How corrupt are your foreign business operations?


Welcome to the first of the Catelas blog posts. We have been working with companies on FCPA compliance for the past 3 years and continue to be astounded at just ‘how in the dark’ most Compliance Officers are with respect to their overseas business operations.

While the lure of doing business in countries like China, Russia and Indonesia is certainly great, the risks that come with it are equally so. Our experience is that most companies do a pretty good job at vetting potential partners, 3rd parties and individuals when they first enter a new country (through fairly rigorous background checks), but apart from re-inforcing policies and codes of conduct, that is pretty much where it ends.

The full-time, round the clock monitoring of these partners (or individuals) to uncover potential bribery or corruption is clearly cost-prohibitive and not usually practical. And most of the monitoring is focused on the financials, ie expense reports to try to uncover unreasonable or unwarranted spending.

That is why Catelas has approached the problem from a totally different perspective. If we could analyze the daily communications of a company (both inside and outside the company) and focus on those high-risk countries, partners and individuals, then we could uncover potential risks to the company, before potential FCPA infractions occur.

Tall order? Sure. And costly too? Perhaps. So we have developed a fast, effective and non-disruptive way to audit and report high-risk relationships, typically at 6 monthly intervals. Like an MRI, Catelas is able to provide Compliance Officers peace-of-mind with respect to potential FCPA violations. We identify ‘who is doing business with whom’, providing 360° profiles for companies to help them understand which countries, partners or individuals pose the highest risk based on the day-to-day communication patterns inside and outside the company.

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5 thoughts on “How corrupt are your foreign business operations?

  1. Interesting article and valid. In many areas of the world where Company insiders are aware of internal FCPA compliance regimes, the bribery schemes take place via phone and are off the books as well. The scheme is run through middlemen and designed to skirt standard and often very public compliance programs and reviews. What is interesting is how prevalent and common bribery is in many countries yet there is little to no periodic market intelligence collection. Perhaps, the future of compliance will include direct market intelligence collection.

    • Very true Mauro, but a point of clarification is that we do not collect market intelligence. All of our intelligence is derived from internal (and outbound) communications. As you said most schemes are run through middle men, so there are always points of contact between the company and the entity taking the bribe. And yet company communications are seldom analyzed (mainly because of the sheer volume) or if they are, audits are conducted using a 1% sample. We have developed a solution where we can audit 100% of the company’s communications, extremely cost-effectively, to uncover the schemes which as you say are “not on the books”.

  2. Pingback: How well do you know your Partners and 3rd Parties? « catelasblog

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