators, city mayors, and county commissioners will soon conduct themselves similarly (although, we hope, more responsibly), if they are not already doing so.

Political change always presents challenges and opportunities. Those who act with an eye toward the long term and who transcend partisanship and keep in mind the long arc of progress will continue to benefit from adopting inclusive policies that signal a commitment to diversity, fairness, and equality. In an atmosphere as complicated and fluid as this, small and medium-sized businesses and law firms are likely to need guidance on engaging carefully, thoughtfully, and successfully with customers and political leaders in their community.

Navigating this new world order is going to be a tricky business. Don't be afraid to ask for help along the way.


The Corrosive Effects of Corruption
by Anne Eberhardt, Senior Director at Gavin/Solmonese

Anne Eberhardt

By any measure, 2016 was the largest year in the history of the enforcement of the Foreign Corrupt Practices Act. Four of the largest FCPA settlements of all time were resolved last year, over $2.5 billion was paid in fines to resolve enforcement actions, and more than 25 individuals either settled civil charges, pleaded guilty, or were indicted. At least 80 FCPA investigations are in progress - and that is only counting those that have been publicly disclosed.

Meanwhile, millions of hacked documents were leaked to the public, revealing details of secret accounts and shell companies of individuals, politicians, and criminals seeking to hide their assets.

A Dutch telecom company bribed Uzbek government officials and their family members. A blockbuster Hollywood movie about the excesses of Wall Street was financed with pilfered funds from the Malaysian government. In Ukraine, a law requiring public officials to itemize their assets on a public database was passed, and almost immediately reporters discovered assets top politicians failed to list, including several Mediterranean villas dotting the south coast of Spain. And here in the U.S., amid the cacophony that passed for civil discourse during the election cycle, it may be possible to discern a common anxiety that politics has become so corrupt that our democracy itself is threatened.

Perhaps it is not an exaggeration then to say that corruption is having a "moment."
For democracy to flourish, citizens must believe their leaders are accountable. This assurance does not exist in most countries, and you might be forgiven for believing that corruption represents the natural order of things. But make no mistake. Corruption is the acid that corrodes the bonds of civil society.

Whether or not the priorities of the Justice Department will continue to embrace the enthusiasm for FCPA enforcement as it has for the past decade, organizations should continue to support robust compliance programs.

With increased incentives and protections offered to whistleblowers, along with the rise of activist hacking, organizations are losing their ability to maintain secrecy over unethical acts. And the government's increased data-gathering and processing capacity make the risks of being caught greater than ever.

But the most important reason to support ethical behavior is self-protection. Tolerance of illicit activity is practically an invitation to commit unethical acts against the organization itself, and more than one employee has turned a no-questions-asked expense reimbursement policy to his or her personal benefit. Research suggests that damage to employee morale may be the single most significant negative consequence during a bribery investigation.

Corruption will continue to be a topic of media focus. In this environment, organizations must communicate from the highest levels the importance of maintaining an ethical culture. It should be done to avoid punishment, it should be done because it's the right thing to do, but it should also be done to benefit the organization itself.


Our Gallery
22nd Annual Rocky Mountain Bankruptcy Conference
Ted Gavin participating in a panel discussion on  Alternatives to Bankruptcy: Receiverships, ABCs, Self-Managed Liquidations. 
Cycle for Survival 2017
Jeremy VanEtten
Cycle for Survival 2017
Anne Eberhardt and Ted Gavin
"Escape the Room Philly"
G/S' first-place team takes their victory in stride with the proper amount of humility and respect. (Yes, they celebrated later.)
"Escape the Room Philly"
We don't end up on the losing side very often, so it's understandable this G/S team didn't quite know how to process anything other than winning. Rematch? Absolutely.
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