Giving the boot to corruption

A leading American multinational that designs, manufactures, and retails footwear and sportswear around the globe faced a real risk. The company found it hard to comply with all the anti-bribery laws across 150 countries of its operations. Genpact conducted a thorough screening of vendors in high-risk countries, performed risk assessments to identify control gaps in key high-risk processes, and designed a comprehensive framework for anti-corruption monitoring to drive tighter compliance.

Working in more than 150 countries exposed the company to a significant risk of violating various anticorruption laws such as the FCPA.

Also, compliance was complicated by:

• A lack of mechanism and framework to screen new vendors or evaluate the client's 120,000 existing vendors for FCPA compliance
• Poor risk assessments hampering the identification and mitigation of corruption across critical processes
• Inadequate monitoring of high-risk spends, travel and entertainment (T&E) expenses, and promotional products
• The lack of built-in system controls to report and track high-risk transactions
• Absence of well-defined anti-corruption policies

After a compliance-focused risk assessment via a customized questionnaire rollout in seven high-risk countries, including China, Brazil and Mexico, we created a robust regulatory compliance and governance framework to track and mitigate all risks across geographies. We also designed a risk-based comprehensive vendor screening process, an analytics-driven review of high-risk spends, and a workflow-guided process for remediation, action-planning, and closing of all control gaps.

Here's how we performed the review:

Vendor screening

We designed and implemented a risk-based framework for screening vendors; along with system-generated reports and vendor risk ratings, it also included identifying risk drivers, escalating true hits, and following up and closing recommended actions for true hits.

As part of the screening, we also:

• Screened a database of about 120,000 vendors in high-risk territories to identify high-risk third parties with sanctions, bribery, or other charges of non-compliance and PEP/SOE links
• Conducted stress testing to finalize confidence limits, fuzzy search criteria, and other parameters to automate the screening process
• Reported potential true hits for review and action

Risk assessment

We captured the questionnaire responses from the process owners through the workflows that had built-in follow up and reminder capabilities. We also had follow-up calls, process discussions, and webinars to validate process understanding.

While performing risk assessment, we:

• Identified high risk processes from a compliance perspective across business entities
• Identified control gaps and improvement opportunities in processes such as complimentary or promotional products issuance, marketing spends, T&E, gifts, donations, and training
• Reviewed back-up and supporting documents to assess the operational effectiveness of the existing controls
• Identified root causes for control gaps and recommended remedial action to frame guidelines and reduce exposure to corruption risks
• Reported non-compliance via dashboards and followed up and tracked remediation action plans via workflow-based tool

Data analytics

Applying data analytics to tackle corruption was a key part of our framework, where we:

• Analyzed 100% of T&E and AP transactions, including complimentary and promotional product categories, using customized and corroborative algorithms to cover elements of fraud and regulatory compliance in addition to policy compliance
• Conduced a root cause analysis and remediation action planning via workflows

Genpact delivered more robust compliance in addition to significant savings by:

• Identifying system enhancements and creating separate expense categories for high-risk expenses
• Defining and implementing a global anti-corruption policy
• Identifying 24 potential blacklisted vendors doing business worth $10 million with the company and eliminating them

What's more, we also:

• Defined the regulatory compliance framework including risk assessment, transaction monitoring, and anti-bribery trainings
• Created a framework for periodic screening to report FCPA sanctions for existing vendors and recommended screening for new vendors
• Identified places in the marketing process where people were misusing complementary products
• Identified training needs for employees and third parties
• Identified policy improvement opportunities and created an enhanced control and compliance environment