The Foreign Corrupt Practices Act of 1977 (FCPA) prohibits making—or even offering to make—any corrupt payment to foreign officials to further business interests. However, concerns about corruption stem back to the times of our nation’s founding fathers. Our attitude toward bribery has not changed in the ensuing two centuries, but the tools we use to detect and validate allegations certainly have.
In 1779, one of the earliest political scandals of the new republic arose. It involved Silas Deane, who served as a commissioner charged with secretly obtaining French support—including uniforms, armaments, and money—for the Revolutionary War. Though successful in his mission, Deane was later accused of billing the U.S. government for aid that France had offered as a gift and of promising French officials better military commissions than American officers. Unfortunately, Deane failed to keep accurate records, and neither Congress nor Deane could prove or disprove the accusations. Despite the lack of evidence and suggestions that the informant had lied about Deane’s transgressions, the scandal destroyed Deane’s career. Sixty-one years later, Congress completed an audit of Deane’s accounts and cleared his name.
Today, far superior options are available for unearthing corruption involving foreign officials. Even so, internal audit detects a paltry 14 percent of corporate fraud, according to the Association of Certified Fraud Examiners’ 2014 Report to the Nations on Occupational Fraud and Abuse. This figure is likely attributable to organizations relying on traditional tools that are not sensitive enough to recognize the elusive indicia of bribery that are often found in unstructured data and communications between employees, third-party partners and others—such as email, chat, messaging and social media. Additionally, employees who engage in corrupt behavior often conceal their actions with innuendo, making it difficult to use traditional search methods, such as keywords, to identify telling documents.
Newer, more advanced analytics are needed to search the unstructured data where evidence of corruption is most likely to lurk. Analytics can provide actionable hindsight in the case of litigation or a regulatory investigation (descriptive diagnostic), actionable foresight (predictive, prescriptive) and enhanced control (proactive, real-time). Consider some of the following tools and their uses:
- Linguistic analysis highlights instances where words and phrases with similar meanings are used to discuss suspicious activity.
- Concept clustering isolates similar documents and highlights subtle patterns among them.
- Data visualization can analyze relationships between employees, vendors, and foreign officials, and the who, what and when of e-mail communications.
- Technology-assisted review can leverage machine learning and human expertise to automate the prioritization of data for review based on likelihood of containing relevant information.
Data analytics is increasingly important for companies to employ as the DOJ and SEC continue to enforce the FCPA vigorously. Last year was the second-highest year on record for FCPA penalties, and the SEC is still following its “broken windows” strategy, meaning no infraction is too small for investigation and prosecution. But, even with this aggressive approach, the agencies still consider organizations’ timely self-disclosure and remediation of misconduct in assessing fines. Therefore, constant vigilance is important.
As we celebrate Presidents’ Day, George Washington’s words from more than two centuries ago echo even louder today: “Few men have virtue to withstand the highest bidder.” Fortunately, unlike Washington’s congressional colleagues, we now have sophisticated tools to identify high-risk transactions, monitor business relationships, and combat corruption.
About the AuthorMore Content by Bill Mariano