Digital case study

How a global electronics company leveraged technology to overcome integrity and internal control lapses related to fraud and corruption

 

PwC helped a global electronics company introduce technology solutions to address integrity risks on a global scale.

 

Client: Global electronics company
Our Role: PwC helped to introduce new policies, procedures, internal controls and technology solutions to address integrity risks on a global scale.
Industry: Technology, Media and Telecommunications
Services: Forensics, Crisis Management, Risk Compliance and Governance
Integrated Solution: Anti-Bribery/Anti-Corruption

 

 

 

 

Situation

Could the client rebuild trust and deter future integrity violations through a reliable governance framework?

Integrity violations, such as fraud and corruption, are serious governance challenges that threaten all large multinationals. Our client, a global electronics company, found itself facing corruption allegations when it was discovered that salespeople at one of its subsidiaries had been concealing payments to third parties and improperly retaining consultants. Hit with significant fines by the U.S. Department of Justice (DOJ) and Securities Exchange Commission (SEC) under the Foreign Corrupt Practices Act (FCPA), the client swiftly and promptly moved to revamp its global anti-corruption compliance program in order to enhance its ability to prevent, detect, investigate, and remediate similar acts of misconduct in the future.

After resolving the matter with regulators, our client approached us to assess its anti-corruption compliance program and support the client’s efforts to strengthen its anti-corruption posture across its businesses around the globe. The company didn’t just want to align its working protocols with various laws and regulations, it wanted to actively demonstrate its position as a transparent company with high integrity around its business practices, safeguarding the company’s brand and reputation. Leadership knew it needed experienced advisors and solutions that would help the company interpret and implement the requirements of international compliance standards in ways that would be practical, workable and sustainable.

“On the heels of a regulatory settlement over its past working practices, our client agreed to enhance its anti-corruption compliance efforts and, on this basis, the company developed and is now implementing an effective anti-corruption compliance program that aligns with applicable laws, regulations, standards and leading practices. Even more importantly, they are actively promoting a culture of compliance across the company that supports their strategy and values.”

George W. Prokop, PwC Principal

Solution

PwC helped to introduce new policies, procedures, internal controls and technology solutions to address integrity risks on a global scale

Our multidisciplinary team handpicked for this engagement was comprised of professionals with a broad level of knowledge and skills, including extensive technical, regulatory, and industry experience. The team began the engagement by assessing the adequacy and effectiveness of the existing anti-corruption compliance program, benchmarking it against leading industry standards and regulatory guidance, including that from the DOJ and SEC, and ultimately identifying the company's regulatory and compliance risk exposure. Our goal was to design an effective governance and organizational compliance framework, develop robust compliance policies and procedures, and implement creative technology solutions that included the development of a web-based application to centralize all compliance risk management tasks. Collectively, our regulatory compliance experiences and our technology solutions enabled the company to enhance awareness among both management and employees of key corruption-related compliance risks through advanced communication and training thereby positioning employees to monitor the effectiveness of the compliance program on an ongoing basis.

Beyond the tactical compliance program requirements, our team engaged the client’s stakeholders – conducting research and interviews in several worldwide markets – to develop a deep understanding of the existing corporate culture and the company’s compliance experience and infrastructure. Our approach was to guide the client as they refined their own vision of what the optimal anti-corruption program should look like. We helped them set well-defined and realistic objectives and, in one such example, steered them towards a framework in which the potential risk of corruption of any given vendor could be quantifiably assessed.

These efforts were incorporated into our proprietary web-based tool, Third Party Tracker (TPT), which gives the client the ability to determine the potential compliance risks presented by any given vendor. TPT (which was customized to support more than 20 leading languages) is a third party risk management tool that helps with the due diligence process when onboarding a third party (in this case, for vendors selling products or services to the client). As part of the onboarding process, the third party passes through a series of steps, answering questions that help to automatically rank their bribery and corruption risk. The companies and individuals associated with the third party are then analyzed through a variety of syndicated compliance databases. TPT consolidates the information gathered through the onboarding process and presents it to the client’s legal and compliance team, which can approve or reject the vendor. The team can also request the performance of additional due diligence reviews by PwC’s Global Intelligence team through the tool. Finally, the system records user activity providing a roadmap of requests and approvals enhancing oversight, monitoring and auditability.

Results

Our client successfully transformed its risk and governance operations

During the course of our engagement, it became evident that the client needed more than just an assessment and evaluation of its current compliance program and corruption risk profile. It needed help implementing our recommendations to enhance the company’s efforts to mitigate future corruption risks and emerge stronger from its regulatory experience.

With our assistance, the client restructured its global anti-corruption compliance organization and framework to more effectively identify, assess, and respond to corruption risks, and it’s now leveraging technology on a global scale to enforce its anti-corruption policies and more capably manage these risks. These systems have since become essential tools for the client, and it is actively using TPT to promote transparency and compliance across its population of third-parties.

Over time, our team became increasingly integrated with the company’s global compliance office: (a) facilitating compliance risk assessments across certain subsidiaries targeted at identifying potential risks and promoting awareness among local leadership, (b) conducting compliance-oriented site visits to assess specific risks at businesses operating in high-risk markets, and (c) developing training videos, manuals, and other materials to help the client’s employees better understand anti-corruption strategies and tactics – all crucial tools that will help the client should it come under future regulatory scrutiny. Most importantly, our engagement has given the client’s stakeholders a much greater awareness of the risks of corruption, an awareness that stretches from the rank and file to the executive suite.

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George Prokop

George Prokop

Principal, PwC US

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Reggie Walker

Reggie Walker

Partner, Global Salesforce Alliance and Competency Leader, PwC US