Table of Contents
Preface xiii
About the Contributors xvii
Chapter 1 Managing Corruption Risk 1
You are Not Alone 2
Bribery and Kickbacks 2
Economic Espionage 2
Money Laundering 3
Developing Effective Compliance Programs 3
Performing Due Diligence 4
Chapter 2 What is Anti-Corruption? 5
Anti-Corruption Detection and Prevention 5
Critical Elements of an Effective Compliance Program 6
Governance and Oversight 9
Chapter 3 U.S. Efforts to Combat Global Corruption 11
The Emergence of Nongovernment Organizations 12
World Trade Organization 13
Global Forum on Fighting Corruption 13
International Financial Institutions 14
International Chamber of Commerce 15
Transparency International 15
Global Corporate Governance Forum 15
The Role of Civil Society 16
The Emerging Markets 16
Chapter 4 U.S. Laws Governing Corruption 19
Racketeer Influenced and Corrupt Organizations Act 19
RICO Offenses 20
Sherman Antitrust Act 21
Anti-Kickback Act of 1986 22
Economic Espionage Act of 1996 23
Chapter 5 The Evolution of the Foreign Corrupt Practices Act 27
Background 27
Anti-Bribery Provisions 29
Third-Party Payments 31
Facilitating Payments 32
Sanctions against Bribery 33
Chapter 6 Internal Controls and Accounting Provisions of the FCPA 35
FCPA Accounting Provisions 36
Failed Controls 36
Controls Assessment 37
Conclusion 38
Case Study: Rolling on a River 39
Chapter 7 Do Not Crimp: The Need for Oversight of Foreign Operations 43
Pitfalls of Emerging Markets 44
Monitoring Behavior 45
Education and Communication 46
Extending the Tone from the Top beyond the Borders 47
Case Study: Bribes in the USSR 47
Chapter 8 The Human Factor 49
Why Focus on Fraud and Corruption Risk? 50
Behavioral Root Causes of Fraud and Corruption 50
Psychology of Fraud Perpetrators 51
Understanding Management Fraud 51
Approaches to Deterring and Mitigating Financial Fraud Risk 52
Chapter 9 Corporate Governance: The Key to Unmasking Corrupt Activity 55
Enterprise Risk Management: Create Stronger Governance and Corporate Compliance 55
Mitigating Risk 57
Ascertain Risk Areas 58
Establishing Procedures to Mitigate Risk 59
Perform a Periodic Assessment 60
Blowing the Whistle on Corporate Fraud 60
Chapter 10 Whistle-Blower Programs 61
Pulling Out the Earplugs 62
Understanding Stakeholders and Their Needs 63
Steps of the MACH Process 67
Monitoring the MACH Process 78
Conclusion 79
Appendix 81
Chapter 11 Document Retention 83
Create, Communicate, Monitor 84
Reduce Risk through Technology 84
Computer Crime 85
The Most Common Computer-Related Crimes 85
The Value of Stored Data 86
Chapter 12 Information Security: Intellectual Property Theft is Often the Result of Government Corruption 87
Information Security Audit 89
Classification of Information 89
Division of Responsibilities and Duties is an Effective Strategy in Protecting Trade Secrets 90
Information Security Control Officers or Custodians 90
Use of Confidential or Proprietary Markings 91
Document Destruction 91
Education and Training 91
Background Checks 92
Confidentiality Agreements 92
Employee Orientation 92
Separation Plans 93
Physical Security 94
Systems Security 95
E-Mail Policy 99
Internet Policy 100
Solicitations for Information 100
Seminar/Tradeshow/Off-Site Meetings Policy 101
Joint Venture/Vendor/Subcontractor Procedures 101
Contractual Provisions with End Users 102
Action Plans 103
International Protection Issues 104
Information Security Policy 104
Chapter 13 Anti–Money Laundering: The USA PATRIOT Act 105
Current State of AML in the Global Marketplace 106
Case Study: The Boys from Brazil 109
Chapter 14 Procurement Fraud: Detecting and Preventing Procurement and Related Fraud 111
Kickbacks 112
Vendor Fraud 113
Bid Rigging 113
Defective Pricing and Price Fixing 114
Contract Fraud 116
Cost/Labor Mischarging 118
Case Study 1: Employee Fraud 120
Case Study 2: Vendor Kickbacks and Collusion 121
Conclusion 121
Chapter 15 Construction Fraud: Monitoring, Mitigating, and Investigating Construction Fraud 123
Common Construction Company Fraud Schemes 124
Combating Fraud and Corruption 126
Strengthen Your Internal Controls 126
Chapter 16 Special Investigations: How to Investigate Allegations of Corruption 129
An Interested Party: The Auditor 130
The Special Investigation 132
Chapter 17 Navigating the Perils of the Global Marketplace 135
FCPA Enforcement 135
Record Keeping 138
Data Collection and Processing 139
Transborder Data-Flow Issues 139
Chapter 18 Case for Collective Action: The World Bank Initiative 143
Why Collective Action against Corruption? 143
Different Views of Corruption 144
Business Costs of Corruption 144
Costs of Corruption for Industries, Economies, and Countries 145
Different Views of the Private Sector 145
Corruption Dilemma 146
Chapter 19 Leveling the Playing Field 157
Book Research Summary 161
Index 165
