A well designed ABC compliance programme usually comprises of a number of prevention, detection and response elements, but many ABC due-diligence plans fail to involve the information technology (IT) department.
This piecemeal approach is the Achilles Heel of ABC compliance in most global organisations, says Roy Muller, Head of Anti-Bribery & Corruption KPMG South Africa.
Taking a worldly-view
Globally, parent companies have inadequate understanding of the regulatory environments in which their overseas subsidiaries operate. This has led to enhanced enforcement by (for example) the US Department of Justice and the UK Serious Fraud Office of global anti-bribery and corruption (ABC) laws, where regulation is (now) forcing companies which are listed in the United States (U.S.) or United Kingdom (UK) – or otherwise connected – to conform to a new regime. As a result, senior management in these organisations look to the legal and compliance teams – in particular – to augment the design and implementation of ABC compliance programmes.
A review of the Foreign Corrupt Practices Act (FCPA) enforcement trends since 2010, however, suggested that in nearly 75 percent of the instances in which companies were charged with violating the law, third party intermediaries (TPIs) were conduits for paying bribe. Though due-diligence is a high risk area, unfortunately it receives significantly less focus in ABC compliance programmes, as a result lack of awareness or overlapping responsibility.
For instance, procurement (or Supply Chain) is generally the entity within the organisation responsible for conducting due-diligence, however, this entity often has a limited focus on “capability” – i.e. more focused on whether the prospective vendor has the ability to delivery – and often the forensic perspective is missing from this type of due-diligence. Additionally, while other entities within the organisation may assist and be involved in the due-diligence process – including legal, compliance and in some instances corporate security – regardless of who is primarily responsible for this, too frequently information collected from vendors and other TPIs is not collated in a format that would facilitate down-stream comparison and analysis.
In reality, often no single team within a company has a complete perspective of ABC due-diligence – procurement will have one perspective, legal/ compliance will have another and (when involved) corporate security will have an entirely different emphasis. It’s for this reason that IT has such a critical role to play!
Internet access and advances in technology have resulted in the rapid transformation in civil society today. Forensic technology is therefore becoming vital in all aspects of preventing, detecting, monitoring and reporting on fraud, corruption and/or misconduct – as well as in quantifying and recovering overall losses. Including IT early in the design of an ABC compliance programme is a better, direct approach that will support the overall objectives of the programme, and allows for customisable systems, that will ultimately facilitate (or even drive) the overall implementation and/or monitoring of the programme, to be put in place.
Mapping global requirements to the African challenge
In Africa, poor public records and inadequate or lack of accurate information sources impede the ability to conduct thorough due-diligence. For instance, where records may be available, they are generally not online or in a digital format for easy access.
In addition, Africa has a range of languages – both indigenous and the legacy of the colonial age. While official business is usually conducted in English, French, Arabic and, Portuguese, print and electronic (including social) media spans hundreds of local languages. To put this in perspective, the Organisation of African Unity (OAU) has recommended 50 languages to be supported along with Arabic and Swahili as the “native” African working languages. Where companies usually face a significant challenge in having skilled forensic resources in-house, now companies need to seek out skilled human resources with a range of language skills and a nuanced understanding of the availability of information in various jurisdictions as well.
Having a sufficient or customisable solution that is backed by a proficient IT backbone, however, will assist global companies in Africa in designing effective risk based due-diligence programmes that will accelerates the ability of the company in identifying and addressing critical ABC compliance risks. Additionally, through partnering with the right managed service offering provided, global companies can also gain a number of other benefits, including – in particular – access to an extensive network of human resource intelligence to facilitate enhanced due-diligence and so as to help meet global ABC compliance requirements. Something worth doing a little due-diligence on, don’t you think?