Debra KuperVice President, General Counsel and Corporate Secretary, AGCO - International Law Office
In-house Counsel Q&A
Debra Kuper
Vice President, General Counsel and Corporate Secretary, AGCO
Please describe your current role (eg, responsibilities, size of team, structure).
I am the vice president, general counsel and corporate secretary for AGCO Corporation, a Fortune 500 manufacturing company located in Atlanta, Georgia. I am responsible for all of the company's legal matters, including litigation, regulatory and securities filings, executive compensation, mergers and acquisitions, joint ventures, corporate records and minutes, resolutions and consents of AGCO's board of directors. I am a member of the senior management team reporting to the chief executive officer, and determine and implement legal strategy for the organisation. My legal team consists of 25 in-house attorneys and 12 support staff located in nine countries. I have two direct reports located by region (Europe/Asia and South America), and the remainder of the team report up through these two individuals. I also serve as the global chief ethics and compliance officer.
What is the greatest achievement of your career thus far?
By revamping AGCO's ethics and compliance programme, I was able to settle a major investigation by the US Securities and Exchange Commission (SEC) and the US Department of Justice (DOJ) into the company's involvement in the Oil for Food Programme.
I was in law school when the Oil for Food Programme began in 1995. Even though I studied anti-corruption laws such as the US Foreign Corrupt Practices Act, there were not a lot of cases to study. Even in my various career moves, the topic never arose. In fact, in 2001 an investigatory panel headed by former US Federal Reserve Chairman Paul Volcker produced a 500-page report alleging that 2,200 companies in 66 countries, as well as a number of prominent international politicians, offered bribes or other inducements to the Iraqi authorities totalling almost $2 billion. But, this was overshadowed by the explosion of the 2001 Sarbanes-Oxley Act. Everyone was focused on complying with Sarbanes-Oxley, including the company I was working for at the time. I started becoming an expert in corporate governance, touring the country and speaking at seminars on how to implement effective Sarbanes-Oxley compliance controls. Still, non-compliance with the Foreign Corrupt Practices Act via the Oil for Food Programme was not a hot topic.
Suddenly, in 2006 there was a flurry of investigations against major corporations for their involvement in the Oil for Food Programme. Large corporations started paying huge fines to settle the investigations. One of the first was Chevron Corporation, which in November 2007 agreed to pay combined civil and criminal penalties of $30 million for violations of the Foreign Corrupt Practices Act's books and records provisions related to alleged kickbacks to the former Iraqi government under the Oil for Food Programme. The agreements were announced as a collaborative investigative effort between the DOJ and the SEC, as well as the Federal Bureau of Investigation, the New York County District Attorney's Office and the Treasury Department's Office of Foreign Assets Control (OFAC). I would later find out that AGCO, too, had received subpoenas from the SEC and DOJ to investigate its sales of farm equipment to the Iraqi Ministry of Agriculture under the Oil for Food Programme. But in 2006 I was a senior corporate counsel at Caterpillar, still focusing on Sarbanes-Oxley and other regulatory compliance matters.
While at Caterpillar, I co-sponsored a 6 Sigma project comprised of a multi-functional global team which focused on complying with the amendments to the US Federal Sentencing Guidelines. The 2004 amendments responded to a provision in Sarbanes-Oxley that directed the Federal Sentencing Commission to review and, as appropriate, amend the guidelines that apply to organisations to ensure that they "are sufficient to deter and punish organizational criminal misconduct". In order to ensure compliance with the guidelines, we conducted 18-months of benchmarking, data analysis and Board approval, before implementing a fulsome ethics and compliance programme led by a chief ethics and compliance officer and supported by regional and local staff. All was in place at Caterpillar by the time I left to join AGCO in January 2008.
My first task at AGCO was to implement a similar structure to address the SEC's and DOJ's concerns with the company's participation in the Oil for Food Programme. Throughout the next two years (and in addition to my regular general counsel duties), I met frequently with the SEC and DOJ and worked diligently on enhancing the existing ethics and compliance programme. I began with the board of directors to ensure the appropriate 'tone at the top'. They understood and were fully committed to the implementation of a new, effective and robust ethics and compliance programme. Then I socialised the new ethics and compliance programme with the senior management team. I also asked them to designate regional and local ethics and compliance officers and controllers to form a steering committee of sorts in order to implement the new processes and procedures, and to provide training. They did, and now I chair a multi-functional ethics and compliance committee responsible for the design, implementation and oversight of the ethics and compliance programme.
At our first ethics and compliance committee meeting in 2008, we created a charter which outlined specific roles and responsibilities. We also created local sub-committees which meet quarterly to review compliance issues such as hotline complaints, and to review transactions to ensure compliance with anti-corruption laws. They provide quarterly reports to me and have identified local 'owners' to input the documentation into one 'safe source' using SharePoint. The goal was (and continues to be) that all employees should be knowledgeable of the ethics and compliance programme and the policies and/or procedures that relate to their daily business activities. The committee endeavours to provide understandable guidance on permissible and impermissible conduct. We revised the code of conduct and created online and live training materials. With the help of human resources, we rolled out new online and live training materials which include real-life examples applicable to the industry and localities. All policies, procedures, training materials and general information are translated into seven languages. We ensure that these are included in the on-boarding orientation process for new employees. We have clearly identified the consequences for refusing to undergo training and/or violating the ethics and compliance policies themselves. We have been consistent in applying disciplinary standards to ensure that all employees understand that violations are not tolerated or encouraged.
By September 2009, we had implemented the new ethics and compliance programme. As a result, I successfully negotiated and settled the investigations. The settlement included a deferred prosecution agreement, with no monitor, but a yearly reporting requirement on compliance activities.
Since then, we have continued tweaking our ethics and compliance program, particularly after the United Kingdom passed its Bribery Act. And we have identified other areas of opportunity for improvement, including new policies and procedures on sanctions, antitrust, contract management, data privacy and even a policy on how to create policies! We just rolled out a new supplier code of conduct which is intended to establish a foundation for the crucial relationships that AGCO forges with its supply base. We have also established procedures for dealing with foreign sales representatives and partners. We went back and reviewed and screened our existing supplier database against the Transparency International Corruption Perceptions Index and an online software tool. We also pre-screen new vendors in the same manner. We have enhanced monitoring by requiring vendors to sign a form or certificate of compliance with the ethics and compliance programme. In addition, we have set guidelines on approval limits and documentation on government expenses, bids, tenders and a direct sales checklist. All of our contracts now include anti-corruption clauses.
As a result, AGCO was nominated by Corporate Secretary magazine for 2009 Best Overall Governance, Compliance & Ethics Programme, 2009, Corporate Secretary of the Year and 2010 Best Overall Governance, Compliance & Ethics Programme.
What is the most challenging situation that you have faced in your current role?
Supervising a legal team dispersed throughout nine countries. As general counsel, I supervise all of the company's 25 in-house attorneys and 12 support staff dispersed throughout Argentina, Brazil, China, France, Germany, Russia, Switzerland and the United Kingdom. (In addition, as chief ethics and compliance officer, I manage a team of 18 compliance officers and controllers throughout the world, but the ethics and compliance committee structure is working out well).
When I joined the company in 2008, I quickly discovered that the in-house attorneys had never officially met each other. In 2009, I travelled around the world to meet and greet my team members. For talent management purposes, I wanted to assess the talent and skill set and to reorganise reporting relationships if necessary. I also wanted to ensure that we had the proper legal staff to support the company's growth strategies, particularly in emerging and high-risk markets. After the overall assessment, I encouraged them to hold regional meetings - all legal staff from Europe and Asia met in the United Kingdom and all legal staff from South America met in Brazil. This was done in 2010, and it was a fantastic time of sharing best practices, meeting local executives, listening to seminars conducted by outside counsel and generally socialising after several busy days of work. The regional meetings were such a success that in January this year I held the first-ever AGCO Global Legal Summit in Atlanta to share best practices, provide presentations, listen to speakers, and participate in panel discussions. For some, this was their first foray into the United States. For others, this was the first opportunity to practise their English-language skills. It was a growth opportunity that instilled excitement, encouragement and engagement throughout the whole team. Because of its success, we will continue holding the Global Legal Summits in a different location each year. In addition, I have implemented an 'exchange programme' whereby in-house attorneys can visit different locations for a period of time. This exchange programme has been embraced by everyone, including the businesspeople who help to 'host' the attorney by inviting them to operational meetings.
Consequently, two weeks ago I received an award from ILO for 2011 Employment Team of the Year.
Are there certain kinds of legal issues that you routinely refer to outside counsel? And what kind of matters do you tend to handle in-house?
Of my 25 in-house attorneys, only two (other than me) are located in the United States. So I routinely refer US legal matters - concerning commercial contracts, litigation, employment and immigration law - to outside counsel. Also, we do not have a political action committee, so I use a lobbying firm to arrange for meetings between me and the senior staff with senators and congressmen. All foreign legal matters are handled by local in-house counsel. We generally handle all patent activities in-house as well.
What is the best piece of advice that you have ever received?
Be flexible. Working for a corporation is different from working for a law firm. General counsel need be able to handle the daily surprises, economic uncertainties, industry volatilities and communication and time-zone issues of a global company. They must be open to changing or altering their opinions to suit the business climate (always within legal compliance, of course), rather than sticking to their guns.
What are the most significant challenges that in-house lawyers are likely to face over the next few years?
The cost of legal fees in the future. Right now, the economy is soft. But when the economy strengthens, the cost of legal fees will rise. For me, sensing a softness in legal purchasing markets and seeking to an innovative way to contribute to and assist the company in extending its cost advantage over its competitors, I entered the legal purchasing market with a never-before-used model in partnership with ARIBA, a longstanding AGCO vendor normally associated with commodity purchasing. In conjunction with our AGCO sourcing and purchasing professionals, ARIBA put together a unique template for the sourcing of legal services. The model, once approved by me, was then put out for bid.
We in the AGCO legal department certainly expected the programme to reveal and establish new benchmarks in the changing legal marketplace - and that it has done. However, what we did not expect - and which has been an added and essential benefit of this programme - was that it showed that we may have been overcharged by our traditional firms for what had become routine legal matters. My legal department then renegotiated some existing contracts, and awarded other contracts to other firms with which we had no prior relationship, but had lower cost structures and rates. The cost savings to the company at year-end 2010 has already saved AGCO more than $50,000 in legal costs. Continued use of this model into the future will further reap cost savings estimated to be $2 million, thereby giving us substantial legal savings over that of our competitors and revealing that the legal department - normally considered a 'cost centre' - is itself capable of contributing to a healthier bottom line for the Company.
With regard to your industry, are there any recent significant developments worth highlighting?
Environmental issues are at the forefront of our industry, particularly those related to emissions requirements of the US Environmental Protection Agency and the European Union. In addition, AGCO is focused on researching and developing new alternative fuel methods to lower emissions and green biomass technology to keep the environment clean. Also in the United States, the 2012 Farm Bill Reauthorisation will have a significant effect on the agricultural industry, including on agricultural machine manufacturing. We are also attempting to increase our visibility and footprint in Washington DC.
If not a lawyer, what would you be?
A professor. My mother was a teacher and provided tutoring services in our home throughout my childhood. After completing law school, I taught as an adjunct professor at Marquette University Law School. I enjoy being a frequent speaker at industry and legal seminars, including at Georgetown University, the National Association of Women Lawyers, the Consero Group LLC, the National Diversity Council and the Atlanta Institute of Internal Auditors.
About AGCO
AGCO is the world's largest manufacturer purely focused on agricultural equipment, including tractors, combines, hay tools, sprayers, forage and tillage equipment. AGCO was established in 1990. Since then, AGCO has become a global company through market growth, strategic acquisitions and cutting-edge agricultural solutions, with over 15,000 employees worldwide. What started out as a $250 million investment is now an $8 billion company. Throughout that time, farming has changed, becoming more sophisticated and more demanding. I grew up on a farm in central Illinois and these tractors are not 'my father's tractor'; they are high-tech, sophisticated, major investments for maximising the crop yields of huge farming companies to meet the growing food demands throughout the world. The strength of AGCO's global reputation can be found in its independent network of approximately 2,600 dealers located in 140 countries – one of the largest distribution networks in the industry. The cornerstone brands include Massey Ferguson, Challenger, Fendt and Valtra.
