HOMELAND SECURITY…New Energy Challenge
By Dick Powers
Armed with automatic weapons, pirates stormed an Indonesian chemical tanker ship recently, escaping with equipment and cash valued at $13,000. The Malacca Strait is one of the world's busiest shipping lanes, but its numerous islets and reefs which bandits use to elude capture, make even beefed up security efforts feeble at best.
Your pipeline or chemical plant may not be set upon by storybook pirates such as Peter Pan's Captain Hook, but other threats from activity related to terrorists or simply disgruntled employees or area residents with an axe to grind (or in hand) may prove to be much more of a concern.
Precautions need to be integrated into the security of your physical infrastructure and your technology, to help prevent infiltration of the actual premises or your proprietary information. And if breaches of security are successfully made, a system must be in place to report the infraction instantly so the extent of the damage can be mitigated.
Since the September 11 attacks, the energy industry has made renewed and concentrated efforts to protect its infrastructure assets from possible and real security threats, while enactment of the Homeland Security Act focused the government's efforts even more on this, making pipeline and chemical plant safety a top DOJ priority.
Chemical companies in the UK have been on high alert and are continuously revising security arrangements to safeguard against possible terrorist attacks. Security has long been a priority in the UK, as domestic terrorism threats have existed since the 1970s.
The DOJ recently announced that facilities will be required to increase their infrastructure security and submit to regular inspections and upgrades, while the Environmental Protection Agency is supporting requiring chemical facilities to assess and remedy vulnerabilities. On the information security front, the Federal Energy Regulatory Commission has issued rules on restricting access to critical infrastructure information and the Department of Homeland Security has issued its own procedures under the Freedom of Information Act; but at the same time the Senate is currently debating whether to roll back some of the information protections established under the Homeland Security Act.
The potential for damage-inflicting threats, combined with changing federal security requirements, make these complicated and worrisome times in the energy industry, but some of this can be alleviated with a series of evaluations and implementations with the recommendations of your information technology, security and legal counsel.
Business Without Borders: How to Navigate Changing International Trade Regulations
By Philippe Bruno
Fried chicken, cable-knit sweaters, steel beams and wheat: Vastly different items, with one central similarity – they're all involved in decisions being considered by the World Trade Organization, affecting the global import/export industry.
The 145 members of the WTO just missed a deadline to agree upon a framework for cuts to farm subsidies and import duties on agricultural goods, a key agreement viewed as essential to the wider round of trade liberalization negotiations, which also cover areas such as cutting import duties on manufactured goods and opening up the international market in services such as banking and telecommunications. The WTO also recently ruled that steel tariffs imposed by President Bush last year violate international trade rules, agreeing with the complaint against steel levies filed by the European Union and other countries such as Japan, Brazil and China.
The WTO has ruled in a number of recent cases that the U.S. violated international rules in the way it raised duties against products allegedly "dumped" into the U.S. market – that is, sold at unfairly low prices.
In addition to the current WTO decisions affecting goods coming into or leaving the United States, discord over the war in Iraq strained economic links between the U.S. and Europe, a relationship crucial to global prosperity. Beyond the actions of some to re-name fried potatoes "Freedom Fries" and shy away from French wine, this unrest among top policymakers sparks concern over tit-for-tat trade wars. But any American assault against, say French or German economic interests, would be barred by WTO rules that require products from any WTO member country to be treated equally.
Litigation In A Post-Enron World … Putting the Ethics Back into "Corporate Ethics"
By Alan Baron
WorldCom, Tyco, HealthSouth, ImClone, Adelphia … Investor confidence in publicly traded companies – and that of the population at large – is nearing bottom.
So-called "perp walks" of once highly esteemed business executives have replaced those of violent crimes offenders on the nightly news. The Securities and Exchange Commission has its hands full and sleeves permanently rolled up.
The investigation into former HealthSouth CEO Richard Scrushy, may provide the first real test of the Sarbanes-Oxley law requiring executives to certify their companies' financial reports. In August, Scrushy signed documents saying he had reviewed and stood behind HealthSouth's 2001 annual report and its second-quarter report for 2002, so prosecutors could make him the first person tried under the new statute.
The certification also may remove the excuse – employed by a number of high-level executives in recent corporate scandals – that they were too removed from day-to-day operations to know about accounting problems.
All of this means that corporations today must place a high priority on implementing effective compliance programs, which are rigorously enforced. The days of the "wink and a nod" toward compliance programs, which are honored more in the breach than the observance, are over. No company of any size, particularly a public company, can afford to function without a meaningful compliance program that will prevent or detect potential wrongdoing at all levels of the organization.
What are the hallmarks of an effective corporate compliance program?
There is no "one size fits all" program that can be applied on a universal basis. Each company presents unique areas of concern and vulnerability, so each program must be tailored to fit the particular situation. Nevertheless, no program can be deemed effective in the absence of the following:
- A written code of conduct clearly setting forth policy on ethical and integrity issues
- Full and public support of upper management
- Ethics training for employees at all levels
- Auditing and accounting controls
- Enforcement
- Appropriate discipline for violators
The prevention of wrongdoing occurring within the company is of incalculable value. When competitors are meeting with lawyers and worrying about their freedom, the CEOs of companies that take their legal and ethical obligations seriously can be meeting with their staffs to improve their company's bottom line. Which meeting would you rather attend?
DORSEY & WHITNEY THOUGHT LEADERS: In the News
National Post: War Position Fosters Western Alienation, 3/21/03
"But we have to remember the big picture: Canada is our most loyal energy bedfellow. From an energy standpoint, the most secure sources of energy we can have are in North America, and Canada is an important part of that…"
Dick Powers, Dorsey & Whitney, Washington
Wall Street Journal: WTO Negotiations Could Miss Deadline on Agriculture Snag, 3/18/03
"It's like a poker game right now…when you start a poker game, you don't want to show your cards…"
Philippe Bruno, Dorsey & Whitney, Washington
Reuters: Washington law firm forms Iraq group, 4/23/03
"There is an immediate need for legal counsel to support the various government agencies and private corporations asked to help rebuild specific industry sectors such as petroleum, housing, power generation, food, medical supplies and telecommunications."
Dick Powers, Dorsey & Whitney, Washington