Common Pitfalls While Implementing an Anticorruption Program By Robin Singh, MSc.(Law), MIT, CFE, CFAP 28/04/2017
“We believe that great governance is at the heart of great business, helping to protect and promote your reputation�. Brian Fahey, CEO, MyComplianceOffice
advance@mycomplianceoffice.com
Robin Singh, MSc.(Law), MIT, CFE, CFAP
Agenda • Background • The growing maze of laws, rules and regulations
• Anti-corruption / Bribery Framework • Common Pitfall
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
5
Poll:
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
6
Q1: Do you have a anti-corruption framework in place? Yes No
Unsure
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
7
Background
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
8
Its all about the business INTERNATIONAL BUSINESS ATTITUDES TO CORRUPTION - 2015 / 2016 (Control Risks) •
Corruption remains a major hazard in international business
•
High Demand for facilitation payments
•
Among the companies with headquarters (HQ) in Western countries, France stands out, with 37% of companies reporting that they had lost out to corrupt competitors.
Companies that have failed to win due to bribery by the successful competitor By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
9
Do anti-corruption laws serve as a deterrent? INTERNATIONAL BUSINESS ATTITUDES TO CORRUPTION - 2015 / 2016 (Control Risks) • Overall 64% agree – out of which 54% are from USA and 46% from rest of the world. •
While in UK, 41% believe Laws help while 49% believe in opposite.
•
Overall 30% disagree
•
Overall 6% are neutral
Companies that have failed to win due to bribery by the successful competitor By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
10
Enforcement is the key… Corporations
Individual
Image provided by Shearman & Sterling LLP By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
11
The growing maze of Laws, regulations and rules UK bribery Act 2010
• Law that prohibits making payments to • Private sector foreign government bribery representatives • Two primary provisions: • Does not require a (a) The Accounting corrupt intent; Provision the payer must • Fair / accurate merely intend to record keeping influence • Adequate system of internal accounting • Liability of controls receivers (b) The Anti-bribery • No exemption Provision for facilitation • A payment, offer to a payments, government official with a corrupt motive • Section 7 failure to for the purpose of prevent bribery influencing in order to obtain business.
France Anticorruption Law-Spain II
(Proceeds of Crime and Other Measures) Act 2016
The Prevention of Corruption (Amendment) Bill 2013
(a) Article 8 of the aims to: • Two main offences OECD (a) hold orga. : Convention on liable for bribes The Criminal (a) intentional false Combating offered or Code) dealing with Bribery of given by their accounting Foreign Officials associated The documents in International persons to a Administrative (b) reckless false Business public servant Offences Act dealing with Transactions (b) hold the accounting directors, documents managers, secretaries or • The Act also other officers amends the Antiof a Money MONETARY commercial Laundering and AUTHORITY OF organization CounterSINGAPORE ACT liable for an Terrorism (CHAPTER 186) – offense Financing Act Limited to financial committed by 2006 institutions the commercial organization 12
Poll:
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
13
Do you believe there is an overreliance on Compliance programs to ensure compliance with laws, rules and regulations? Yes No
Unsure
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
14
Anti-corruption framework
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
15
Objectives of building a Ethics and Complaince Framework
To establish a culture of integrity and honesty
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
16
Building Blocks of a Ethics and Compliance Framework
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
17
Poll:
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
18
How is your Anti-bribery corruption (ABC) program structured? Stand alone ABC program ( I do not have a separate Ethics and Compliance program) Stand alone ABC program ( I have a separate Ethics and Compliance program) Embedded with Compliance and Ethics program Do not have one
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
19
When can an Anti-corruption / bribery Program Fail
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
20
Not having the right mind set Mindset before commitment •
Profits / bottom line is perceived as a competitor to anti-corruption programs
Investigations (a) AM (b) Fraud
Compliance Enforcement Protected $Recovery $ Amt. Saved ============= $$$
New Business / Opportunities (a) A new venture (b) Key Risks mitigated
(a) Contract Compliance (b) Penalties saved
$$$ $$$
$$ $$ ============= $$$
Labor Law / WB (a) WB that reported to int. HL (b) [others]
=============
=============
$$$
$$$
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
$$$$
28/04/2017
21
No commitment from the organization Common pitfalls in an Anti-corruption framework Tip: A simple litmus test to gauge leadership’s commitment to an anti-corruption programme is to ask how many senior managers have attended the standard anticorruption training workshop traditionally advocated for staff? •
Multiplier effect. • •
Top management cannot be everywhere. They have confidants who carry out tasks and so on.
•
As a ethics and Compliance function you need to target confidants and their confidants in the middle management.
•
Are you ware of the concerns reported to the middle management?
•
Monitor
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
22
Insufficient third-party management Common pitfalls in an Anti-corruption framework
Tip: Train on the limits of incentives. Sales employees should know what could their client mean with words such as “engaging in”, “brain storming”, “favor”, “its no cash”
• Due Diligence (in general, pre merger , post merger) • You can not force your ABC program on the third parties • “Right to audit clause” – Do you exercise it? • Is it your program or a rouge employee?
• Regular monitoring
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
23
Poll:
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
24
Q5: Do you exercise your ‘right to audit’ clause in a contract to assess a contractor? Yes, often Yes, only if there is a substantial allegation No No such clause exists in our contract
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
25
No reporting or recording mechanism Common pitfalls in an Anticorruption framework
TIP: Reporting helpline – A barometer of organizations health? It’s a point of information gathering
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
26
Not been able to analyze & categorize the issues Receive Complaints
Channel: WB, Email, etc.
Rating
Financials Impact (USD) > 10 Mil
5
Assess Complaints (Data base / Case mgmt.)
Level 1 : Analytics & C&FRR Level 2: Risk Mgmt. Function Level 3: Committee
Investigate: Yourself Investigate: Distribute Investigate: Decline
‌‌.. Close Loop / Update system / Action Plan / Report to committee
Criteria for assessing complaints / allegations Business Impact (e.g. in HC it is Patients) Adverse Events
Reputational Impact
Impact through regulatory breaches
Long term systemic International Law / Civil failures or bad publicity, etc.
Employees Involved C-Suite
Source External / Internal Regulator / Police
4 3 2 1
HML Criteria * Cumulative Maximum Score = 30 Priority Criteria High Priority > 75% of the Cumulative Score Medium Priority > 40 % & < 75% of the Cumulative Score Low Priority <40% of the Cumulative Score
27
Check mate: Is the king different from the pawn? Common pitfalls in an Anti-corruption framework Tip: The higher the perpetrator’s level of authority, the greater fraud losses tend to be. Owners/executives only accounted for 19% of all cases, but they caused a median loss of $500,000 •
Has the CEO taken the company jet to his best friend’s funeral?
•
Monitor action plan’s consistency
Case Example • Alstom S.A. paid $772 million to the DOJ to settle criminal corruption charges. • Alstom’s lack of commitment to preventing corruption. Even after a previous bribery case was settled, the company continued to on its road path
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
28
Inability to assess risks and in ability to monitor Common pitfalls in an Anti-corruption framework
Risk Assessment •
Risk assessment is a critical activity
•
Risk assessment creates awareness
•
Helps you fix
Monitoring •
Not a stand alone phase, it should be embedded in all the sub elements
•
You don’t know what you will fix, unless you know what is broken
Case Example • Smith & Wesson case – Hired third party without risk assessment
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
29
Others Common pitfalls in an Anti-corruption framework •
Lack of procedures
•
Inability to create, update regulatory sources register - laws, rules and procedures
•
Insufficient communication and transparency
•
Insufficient and record keeping training
•
Competing Priorities
•
Making one size fit all (Don’t take any pre designed framework)
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
30
Q&A
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
31
Highlights • Manage by alerts not reports • Dashboards deliver greater oversight
• Custom questionnaire builder • Continuous updates to the software • Enhanced control • 100% data capture
• 24/7/365 support • Scalable into the future
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
32
Thank you MyComplianceOffice
www.mycomplianceoffice.com Phone: (866) 951-2279 advance@mycomplianceoffice. com
Email : robinsingh@gmx.com Website: www.whitecollarinvestigator.com
By Robin Singh, MSc.(Law), MIT, CFE, CFAP
28/04/2017
33
Thank you