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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
A Shared-Cost Approach to Anti-Bribery Compliance
Alexandra Wrage
President, TRACE International
12th Annual Compliance & Ethics Institute
©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Alexandra Wrage President TRACE International, Inc.
Contact Information [email protected] (410) 990-0076
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
FCPA & Anti-Bribery Enforcement
> Over 90 companies are currently the subject of an ongoing and unresolved FCPA-related investigation
> High dollar cases continue (Total fourth largest case in the history of FCPA enforcement)
> Rise of international, multi-agency cooperation
> Nearly 90 percent of FCPA cases involve conduct by 3rd parties
> More is expected of companies and their third parties each year
> Improving transparency across supply and marketing chains requires collaboration
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
The Cost of Non-Compliance
Wal-Mart Bribery Probe
> FCPA-related professional fees and expenses approximately $1.25 million per working day
> $73 million in its first fiscal quarter of 2014 on probe
> $44 million on the investigations
> $29 million on a global compliance review and organizational enhancements
Total
> Fourth largest case in the history of the FCPA
> $398.2 million in total monetary sanctions
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Risks Associated with Third Parties
An Evolving Landscape
> Corruption and bribery
> Money-laundering
> International sanctions
> Forced and trafficked labor
> International crime
> Conflict mineral usage
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Time to Rethink Our Current Approach to Anti-Bribery
> Increasing number of international business partners
> Expanding risks: companies held accountable for a growing number of compliance issues
> Organizations are struggling to remain within “best practices”
> Third parties that want to embrace compliance are often confused about conflicting messages
> Cumulative effect: expense & waste
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
New Approach to Due Diligence
>No waste
>No duplication of effort
>No needless expense for identical processes
>The comfort of working to a common standard
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Portable Due Diligence A New Approach to Due Diligence
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
What is Portable Due Diligence?
> “Portable” reporting represents an evolution in due diligence
> Third parties complete due diligence process – to a high standard – one time per year at the entity’s expense
> Portable due diligence helps companies realistically manage risk across thousands or tens of thousands of suppliers
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Portable Due Diligence Benefits
> Shifts the burden of screening third parties away from companies
> Eliminates most of the expense and delay associated with the vetting process
> Enables third parties to share their verified due diligence information with all of their business partners
> Offers ongoing monitoring of third party relationships with daily screening of names against international sanctions and enforcement lists.
> Provides certified intermediaries with a valuable business credential and companies with the confidence they are looking for in selecting business partners
> Simplifies third party recertification process for companies
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Portable Due Diligence Solutions
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Transparent. Efficient.
> Based on social media principles, this global online platform captures, assesses, and shares baseline due diligence information on organizations and individuals across complex supply chains and assigns a universal ID number (TRAC number) to all approved applicants.
> A detailed review, analysis and approval process than enables candidates to own their verified due diligence reports. Candidates are required to complete a mandatory anti-bribery online training course and update their due diligence information annually.
Together TRAC and TRACEcertification provide companies and their business partners with a practical and comprehensive solution to
supply chain compliance.
©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Transparent. Efficient.
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
What is TRAC?
TRACE Registered Access Code
1-23-456-7891-12
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> Unique identifying number for individuals, companies, partnerships, SOEs
> Linked to web profile of key identifying documentation and information
> Meets basic due diligence, know your customer, and screening standards
> Names searched against all relevant government watch lists
> Standardizes the information gathered globally for vendors, suppliers and low risk intermediaries on and third-party platform
©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Why Do We Need TRAC?
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Efficient
> the burden on companies and individuals to identify themselves repeatedly is growing
Reliable
> the burden on companies, banks, charities, airlines and others to confirm, reliably, the identification of partners and suppliers is growing
Free to access
> the expense of implementing due diligence at this level is preventing companies from acting
©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Who Can Get a TRAC?
> any company, entity, charity, business association or individual committed to transparency and improving their efficiency;
> most useful for suppliers, vendors, and other intermediaries to prove their identity, and verify their location;
Relying on TRACE’s traditional shared‐cost compliance model, entities receive a TRAC number and profile which will be available at no charge to anyone the TRAC‐holder designates
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Who Uses TRAC?
> the TRAC holder company, entity, charity, or individual uses the TRAC system to demonstrate transparency and improve their efficiency managing compliance;
> companies use the TRAC system to vet their supply chains and bring discipline to their procurement process by requiring partners and suppliers to obtain a TRAC;
> banks use TRAC to meet their know their customer requirements
> companies and private equity firms for initial screen on acquisition targets
> Other uses: identification program in aid programs, clinical trials, etc.
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
How Does a Company Gain Access to Another’s TRAC?
> only with approval of the TRAC-holder;
> TRAC-holder provides the permission;
> receive individualized link by email;
> company can then view / print the compliance profile
TRAC-holder may allow access to their TRAC profile for as little as 24-hrs or as long as several years depending on the nature of their relationship
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Getting Started
> there is no charge to use as a compliance tool; TRAC holders pay US$80;
> identify a manageable set of initial vendors or business partners; need a list containing only a name and email address;
> get set up as a multinational company user of TRAC and send a custom message through the TRAC system to your supplier list that also contains model language explaining the TRAC process and directing them to the TRAC site to apply for a TRAC number;
> require TRAC number as part of accounts payable process;
> review TRAC profiles as necessary or in accordance with internal compliance program and expand use of TRAC on suppliers and business partners
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide 19
©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
What is TRACEcertification?
> TRACEcertification is a detailed due diligence review designed for medium-to-high risk third party intermediaries
> Includes a requirement to complete anti-bribery training
> Candidates are required to update their due diligence information annually
> A review that reaches completion results in the certification of the candidate by TRACE
> Certified third parties own their verified due diligence reports and have the ability to share them with an unlimited number of global partners
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
What does a TRACEcertification Report Include?
> Red flags identified
> Comprehensive anti-bribery questionnaire
> Company literature collected and reviewed
> Business registrations
> Names and CVs for owners, directors, and key employees
> Contact information for three business references
> Financial reference
> A signed Anti-Bribery Code of Conduct
> Reputational screening
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Why Do We Need TRACEcertification?
> The need for unbiased, trustworthy reporting on global business partners has never been greater as both compliance expectations and expenses rise.
> Corporations can no longer bear the expense in time and dollars of obtaining due diligence reports on every single business partner around the globe with whom they work.
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Value of TRAC and TRACEcertification to Large Multinationals
> Reduce costs and labor along the supply and marketing chain
> Provide ongoing monitoring of third party relationships with constant screening of names against international sanctions and enforcement lists that are updated every 24 hours
> Mitigate risk across complex supply and marketing chains
> Turn supply chain compliance into a reality for corporations with thousands or hundreds of thousands of suppliers
> Corporations pay nothing to access verified due diligence information
> Provide compliance certifications on issues such as anti-bribery, forced labor, and conflict minerals
> Encourage supply chain entities to think about compliance issues and their reputation
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Value of TRAC and TRACEcertification to Suppliers and Intermediaries
Save time and enhance reputation
> Efficiently distribute information without duplicating the labor-intensive vendor qualification process.
> Promote transparency to third party companies and enable them to control and disseminate their identifying information to partners.
> Marketing value in demonstrated transparency
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Other Cost-Effective Anti-Bribery Solutions
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Ascertaining Best Practices
> The OECD’s Good Practice Guidance http://www.oecd.org/investment/anti-bribery/
> U.K. Serious Fraud Office Guidance http://www.sfo.gov.uk/bribery--corruption.aspx
> DOJ & SEC Resource Guide to the Foreign Corrupt Practices Act http://www.sec.gov/spotlight/fcpa/fcpa-resource-guide.pdf
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Written Policies
UNODC Database (www.unodc.org)
> Anti-corruption policies and measures of the Fortune Global 500
UN TRACK (www.track.unodc.org)
> Tools & Resources for Anti-Corruption Knowledge
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Written Policies
Gift and Hospitality Guidelines
> The US Department of State maintains per diem thresholds for almost all cities, broken down by meals, accommodation and incidentals.
> http://aoprals.state.gov/web920/per_diem.asp
Facilitation Payments
> Expensive and risky
> Flat prohibitions can save companies money
> Guidebook: The High Cost of Small Bribes
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Training Tools
Webcasts and Videos
> A combination of on-line training and webcasts can be very cost-effective.
> Webcasts: an opportunity to ask questions, which can educate trainers on specific challenges that employees face.
RESIST Training Tools
> Pamphlet providing brief scenarios aimed at training employees to avoid extortion & online video tool (www.icc-france.net)
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Training Tools
TRACE Training Video
> Toxic Transactions: Bribery, Extortion & the High Price of Bad Business
Ethicana (www.ethicana.org)
> Video on corruption in the construction industry
Global Infrastructure Anti-Corruption Center (GIACC) Anti-Corruption Training Manual
> Training manual designed for infrastructure, construction, and engineering sectors.
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
FREE Anti-Corruption Resources
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Resources
TRACE Compendium
> Fully searchable database of comprehensive summaries of case law.
> 2012 TRACE Global Enforcement Report – trends by country and by industry
> Online center for anti-corruption news
> For qualified nonprofits, TrustLaw will link organizations with lawyers willing to represent them in corruption-related matters.
TrustLaw
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
Resources
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OAS’s Anti-Corruption Portal of the Americas
> Provides model laws, training programs and tools categorized by topic.
Group of States Against Corruption (GRECO)
> Offers resources for sharing best practices, as well as reports on anticorruption legislation and enforcement in member states.
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©2013 TRACE International, Inc. Raising the Standard of Anti-Bribery Compliance Worldwide
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Questions?
Visit TRACnumber.com to use your FREE TRAC Code: SCCE2013
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