Forensics & fraud blog

Or maybe not, considering the impact the current crisis has on Greek society.

In his post, Luke Balleny explains the impact corruption has had on Greek society and now on the crisis facing Greece.

The 2012 Greek chapter of the Transparency International report on National Integrity System Assessment suggests that the Greek government “acceptance” of corrupt practices has contributed to the current crisis in Greece.

TI’s Assessment of National System Integrity on Greece can be found here: TI – NIS

Considering the impact on the lives of many if not most Greeks, and the contribution to the current crisis of the corruption in Greece, we must conclude that corruption is in fact not a victim-less crime.  The consequences may not be immediate or clear to most, but as this case teaches us, there almost always are consequences to be paid.

Fighting corruption, both by preventative measures and controls and by investigating and exposing corruption post-fact, is crucial to the smooth operation of the economy as a whole. And if you need more convincing of the real-world impact, just look at Greece today and the draconian budget measures that they have to implement.

What does the recent US$ 22.2 million settlement of Smith & Nephew means for the Medical Devices industry?

On February 06, 2012, U.K. based medical devices maker Smith & Nephew Plc. agreed to pay $22.2 million to settle Foreign Corrupt Practices Act offenses committed by its U.S. (Smith & Nephew Inc.) and German (Smith & Nephew Orthopaedics GmbH) subsidiaries. [Refer SEC’s Litigation Release 22252 / February 6, 2012 on the following link http://www.sec.gov/litigation/litreleases/2012/lr22252.htm (Accessed on February 9, 2012)]

This is a significant order for more than one reason. The biggest reason is that this order is one in a series of previous prosecutions that has included key players in the medical devices industry. Another reason is that this order highlights why companies that are operating in medical devices segment need to go that extra mile to ensure that the transactions entered into by third parties (agents, distributors etc.) on their behalf adhere to their policies. In this alert, we outline salient points of this case and then outline what companies in this segment can do in future to avoid such actions.

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With the 2012 World Economic Forum in Davos just behind us, Transparency International reflect on some of the evolutions in the global corporate community in terms of transparency, corruption, bribery and perception of people around the world.

TI sees the need for companies to consider new approaches and new business models in light of the persistent global economic woes and ever growing public dis-trust in corporations around the world.

Well worth the read: TI – Corporate Transparency: Old Problems and New Ideas

Interesting publication from the UK Serious Fraud Office providing comments on the impact of anti-fraud and anti-corruption legislation. It provides insights into current international legislation and related implications. Additionally it provides hands-on information regarding the management of forensic investigations and the implementation of preventive measures.

Serious Economic Crime: A boardroom guide to prevention and compliance

Good risk management at UBS, you say?

The Harvard Business Review seems to thinks not…

HBR: UBS Systems Failed the “Too Big to Fail” Bank

An eye-opening piece on risk management systems at UBS, which permitted this massive fraudulent trading to take place, without ever being detected.
Despite a recent and large scale overhaul and improvement.

Sort of makes you think, doesn’t it?

UK Bribery Act: the British act against corruption is not something that Belgian business can just ignore.

UK Bribery Act press release PwC

The Bribery Act 2010 received Royal Assent on 8 April 2010 and came into force on 1 July 2011.  In addition to the two offences of active and passive bribery (paying and receiving bribes respectively), two specific offences are covered:

• Bribery of an overseas public official; and
• A corporate offence of ‘failure to prevent’ bribery.

With the Bribery Act the UK has one of the strictest anti-bribery regimes in the world and its reach is even broader than the US Foreign Corrupt Practices Act.

What do you need to do?

As the Bribery Act will have implication for all businesses that are incorporated in the UK and for the businesses that carry on all or part of their business in the UK, it is of utmost importance to have a fully integrated and effective anti-corruption program.

In many ways the introduction of the Bribery Act could require a fundamental reassessment of the risks that a company is running and how those risks are addressed.

When fraud appears, the culprit identified is usually always the same: CONFIDENCE!

Most companies have developed internal control mechanisms but weaknesses are unfortunately often considered only after the onset of a suspicion or a fraud. Once on the field, the Forensic Auditor repeatedly remarks that most fraud’s cases are related to the following issues:

• The non-compliance with the fundamental principle of segregation of duties,
• The non-compliance with controls in place,
• The absence of control below certain thresholds and/or
• Conflicts of interest.

No matter that the fraud is perpetrated within or outside the organization, the only real way to protect an organisation from fraud is to implement efficient and effective controls with regular monitoring / controls testing.

Create or Challenge the control environment

The only way for an organization to effectively fight against fraud is to create an environment that’s discouraging it. Prevent fraud through the creation and implementation of processes and controls, codes of conduct and ethics along with management and staff training. A key element that is too often neglected is “communication”. A good fraud prevention plan involves the setting up of a “communication plan” tailored to both management and staff on the available tools to prevent and detect fraud as well as an action plan in case of a fraud case (suspicion).