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By Che Odom
June 30 — Companies that find themselves under probe by the Justice Department's Fraud Section may discover that Hui Chen—the department's first-ever compliance counsel—is a different kind of regulator.
The DOJ hired Chen in November to serve as a compliance expert for the Fraud Section (60 CARE 60, 11/3/15). In that role, she evaluates compliance and monitoring programs for companies being reviewed by the section, and helps determine whether they have taken appropriate remedial steps.
Almost eight months into the job, corporate attorneys told Bloomberg BNA that she brings a different conversation to the table—she focuses less on the prosecutorial aspect, and more on how companies can avoid fraud risks.
Chen is interested in real-world situations and measures that address them, said an attorney who defends companies against regulatory actions. She delves into the inner workings of a program, such as how stakeholders within a company communicate up and down the ranks, said the Big Law attorney, speaking to Bloomberg BNA on condition of anonymity so as to protect the identity of his clients.
“With her, it's more of a conversation than you're used to from DOJ,” he said. “She's not laying traps.”
The DOJ turned down Bloomberg BNA's requests to interview Chen for the article.
Chen earned her juris doctorate in 1991 from the University of California, Los Angeles, and her bachelor's degree in social sciences in 1988 from the University of California, Berkeley. She also attended divinity school.
In the early 1990s, Chen worked as a trial attorney for the DOJ as part of its honors program. She followed that with a two-year stint as an Assistant U.S. Attorney in Brooklyn, N.Y., prosecuting criminal cases, then headed to Microsoft for 13 years, where she held senior compliance positions in China, Europe and the U.S.
Among other roles, Chen was assistant general counsel at Pfizer Inc. Before rejoining the DOJ, she was global head of anti-bribery and corruption at Standard Chartered Bank PLC.
In a February interview with the non-profit group Ethics & Compliance Initiative (ECI), Chen said she got into the compliance field “somewhat accidentally.”
Chen explained that soon after Sept. 11, 2001, while living in New York, she volunteered to help the families of missing victims of the terrorist attacks to apply for death certificates. “Out of that experience, I ended up leaving Microsoft, where I was an anti-piracy lawyer, to get a divinity degree,” she told ECI.
Chen said that when she started missing the legal profession, she contacted former colleagues at Microsoft, and she was offered a job as its first “in-field compliance officer in China.”
Separately, Chen told a New York University School of Law gathering in November that one of her duties as the greater China compliance director at Microsoft involved the 2008 Beijing Olympics.
She reviewed “hospitality offerings” associated with the games, looking through gift bags, she said.
Fast forward seven years, in her role as the Fraud Section's compliance expert, Chen said, “The most important thing that I’d like to think I bring to the table is the in-house perspective” from not only the headquarters but also “the field.”
Russell Duncan, a former Assistant U.S. Attorney and partner at Shulman Rogers Gandal Pordy & Ecker PA, told Bloomberg BNA that Chen has the real-world experience to evaluate a compliance program. “She can identify when a program is merely window dressing, when a company is not really taking it seriously or is not thinking through the details,” he said.
Another attorney who focuses on Foreign Corrupt Practices Act matters told Bloomberg BNA that Chen's assessment of compliance programs may be “less a legal examination” than a look at the “practical application of a program.”
“I have clients who frankly don't have her expertise, and they should find her thoughts instructive, if not fascinating,” said the attorney, who didn't want to be identified to preserve her relationships with the Fraud Section.
Attorneys told Bloomberg BNA that Chen's appointment may have enforcement and corporate compliance ramifications.
Gregory Husisian, chair of Foley & Lardner LLP's Export Controls & National Security Group, said the creation of Chen's role reflects the growing importance federal regulators place on compliance.
Chen's appointment serves a number of purposes, such as determining whether companies are implementing effective compliance improvements under deferred prosecution and non-prosecution agreements, especially in situations in which there is no corporate monitor, Husisian said.
“The appointment of a compliance specialist in-house raises the possibility that the DOJ will feel less need to include independent monitors as part of DPAs and NPAs,” he told Bloomberg BNA in an e-mail.
This would address a common criticism of independent monitors, “which is that they are expensive,” he said.
Duncan suggested that Chen's work in the Fraud Section may “inspire companies to have robust compliance programs.”
“The best approach is prevention,” he said.
Companies that try to develop effective compliance programs will find it is a struggle, Chen said during her NYU appearance in November.
Compliance must be understood by the rank and file, who also must have a means of reporting problems to management to prevent future violations, Chen said.
“There is not likely to be a day where there is zero conduct issues,” she said, “but I think an indicator of a real program is that effort to try to figure out how to make it better, how to make it more real, and how to make it more real to the little guys in the field.”
To contact the reporter on this story: Che Odom in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Yin Wilczek at email@example.com
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