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Fighting business corruption with computers

Evidence is becoming increasingly harder to destroy, says forensic accountant Peter Dent

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As a result of his time spent battling fraud and corruption within World Bank projects, Deloitte Partner Peter Dent is an anti-corruption specialist with global investigative experience. He began fighting crime as a member of the York Regional Police Service in Ontario, returning to university to study business and accounting. Peter subsequently joined Deloitte’s Edmonton office where he articled for his CA, obtaining the CA•IFA (Investigative & Forensic Accounting), CFE (Certified Fraud Examiner) and CPA (US Certified Public Accountant) designations along the way. During this period, Peter also spent several years uncovering corrupt activity — and millions in embezzled funds for grateful clients.

Helping clients with internationally honed investigative skills
When the opportunity arose to join the World Bank as the senior forensic accountant, Peter left Deloitte for Washington, D.C. He became the organization’s global resource for investigative accounting of fraud and corruption, also conducting investigations into allegations of corruption. “When a company is identified as having been involved in corrupt activities — such as the bribery of public officials or fraudulent activities that undermine the project — the impact on that company can be catastrophic,” says Peter. “The World Bank would disbar it from future business opportunities, and post that information on the web. As a result, the company’s worldwide reputation could be destroyed.” Peter’s deep immersion in stamping out corruption with the World Bank means his Deloitte clients benefit from international investigative skills that are second to none.

Navigating unfamiliar territory and identifying red flags
Frequently, Deloitte’s anti-corruption specialists use their experience and resources to help companies with global operations navigate unfamiliar territory. “These days if an organization enters into a new partnership — particularly in a foreign country — without proper due diligence, it’s a formula for disaster. Companies need to start by thoroughly checking out the organizations or people they plan to do business with before signing on the dotted line,” says Peter. On behalf of our clients, we look for:
• Unusual payment patterns or financial arrangements
• History of corruption in the foreign country
• Refusal to provide an anti-corruption, FCPA certification, or audit/inspection rights
• Unusually high commissions, management fees, gifts and entertainment
• Lack of qualifications, resources or business history
• Decentralized operations or history of acquisition without due diligence

Peter and his team are also fully versed in the complex and sometimes unpredictable regulatory requirements in jurisdictions around the world. “Governments are taking greater action to combat money laundering and bribery of public officials,” he says. “That means multinationals need to continuously monitor the activities of their local business partners to ensure adherence to local and international legislation.” However, he adds, finding out what the rules are and how they apply is tough to do without help from specialists.

Investigating under the CFPO, FCPA and other international legislation
Deloitte’s anti-corruption team is composed of former regulators and senior law enforcement officials, lawyers, Certified Fraud Examiners, statisticians, online database research specialists and computer forensics professionals. “Our team has the expertise needed to assist companies conducting or facing investigations under the Canadian Corruption of Foreign Public Officials Act (CFPO); the U.S. Foreign Corrupt Practices Act (FCPA); the U.K.’s Anti-Terrorism, Crime and Security Act, and the United Nation’s Convention against Corruption,” says Peter. “We also help clients develop anti-corruption policies and procedures, whistleblowing systems and internal controls — all of which help demonstrate to regulators that the company has done everything it can to mitigate the risks of fraud and corruption in its business processes.”

State-of-the-art equipment and expert testimony
Peter and his team often employ computer forensics to help clients determine whether corruption is a current problem or one in the making. With sophisticated labs in Edmonton and Toronto, Deloitte leads the other major Canadian professional services firms in this area. In these labs, the computer forensic analysts can conduct remote, unsullied investigations. “When you’re examining computer files, it’s critical that you don’t add your own fingerprints to the data,” explains Peter. “Our process allows us to take a snapshot of the entire computer — every sector and bit on the system, including visible, hidden, empty and deleted files. We can then work on these images in one of the labs without arousing suspicions at the client’s office — something that can undermine the investigation.” The information uncovered is used by clients to take action against the perpetrators, and Deloitte’s anti-corruption professionals are often asked to provide expert testimony during court proceedings.

The future of forensics is proactive
Peter and his colleagues believe that computer analysis is destined to become a new focus of internal control. “While there are many ways to hide or disguise improper behaviour electronically, completely removing or destroying the trail is becoming increasingly difficult. The tools for recovering and detecting misdeeds and ill-conceived business decisions are very sophisticated,” he says. “As the rules for accountability evolve, it’s likely that the use of computer forensics for more than after-the-fact allegations of criminal activity will increase significantly.”

Do you have mechanisms in place to detect and deter corruption?

  1. Have you assessed the risks of conducting business in each of your international locations?
  2. How robust are your internal controls for global procurement and anti-corruption?
  3. Do you have contingency plans for reacting to suspicions or allegations of corrupt acts?

If you’re concerned about your organization’s ability to identify and deal with corrupt business practices, we can help with a comprehensive assessment, or on an investigative basis.