- 1. ANTI-BRIBERY & CORRUPTION FOR EMERGING
ECONOMIESCompliance Advisory, Risk Assessment and Due Diligence
InvestigationsPRESENTED BYKim Marsh, CFE, CAMSExecutive VP,
International Operations33 Cavendish SquareLondon, UK W1G 0PWPhone:
44 (0) [email protected]
2. Margin CallThere are three ways to make a living in this
business: be first, be smarter or cheat. John Tuld (Jeremy
Irons)CEO of fictional investment bank in Margin Call (2011) 3.
About IPSA International, Inc. IPSA International, Inc. (IPSA) has
a 20-year history of successfully completing complex
multi-jurisdictional investigations in the areas of:
Anti-MoneyAnti-Bribery & Laundering Corruption
LitigationInvestigative SupportDue Diligence Assignments include
large-scale Criminal, White Collar and Financial Investigations for
multinational corporations, banking/financial institutions and law
firms. 4. Track Record Mid-size Firm > Top-tier Experts >
Competitive Rates Preferred AML service provider to 5 major
international banks Research capabilities in 20 languages Resources
in over 75 countries Emerging markets expertise in Former Soviet
Union, LatinAmerica, Middle East, Nigeria, China & Taiwan
Offices in New York, London, Phoenix and Vancouver 5. TeamDan
Wachtler, President & CEO - 20+ yrs industry veteran;
large-scale AML remediation for globalfinancial institutions;
security program development, international due diligence,
off-shore assetlocation.Kenneth (Kim) Marsh, CAMS, CFE, Executive
V.P. International Operations - 35+ yrs industryexpert, due
diligence investigations, 25 yrs RCMP Organized Crime Unit focus on
large-scale moneylaundering.Robert Weiner, JD, CIPP, Managing
Director & Regional Counsel - 20+ yrs legal, investigation
andcompliance. Former Director BDO consulting; specialist in
anti-bribery/corruption, focused on US FCPAand UK Bribery Act, and
litigation support.William Goss, CAMS, Senior Director Anti Money
Laundering - 25+ yrs AML investigations, duediligence and fraud.
Charter officer of RDC, an AML/EDD database by 20 global financial
servicescompanies including Goldman Sachs, Morgan Stanley,
Citigroup and Bank of America.Jim Oakes, CFCI, CFE, Senior AML
Consultant - 30+ yrs experience investigating international
fraud,AML and financial crime prevention with Citigroup, Barclays,
Standard Chartered Bank, GE Money andAbbey Santander. Regent of the
Board of the ACFE.Robert Cone, MBA, Managing Director, Special
Projects - 25+ yrs senior manager with internationalbanks in
treasury and broker dealer functions, foreign exchange, derivatives
and money markets. 6. ServicesAnti-Money LaunderingIntelligence at
Work AML services for a wide array of organizationalconditions,
business lines, geographic markets, regulatory situationsand
implementation timetables.Investigative Due DiligenceIntelligence
at Work Investigative Due Diligence services delivercredible and
timely intelligence to support corporate decision makingon
acquisitions, investments, business partners, clients,
supplychains, competitors, employees and board members.Litigation
SupportIntelligence at Work Litigation Support group designs,
manages andconducts comprehensive investigative solutions for
commerciallitigation, financial and fraud investigations,
regulatory proceedingsand dispute resolution. 7.
ServicesAnti-Bribery & Corruption Due Diligence Compliance
advisory, risk assessment and due diligence investigationsfor
corporations, investment banks, private equity & hedge funds
Defensible procedures for M&A, investments, litigation support
andregulatory enforcement proceedings Initial assessment, key
interviews, evidence gathering andanalysis, reporting and
implementation of remedial action Conducted in accordance with
provisions of the FCPA, the U.K. BriberyAct & anti-corruption
laws of OECD signatory countries 8. ServicesEmerging Economies Due
Diligence Advanced investigative capabilities and established
network of well-placed, highly credible in-country resources Access
to expertise and information not readily available - one of
thegreatest challenges encountered in emerging economies due
diligence Due to the volume of requests from our clients, we excel
in the followingcountries:Argentina, Brazil, Chile, Colombia, Peru,
Venezuela and Mexico in LatinAmerica; Russia, Ukraine and
Kazakhstan in the Former Soviet Union;China and Taiwan in Asia;
Nigeria in Africa; and UAE, Qatar, SaudiArabia and Egypt in the
Middle East. 9. Regulation & Enforcement Increasing
globalization of Anti-Bribery & Corruption regulations
Collaborative cross-border investigations and aggressive
internationalEnforcement Requirements to Conduct Anti-Bribery and
Corruption Due DiligenceAcross Multiple Jurisdictions Risk of
Criminal & Civil Penalties for Corporations,
Directors,Management and Individuals Fines, Litigation, Debarment,
Reputational and Financial Damage See Appendix for Comparison of
U.K. Bribery Act & U.S. FCPA 10. Global RegulationU.S.
ForeignOECD Anti- Council of Africa UnionRussian Anti-U.S. SEC
Dodd-Corrupt BriberyEurope Convention on Bribery Laws Frank
ExtractionPractices Act Convention Convention Preventing
&(Amended Issuers/ Conflict OECD(1977)(1999) on
CorruptionCombating 2011)Minerals (2012) (2002-2003)Corruption
(2006) 1977 . . . .1997 1999 2002 2005 2006 2010 2011 2012 . . 2013
Inter-AmericanCanadaUN ConventionU.K. BriberyChinese Anti-
ConventionCorruption of AgainstAct (2010)Bribery Laws Against
Foreign PublicCorruption (Amended CorruptionOfficials Act
(UNCAC)2011) (1997)(1999)(2005) 11. Commonly Encountered
RisksCountry RiskPerceived high levels of corruption, absence of
effectively implemented anti-bribery legislation andfailure of
foreign government, media, local business community and civil
society to promotetransparent procurement and investment
policies.Sectoral RiskSome sectors are higher risk than others.
Higher risk sectors include the extractive industries and
largescale infrastructure sector.Transaction RiskCertain types of
transaction give rise to higher risks, for example, M&A
transactions, licences andpermits, transactions relating to public
procurement and charitable or political contributions.Business
Opportunity RiskSuch risks might arise in high value projects or
projects involving many contractors or intermediaries;or projects
not apparently undertaken at market prices, or which do not have a
clear legitimateobjective.Business Partnership RiskCertain
relationships may involve higher risk, for example, the use of
intermediaries in transactionswith foreign public officials;
consortia or joint venture partners; and relationships with
politicallyexposed persons where the proposed business relationship
involves, or is linked to, a prominent publicofficial. 12. Emerging
Markets Risk Dependence on large government contracts, critical
licenses andpermits Reliance on agents, distributors and
third-party intermediaries toobtain business or secure
licenses/permits Off-the-record payments to facilitate contracts
& licensing Foreign public officials associated with
intermediaries & customers Unusual payment arrangements and
excessive commission structuresfor subsidiaries, intermediaries
& third-parties Payments made to offshore entities Differing
cultural values and social realities 13. Third Party RiskThird
party intermediaries have been identified as the greatest risk
toenforcement of anti-bribery and corruption regulations. (Source:
KPMG, 2012)Analysis of U.S. SEC and DOJ enforcement actions
indicate alleged use ofthird-party intermediaries to pay bribes to
foreign governments increasedto: 100% of U.S. FCPA enforcement
actions, from 42% in 2005. (Source: Sherman & Sterling,
2012)Conducting adequate due diligence on third partyintermediaries
is one of the six guiding principles of the U.K.Bribery
Act.(Source: SFO, 2010) 14. IPSA International, Inc. Compliance
Advisory, Risk Assessment and Due Diligence Investigations In-depth
investigation of principals, management, subsidiaries, supply
chains and intermediaries Background and reputational checks to
establish prior association with bribery, corruption, money
laundering and fraud Payments to host governments, off-shore
entities and related-party transactions Arrangements for securing
high-value licenses, permits and contracts Use of middlemen and
off-shore vehicles to hide beneficial ownership and financial
information 15. Third Party Due DiligenceRisk Assessment
determinesIdentifythe extent of Due Diligence Reviewrequired.Six
Stages for conductingDue Diligence on:Due Diligence Risk M&A
Targets Assessment JV Partners Monitor- High Level - Investors
Process Principals Management Board Members Subsidiaries Audit
Research Supply Chains Intermediaries 16. Third Party Due Diligence
Process ReviewThird-Party Collect documents from third-Identify
party (incorporation docs, etc)Risk AssessmentSimplified Due
DiligenceHigh Level Due Diligence(Low Risk) (High Risk) Company
CheckPerson Check Company Check Person CheckKey company data ID
VerificationKey Company DataID verificationSanctions &
WatchlistsPEPsSanctions & Watchlists PEPsSenior
ExecutivesSanctions & Watchlists Negative News Associates
Person Checks on all Sanctions & Watchlists Directors
Directorships Person Checks on Key Shareholdings
ShareholdersNegative NewsReport Monitoring and Review 17. Summary
Industry leader in risk management Senior multi-disciplinary team
with deep emerging markets expertise Decades of experience
conducting complex white collar crime, anti-briberyand corruption,
and AML investigations across high risk sectors andgeographic
regions Network in 75 countries, research capabilities in 20
languages Ready access to expertise and resources not available
in-house Offices in U.S., U.K. and Canada 18. Contact UsPRESENTED
BYKim Marsh, CFE, CAMSExecutive VP International OperationsIPSA
International, Inc.33 Cavendish SquareLondon, UK W1G 0PWPhone: 44
(0) 207 182 4098Email: [email protected] New York | London |
Phoenix | Vancouver800-997-4772 | www.ipsaintl.com 19. Appendix 20.
Transparency International :: 2011 Corruption IndexVERY CLEANHIGHLY
CORRUPTNatural resources are often located in countries that rank
as highly corrupt on Transparency Internationals Corruption
Index.For example Venezuela, Russia, Guinea, Democratic Republic of
Congo, Nigeria, Nicaragua, Mongolia and Kazakhstan all scored
lessthan 2.9 on the 2011 Corruption Index. By contrast, the U.K.
scored7.8 21. Extractives IndustryExtractive Industries
TransparencyU.S. Dodd-Frank Wall Street Reform Act (2011)Initiative
(EITI, 2002) SEC approval of Section 1504Voluntary regime of 35
participating countriesOil, gas and mining companies listed on a
U.S.calling for disclosure by oil and gas, mining exchange are
required to disclose what they payand timber companies of payments
made toto foreign governments as part of their annualgovernments to
further the commercial filings to the Securities and Exchange
Commission.development of their resource projects.U.S. Foreign
Corrupt Practices Act (1977)UK Bribery Act (2011)U.S. headquartered
multinational companies areCovers overseas operations of firms
doing held to a higher standard of forgoing bribery evenbusiness in
the UK, requires companies to havein countries where it is
commonplace.adequate provisions against briberyKimberley Process
(2003)Any company that carries on a business in the UKcan now incur
liability for the corrupt actions As of January 2012, 76 countries
committed to KP(anywhere) of rogue employees or associated which
sets out requirements for controlling roughthird parties, even if
the companys management diamond production and trade to stem the
flow ofknew nothing about the bribery.conflict diamonds. 22. U.K.
Bribery Act versus U.S. FCPAProvisionU.K. Bribery Act U.S.
FCPABribeNot limited to foreign officials Only bribes (anything of
value), Prohibits bribes paid to any person to paid or offered to a
foreign induce them to act improperlyofficial are prohibited
Advantage ObtainedFocuses on Improper action ratherPayments must be
to than commercial advantage or obtain or retain business benefit
(except in strict corporate liability).Active vs. Passive Two
offenses: (1) Active Offense Passive Offense only the act of
Offense of bribing another; and (2) Passive payment, rather than
the Offense of being bribed receipt/acceptance of payment
isprohibitedCorporate Strict A new strict liability corporate
Strict Liability only under Liability offense for failure of a
commercialaccounting provisions for public entity to prevent
bribery - subject to companies failure to maintain defence of
having adequateadequate systems of internal procedures designed to
preventcontrols. bribery in place. 23. Continued Provision U.K.
Bribery Act U.S. FCPAJurisdiction Organizations that are either
U.S. citizens and companies, foreign established in the UK or
conductcompanies listed on a U.S. stock some part of their business
in theexchange, or any individual acting UK; and individuals who
are UKwhile in the U.S. nationals or are ordinarily residents in
the UKEnforcement Criminal enforcement only by theBoth criminal and
civil proceedingsCivil / Criminal UK Serious Fraud Office (SFO) can
be brought by SEC and DOJ Potential Penalties For individuals, up
to 10 yearsBribery: for individuals, up to five imprisonment and
potentiallyyears imprisonment and fines of up unlimited fines; for
entities,to $250,000; for entities, fines of up potentially
unlimited fines to $2 million. Books and records/internal control
violations: for individuals, up to 20 years imprisonment and fines
of up to $5 million; for entities, fines of up to $25 million.
Source: VistaLaw 24. ContinuedProvision U.K. Bribery Act U.S. FCPA
Facilitation Payments No facilitation paymentsException for payment
to a exception, although guidance is foreign official to expedite
or likely to provide that payments ofsecure the performance of a
small amounts of money areroutine (non-discretionary) unlikely to
be prosecuted government actionPromotionSuch expenditures are
arguablyAffirmative defence for Expendituresnot improper and
therefore notreasonably and bona fide a Bribery Act violation. No
similar expenditure directly related to defence to FCPA the
business promotion or contract performance Allowable Under No
violation if paymentsAffirmative defence if payment is Local Law
permissible under written laws of lawful under written foreign
country applies only in laws/regulations of foreign cases of
bribery of foreign publiccountry official; otherwise a factor to be
considered Source: VistaLaw 25. Global Regulation U.S. Foreign
Corrupt Practices Act (1977) Inter-American Convention Against
Corruption (1997) OECD Anti-Bribery Convention (1999) Canada
Corruption of Foreign Public Officials Act (1999) Council of Europe
Convention on Corruption (2002-2003) UN Convention Against
Corruption (UNCAC) (2005) Africa Union Convention on Preventing
& Combating Corruption (2006) UK Bribery Act (2010) Russian
Anti-Bribery Laws (amended 2011) Chinese Anti-Bribery Laws (amended
2011) U.S. SEC Dodd-Frank Extraction Issuers / Conflict Minerals
(2012) 26. Transparency International (2010)Anti-bribery due
diligence is the research, investigation, assessmentand monitoring
that the company will carry out on businessrelationships to ensure
that it is associated with companies andpersonnel that will behave
in a manner consistent with the companysanti-bribery
programme.Source: The U.K. 2010 Bribery Act Adequate
Procedures(Transparency International)