Pitfalls in Anti-corruption framework by Robin Singh
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The document discusses common pitfalls in implementing anti-corruption programs, emphasizing the importance of commitment from leadership, effective third-party management, and establishing reporting mechanisms. Specific shortcomings include lack of compliance awareness, inadequate risk assessment, and failure to monitor or audit practices. Examples, such as Alstom S.A.'s corruption case, illustrate the consequences of insufficient anti-corruption measures.
![Mindset before commitment
• Profits / bottom line is perceived as a competitor to anti-corruption programs
Investigations
(a) AM $Recovery
(b) Fraud $ Amt. Saved
=============
$$$
Compliance Enforcement Protected
(a) Contract Compliance $$
(b) Penalties saved $$
=============
$$$
New Business / Opportunities
(a) A new venture $$$
(b) Key Risks mitigated $$$
=============
$$$
Labor Law / WB
(a) WB that reported to int. HL $$$$
(b) [others]
=============
$$$
28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP
Not having the right mind set
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Pitfalls in Anti-corruption framework by Robin Singh
- 2. Common Pitfalls While Implementing an Anti- corruption Program By Robin Singh, MSc.(Law), MIT, CFE, CFAP 28/04/2017
- 3. “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
- 4. Robin Singh, MSc.(Law), MIT, CFE, CFAP
- 5. Agenda • Background • The growing maze of laws, rules and regulations • Anti-corruption / Bribery Framework • Common Pitfall 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 5
- 6. Poll: 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 6
- 7. Q1: Do you have a anti-corruption framework in place? Yes No Unsure 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 7
- 8. Background 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 8
- 9. Companies that have failed to win due to bribery by the successful competitor • 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. INTERNATIONAL BUSINESS ATTITUDES TO CORRUPTION - 2015 / 2016 (Control Risks) Its all about the business 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 9
- 10. Companies that have failed to win due to bribery by the successful competitor • 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 INTERNATIONAL BUSINESS ATTITUDES TO CORRUPTION - 2015 / 2016 (Control Risks) Do anti-corruption laws serve as a deterrent? 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 10
- 11. Corporations Individual Image provided by Shearman & Sterling LLP Enforcement is the key… 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 11
- 12. The growing maze of Laws, regulations and rules (Proceeds of Crime and Other Measures) Act 2016 • Law that prohibits making payments to foreign government representatives • Two primary provisions: (a) The Accounting Provision • Fair / accurate record keeping • Adequate system of internal accounting controls (b) The Anti-bribery Provision • A payment, offer to a government official with a corrupt motive for the purpose of influencing in order to obtain business. • Two main offences : (a) intentional false dealing with accounting documents (b) reckless false dealing with accounting documents (a) Article 8 of the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions • The Act also amends the Anti- Money Laundering and Counter- Terrorism Financing Act 2006 The Prevention of Corruption (Amendment) Bill 2013 aims to: (a) hold orga. liable for bribes offered or given by their associated persons to a public servant (b) hold the directors, managers, secretaries or other officers of a commercial organization liable for an offense committed by the commercial organization UK bribery Act 2010 • Private sector bribery • Does not require a corrupt intent; the payer must merely intend to influence • Liability of receivers • No exemption for facilitation payments, • Section 7 - failure to prevent bribery France Anti- corruption Law-Spain II MONETARY AUTHORITY OF SINGAPORE ACT (CHAPTER 186) – Limited to financial institutions The Criminal Code) The Administrative Offences Act 12
- 13. Poll: 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 13
- 14. Do you believe there is an overreliance on Compliance programs to ensure compliance with laws, rules and regulations? Yes No Unsure 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 14
- 15. Anti-corruption framework 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 15
- 16. 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP To establish a culture of integrity and honesty Objectives of building a Ethics and Complaince Framework 16
- 17. 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP Building Blocks of a Ethics and Compliance Framework 17
- 18. Poll: 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 18
- 19. 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 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 19
- 20. When can an Anti-corruption / bribery Program Fail 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 20
- 21. Mindset before commitment • Profits / bottom line is perceived as a competitor to anti-corruption programs Investigations (a) AM $Recovery (b) Fraud $ Amt. Saved ============= $$$ Compliance Enforcement Protected (a) Contract Compliance $$ (b) Penalties saved $$ ============= $$$ New Business / Opportunities (a) A new venture $$$ (b) Key Risks mitigated $$$ ============= $$$ Labor Law / WB (a) WB that reported to int. HL $$$$ (b) [others] ============= $$$ 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP Not having the right mind set 21
- 22. 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 anti- corruption 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 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP No commitment from the organization 22
- 23. Common pitfalls in an Anti-corruption framework 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP Insufficient third-party management 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 23
- 24. Poll: 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 24
- 25. 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 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 25
- 26. Common pitfalls in an Anti- corruption framework No reporting or recording mechanism 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP TIP: Reporting helpline – A barometer of organizations health? It’s a point of information gathering 26
- 27. Not been able to analyze & categorize the issues Rating Financials Impact (USD) Business Impact (e.g. in HC it is Patients) Reputational Impact Impact through regulatory breaches Employees Involved Source External / Internal 5 > 10 Mil Adverse Events Long term systemic failures or bad publicity, etc. International Law / Civil C-Suite Regulator / Police 4 3 2 1 Receive Complaints Channel: WB, Email, etc. Assess Complaints (Data base / Case mgmt.) Level 1 : Analytics & C&FRR Level 2: Risk Mgmt. Function Level 3: Committee …….. Close Loop / Update system / Action Plan / Report to committee Criteria for assessing complaints / allegations Priority Criteria High Priority > 75% of the Cumulative Score Medium Priority > 40 % & < 75% of the Cumulative Score Low Priority <40% of the Cumulative Score HML Criteria * Cumulative Maximum Score = 30 Investigate: Yourself Investigate: Distribute Investigate: Decline 27
- 28. Common pitfalls in an Anti-corruption framework 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 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 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP Check mate: Is the king different from the pawn? 28
- 29. 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 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP Inability to assess risks and in ability to monitor 29
- 30. 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) 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP Others 30
- 31. Q & A 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 31
- 32. 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 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 32
- 33. Thank you MyComplianceOffice www.mycomplianceoffice.com Phone: (866) 951-2279 advance@mycomplianceoffice. com Email : robinsingh@gmx.com Website: www.whitecollarinvestigator.com 28/04/2017By Robin Singh, MSc.(Law), MIT, CFE, CFAP 33
- 34. Thank you