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Corporate Counsel Q&A: Oil & Gas 2012

Who’s Who Legal interviews Carine Smith Ihenacho, chief compliance officer at Statoil, the largest operator on the Norwegian continental shelf and a growing player in the international energy market. She discusses the requirements of her role and trends in the in-house legal market.

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Name: Carine Smith Ihenacho

Position: Chief Compliance Officer

Company: Statoil

Sector: Energy

Number of employees: Approx 21,000

Statoil is an ambitious international energy company headquartered in Norway. Building on 40 years’ experience in the oil and gas industry on the Norwegian continental shelf, the company has expanded its operations to 36 countries worldwide and is listed on the New York and Oslo stock exchanges. The company is committed to accommodating the world’s energy needs in a responsible manner, applying technology and creating innovative business solutions – this commitment has seen it build upon its core oil and gas expertise and seize opportunities in clean and renewable energies.

Overseeing the company’s compliance throughout its activities and conduct is chief compliance officer, Carine Smith Ihenacho. The role is no small undertaking; the oil and gas industry is notorious for bribery and corruption – due to the nature of the business and its key locations – and with governments tightening down on unacceptable conduct there is an increasing pressure on companies to ensure that they are taking positive actions to ensure compliance. In response to the UK Bribery Act which took effect in July 2011, Smith says: “we already had a robust and world-class compliance programme in place, but certain adjustments were made as a result”. While many of the major oil and gas companies have been scrutinising their conduct for some years now, the Bribery Act and US’ Foreign Corrupt Practices Act will step up this review process and require companies of all sizes to engage in the campaign against bribery and corruption.

Carine Smith Ihenacho joined Statoil two years ago as senior legal counsel based in London and was appointed to her present role in January 2012. Prior to working at Statoil, Smith was general counsel for Aibel Group. In addition she has worked in-house at the European Bank for Restructuring and Development, Norsk Hydro, Hydrogas and Kværner. Smith has also worked as a private practitioner at Norwegian law firm BA-HR.

Who’s Who Legal caught up with her to find out more about her role and the qualities she looks for when choosing external lawyers.

Tell us about your role

After having worked as a business lawyer for many years, I was recently appointed the chief compliance officer of Statoil. The chief compliance officer is the head of Statoil’s ethics and compliance department, which is a part of Statoil’s legal department, and report to the general counsel. The ethics and compliance department is responsible for Statoil’s anti-corruption compliance programme, including training, policies, the ethics helpline and providing general advice on compliance issues. We are also actively engaged with a network of compliance officers located in the various Statoil business areas in the many countries where we operate. These compliance officers are the people in the organisation who encounter compliance challenges on a daily basis. Our department is also responsible for Statoil’s integrity due diligence function, to ensure that the company does not enter into contracts with parties that represent an integrity or compliance risk.

How big is the legal department?

The legal department consists of approximately 110 employees, of whom 83 are lawyers. The department is organised into several teams which align with the company’s organisation so that each business area has a dedicated team of lawyers. In addition we have certain teams covering corporate legal functions, such as the company secretariat and compliance. The ethics and compliance team consists of 16 people.

What do you consider to be your most important role as in-house counsel? And how is life as an in-house counsel different from that of a private practitioner?

My most important role, together with the rest of my team, is to ensure that Statoil’s policies, procedures and activities to counteract corruption are well organised and conducted in a satisfactory manner. The purpose of our ethics and anti-corruption compliance programme is to prevent Statoil’s employees from engaging in any unethical or corrupt behaviour by enabling them to identify and manage the operational risk that these types of behaviour pose for Statoil, in order to protect the individual, prevent economic losses and preserve Statoil’s reputation.

My life as an in-house counsel, and in particular as the chief compliance officer, is quite different from that of a private practitioner. In addition to providing timely and high-quality legal advice upon request, I run a company programme, which includes training, risk assessment, monitoring and active engagement with the various business areas and employees in the field. Outside the area of compliance, our in-house counsel identify legal risks within the company’s business operations and handle those within a business setting and ensure that activities are conducted in accordance with external legal and regulatory requirements and internal policies.

Having a background as a private practitioner is definitely valuable in my role, both in respect of the work I perform on a daily basis – where the rigorous training in a law firm in terms of legal analysis and careful drafting still comes in handy – and in my engagement with outside counsel, in particular, by understanding the importance of early involvement and being given the full picture of facts of a case. I also hope I am somewhat nicer and more realistic when giving outside counsel deadlines for their work.

Tell us about recent special projects keeping your team busy?

My team has recently been very busy with ensuring that Statoil has adopted and put into practice adequate procedures, policies and practices related to anti-corruption following the implementation of the UK Bribery Act. In light of the Act we made certain adjustments to our already robust compliance programme, in relation to our governing documents and training programmes.

What law firms did you hire? What were the main challenges?

We have a panel of law firms we work with within different areas. So in my team, ethics and compliance, we will have a panel of at least two law firms we work closely with on compliance matters at any point in time. When deciding on the panel law firms in the compliance area, in addition to extensive knowledge on anti-corruption legislation and enforcement, we look for lawyers that can assist in translating the many legal requirements into practical, understandable and working policies and procedures. The latter is the most challenging.

What skills do you require in external counsel to address these challenges?

It is essential for us that the external counsels we use understand our business and industry. This is as important within the compliance area, where external counsel need to have an understanding of the overall risk in order to provide efficient and practical advice. In addition, it is always appreciated when external counsel are easily accessible and provide timely responses.

Do you always tend to work with the same firms?

We work with our panel law firms for a set period and at regular intervals hold a tender process to ensure that we are working with the law firms that provide the best value for money. However, we do prefer to stay with the same law firms for some time, as this enables them to get to know us and deepen their understanding of the business.

When dealing outside your home jurisdiction, how do you find counsel?

Statoil is an international company with operations in 36 countries, so we work with lawyers in several jurisdictions on a daily basis. Our home jurisdiction is Norway, but many of our external law firms are based in other countries. We tend to use firms with an international presence, or with a good network of local partners, so that the same law firms can provide advice whether this is required in London, Brazil, Angola or Russia.

Do you see yourself hiring the firm primarily, or the individual?

This is a combination. For us, being an international company, it is an advantage to use law firms that are present in many jurisdictions and familiar with working on cross-border transactions. So in that respect, the international presence and expertise of a specific law firm is important. On the other hand, the individual lawyer is key, so when we choose a panel law firm, the quality of the individual lawyer will be a central consideration.

What measures do you use to control or monitor fees?

We have a thorough and competitive selection process. During this process, we ensure that we can negotiate favourable rates and in some instances also fixed fee arrangements. Furthermore, by working with a selected group of law firms over a period of time, external lawyers will not spend unnecessary resources and time getting to know our business. Finally, our legal department has in place a system of knowledge sharing which aims to build up the internal expertise within the company and reduce the need for external advice where possible.

Is the role of the in-house lawyer changing?

In my experience, the role of the in-house counsel has evolved greatly over the last few years. Previously in-house counsel’s role was not dissimilar to that of a traditional lawyer but it is now becoming more focused on legal risk management, providing business-orientated advice and playing a key role in the company’s decision-making processes. I believe this change in the in-house counsel’s role has to a large extent been driven by changes in the external environment such as increased regulation, scrutiny and enforcement in all business sectors.

What is the most pressing issue – practical, legal, or political – in energy law today?

I believe the most pressing issues are linked to transparency and sustainability. Being an international global player within the oil and gas business comes with great responsibility, and a key to future success is a continued licence to operate which relies on maintaining good relationships with regulators, legislators and the general public. Expectations towards the oil industry are as much about how we work as to what we do. In this context, ethics and compliance plays an important role to safeguard the company and enable the business to not only deliver results, but deliver results in the right way.

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