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The big news in the compliance world lately has been the enormous costs associated with FCPA probes and Investigation for Fortune 500 companies. First, it was Walmart with costs over $400 million, related to an incident where Wal-Mart executives allegedly bribed Mexican officials to open up stores in prime locations in Mexico. Avon was also recently in the news because of their $135 million FCPA settlement for an offending incident in 2008. What do both of these incidents have in common? They could have been easily prevented through the use of an effective transaction monitoring program.
In the last quarter alone, Walmart’s FCPA and compliance-related expense topped $58 million. The good news is that figure is more than $10 million below previous estimates for the quarter, although Walmart’s CEO expects to pay another $200 million in FCPA related costs in fiscal year 2015. By the end of 2015, this would bring Wal-Mart’s total FCPA related costs to $650 million. This is a staggering amount of money, especially considering how something as simple as monitoring corporate travel and expense (T&E) transactions can identify risky behavior as it occurs. Companies can use that information to take immediate action, communicate with employees, and take steps to avoid the consequences of an FCPA investigation and all of the expenses that surround it.
Many avoid a continuous monitoring program because they fear it is too expensive for the monthly operating budget. This is a fallacy, as systems that perform this type of analysis rarely break the bank. Even for the largest global corporations, automated T&E monitoring and analysis systems costs less than $100,000 per year, and provides monthly monitoring that can effectively identify potential bribery and corruption. While $100,000 does seem like a high number, it isn’t when compared to the hundreds of millions spent on fees and fines related to an FCPA investigation.
What kind of system should you be looking for? The monitoring system should include automated logging systems that capture traveler responses to questions about their expenditures. The system should track reviews and investigations so businesses can demonstrate to the DOJ and SEC their diligence in identification and follow through. And these automated systems are able to identify links and trends that human and manual analyses can’t identify. Oversight Systems can do all of this and more through our Insights On Demand for FCPA product.
As large companies continue to expand and business becomes even more global in scope, corporations need to ensure they have systems in place to help with their compliance efforts. The truth is, corporate T&E systems are the easiest means for funneling funds for bribery and corruption. Few controls exist, and without diligent monitoring and analysis, it is possible for money to make its way for illicit purposes. Often, unusual behavior in T&E is an indicator of potential bribery and corruption, so it is important to have a total review process in place to protect your company.