The Nuts and Bolts of Anti-Corruption Hotlines: An Interview with Brandon Daniels, President of Managed Services, Clutch Group

December 3rd, 2014

By Rebecca Hughes Parker

An effective hotline program is integral when it comes to a company’s ability to proactively handle compliance issues before they become endemic.  And hotlines can encourage internal reporting, affording a company time to investigate conduct before the government does.  As part of our interview series on hotlines, we talked to Brandon Daniels, president of Managed Services at Clutch Group, a litigation and compliance service provider.  He leads the organization’s strategy for all commercial and operational aspects of the company’s Litigation & Investigation, Compliance & Risk, and Corporate In-house Services.  Daniels discussed, among other things, methods of reporting, when to outsource the hotline, data privacy issues and handling cultural sensitivities.  See “The Nuts and Bolts of Anti-Corruption Hotlines: An Interview with Benjamin Haley of Covington & Burling,” The FCPA Report, Vol. 3, No. 19 (Sep. 24, 2014).

FCPAR:  What are some of the advantages and disadvantages of phone-based hotlines?

Daniels:  In a world that is increasingly moving towards text-based communications, I honestly think that telephone-based hotlines are still a key and fundamental component of an operational compliance program.  You can speak to any of the regulators that are looking at these issues on a day-to-day basis – the SEC, with the new whistleblower provisions of Dodd-Frank; the DOJ; or any of the U.K. regulators, who are still in the midst of implementing their bribery programs.  All of them will tell you that an anonymous mechanism for reporting back to the company is prudent.  But in terms of helplines and hotlines as that mechanism, I believe that they are critical and actually superior to other methods.

First, the point at which someone reports or files a complaint or provides a tip that can lead to an allegation of corruption with an organization is an emotional moment in many instances.  I have listened to a lot of these hotline calls over the course of investigations that I’ve done on behalf of some of the largest pharmaceutical, medical device providers and mining businesses in the world, and I have found that these hotline calls can be charged with a lot of emotion.  When you put that into email or a text message, it can come off in a very adversarial way.  Having a conversation allows you to filter through the noise that can be built into that emotionally-charged moment and allow you to get down to facts.

The critical piece of a hotline is understanding the foundation of the allegations that are being made.  You need to understand whether or not this is a corruption issue, a compliance issue, or an employment issue pretty quickly within the conversation.  And email leaves a lot of that conversational aspect out.  The hotline provides the ability for the company to explore, in these emotionally-charged moments, what kind of liability there may be.

Additionally, sometimes there’s a barrier to written communications.  You sit down and as you try to craft the right message you can sometimes be stifled.  It’s kind of like writers block.  You want to describe the events exactly as you remember them or exactly as you found them.  When you’re speaking to someone on a hotline, that formality is no longer a barrier; you are able to speak and give information as it is coming to mind.  It adds a layer of accessibility to the potential reporting.

Another piece that is really helpful in terms of hotlines is that a phone call does still have the air of anonymity.  Most people understand that if you send an email or another electronic communication, there usually is some form of tracking.  I’m not personally a user of What’sApp or Snapchat, but I know that there are ways to create fleeting messages, and I also know that doesn’t necessarily comply with the second component of a reporting line which is the requirement to record and maintain those records on an ongoing basis.  From an anonymity perspective, telephone hotlines really do remain the gold standard.

To read the full interview, follow this link.