Common Fraud in the Pharmaceutical Industry reported by whistleblowers

Pharmaceutical Fraud

Pharmaceutical fraud involves activities that result in false claims to insurers or programs such as Medicare in the US or equivalent state programs for financial gain to a pharmaceutical company. Several different schemes are used to defraud the health care system, which is particular to the pharmaceutical industry. These include:

  • Good Manufacturing Practice (GMP) Violations,
  • Off Label Marketing,
  • Best Price Fraud,
  • CME Fraud,
  • Medicaid Price Reporting, and
  • Manufactured Compound Drugs.

The pharmaceutical industry is regularly found to be engaging in fraud of many types, and it appears as though each year, the number of pharmaceutical fraud is on the rise. Each year big pharma giants end up spending billions of dollars in paying for fraud, misrepresentation of data and other such corruption allegations levelled out against them. In the last years, global pharma giants have paid fines to the tune of $11 billion for criminal wrongdoing, including withholding safety data and promoting drugs for use, beyond any licensed condition; GlaxoSmithKline paid a $3 billion settlement, Pfizer $2.3 billion settlement, and Merck $650 million settlement. Damages from fraud can be recovered using the False Claims Act, most commonly under the qui tam provisions, which rewards an individual for being a “whistleblower” or relator (law).

July of 2021 saw Bolton pharmacist David “Jason” Rutland pleading guilty to conspiracy to solicit and pay kickbacks and bribes in a $182.5m fraud case in which Rutland himself pocketed $13.3m. This conspiracy is noted as the state’s largest health care/pharmaceutical fraud to date. It is estimated that more than $515 million in fraudulent prescription billings were made to TRICARE, Medicare, Medicaid, and private health care benefit providers in Mississippi.

In the US, whistleblowers are uniquely positioned to report this fraud to the government under the False Claims Act.

Common Fraud in the Pharmaceutical Industry Includes:

  • Unlawful Kickbacks
  • Clinical trials manipulation/fraud against the Food and Drug Administration (FDA)
  • Off-label marketing/Food Drug and Cosmetic Act (FDCA) violation
  • Failure to comply with Current Good Manufacturing Practices (CGMP) requirements
  • Compounded drug fraud
  • Illegal drug-switching
  • Misuse of the 340B drug discount program
  • Medicaid best price fraud
  • Medicare Part D Fraud
  • Fraud by Pharmacy Benefit Managers (PBMs)

Understanding the most common types of pharmaceutical industry fraud reported by whistleblowers

Unlawful Kickbacks

The pharmaceutical industry influences doctors’ prescribing habits, especially in the US. Drug manufacturers and distributors may pay unlawful kickbacks to physicians or others in the form of sham “consulting fees,” luxury vacations, and expensive meals in exchange for increased prescriptions of the company’s drugs.

Clinical trials manipulation/fraud against the Food and Drug Administration (FDA)

Drug manufacturers must obtain FDA approval before marketing a new drug. The FDA approves new drugs proven safe, effective, and properly labelled following extensive preclinical and clinical testing and analysis, which results in a wealth of data regarding the drug’s safety, efficacy, pharmacology and toxicology. The FDA relies on the accuracy of the data that drug manufacturers submit in New Drug Applications (NDAs). Pharmaceutical companies that make false statements to the FDA, omit relevant data in NDAs, or otherwise misrepresent the safety or efficacy of drugs in clinical trials can be subject to False Claims Act (FCA) liability. The same is true of drug companies that pay researchers to falsify clinical trial data.

Off-label marketing/Food Drug and Cosmetic Act (FDCA) violation

Pharmaceutical companies may not promote their drugs for uses, doses, or populations not specifically approved by the FDA as safe and effective. Such “off-label” marketing and promotion violates the FCA. This could include, for example, if a drug is approved for use in treating severe psychiatric disorders, and the drug company’s sales representatives promote it for widespread use in calming elderly patients in nursing homes.

Failure to comply with Current Good Manufacturing Practices (CGMP) requirements

Drug and medical device manufacturers are subject to strict FDA manufacturing rules known as the Current Good Manufacturing Practice (CGMP) regulations. The CGMP exists to ensure manufactured drugs’ identity, strength, quality, and purity and protect consumers from tainted, ineffective, and harmful drugs. Government-funded healthcare programs pay for prescription drugs on the premise that CGMP regulations have manufactured the drugs. If they are not, it can be a violation of the False Claims Act. This could include, for example, a pharmaceutical company’s manufacturing facility using dirty equipment to make drugs, or using equipment that does not accurately measure the type or amount of the active ingredients incorporated into a drug, and then selling these tainted drugs to patients covered by Government-funded health care programs.

Compounded drug fraud

Compounding pharmacies prepare medications tailored to meet the needs of individual patients by mixing drugs or changing the route of administration. Compounding pharmacies can violate the FCA by making large batches of drugs—known as mass-compounding—rather than providing the required individualised service, “compounding” drugs that are already commercially available, or inflating the number of particular medications used in the mixture to increase the cost. Compounded drugs are primarily regulated by the states, meaning efficacy and safety need not be proven to the FDA.

Illegal drug-switching

As a general rule, pharmacies must fill patients’ prescriptions as written by the ordering physician. Putting aside situations where a generic drug may be substituted for a name-brand drug, pharmacists may not simply replace one drug for another or dispense a liquid form of a drug when a pill or tablet was prescribed. Billing government insurers for medications that have been so manipulated can violate the False Claims Act.

Misuse of the 340B drug discount program

The federally mandated 340B drug discount program requires most drug companies to provide hefty discounts — typically 20 to 50 per cent — to hospitals and clinics that treat low-income and uninsured patients. Pharmaceutical companies are required to cap outpatient drug prices at a statutorily defined “ceiling price” equal to the Average Manufacturer Price (AMP) reduced by the rebate percentage or Unit Rebate Amount (URA). Manufacturers submit both the AMP and URA to the Centers for Medicare and Medicaid Services (CMS) quarterly and can defraud the government by misrepresenting these figures, overcharging 340B entities, and/or not providing rebates to which 340B entities are entitled.

Medicaid best price fraud

To obtain Medicaid coverage of their drugs, pharmaceutical companies generally must promise to give state Medicaid programs the lowest price made available to almost any buyer of the drug. To provide this price, pharmaceutical companies report their “best price” on a drug—often calculated based on the drug’s “average wholesale price” or “average manufacturer price”—and payback to Medicaid in rebates any amount the programs paid more than this price. Pharmaceutical companies can defraud Medicaid and violate the False Claims Act by manipulating their “best price” to reduce the amount of money they must return to state Medicaid programs.

Medicare Part D Fraud

Implemented in 2006, Medicare Part D, also referred to as the Medicare Prescription Drug Program, provides drug coverage for tens of millions of elderly and disabled Americans. Under the program, private insurance companies—referred to as Part D Sponsors—offer prescription drugs to eligible beneficiaries directly or through pharmacy benefit managers (so-called “PBMs”) and then submit claims to Medicare for the drugs’ cost. Fraud can occur under Medicare Part D in many ways, including:

Some of the more common types of fraud occurring under the Medicare Part D program include:

  • Billing for drugs not provided.
  • Billing for drugs not covered by Medicare.
  • Billing for brand name drugs when generic drugs are provided instead.
  • Billing for drugs—especially opioids and other controlled substances—diverted for illegitimate purposes.
  • Billing for expired drugs.
  • Billing for drugs dispensed without a prescription or with a falsified prescription.
  • Billing for drugs dispensed with prescriptions from unauthorized, excluded, or non-existent healthcare providers.
  • Billing for drugs provided in quantities that exceed approved limits.

Fraud by Pharmacy Benefit Managers (PBMs)

PBMs are an increasingly common target of fraud investigations. PBMs are third-party administrators of prescription drug programs for, among others, Medicare Part D plans. PBMs contract with health plans to provide pharmaceuticals at low prices, which PBMs keep low through negotiation, generic substitution, manufacturer rebates, cost-sharing, formularies, and other methods. PBMs commit fraud by failing to pass savings from rebate arrangements and subsidies to clients, developing forms that favour more expensive drugs, and improperly switching drugs to generic or different brand name drugs instead of prescribed drugs. Drug manufacturers commit fraud by, for example, providing price concessions on certain drugs in exchange for a PBM’s favourable coverage of the manufacturer’s drug.

About CRI Group

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk ManagementEmployee Background ScreeningBusiness IntelligenceDue DiligenceCompliance Solutions and other professional Investigative Research solutions provider.

We have the largest proprietary network of background screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are, we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched the Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001 Anti-Bribery Management SystemsISO 37301 Compliance Management Systems and ISO 31000 Risk Management, providing training and certification.

ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

 

 

Top 10 Bribery & Corruption Stories of 2020

Even with much of the world under partial lockdown during the COVID-19 pandemic, there’s been no shortage of bribery and corruption cases through the first half of 2020. Each of these stories makes it clear that organisations must have proper controls in place to prevent bribery and corruption. ISO 37001 Anti-Bribery Management Systems standard provides a comprehensive approach to mitigating bribery and corruption risk.

Organisations of all sizes and industries should take steps now to ensure that they don’t end up on a future list of top bribery and corruption scandals. Due to last year’s “Top 10 Bribery and Corruption Cases of 2019” successful article we decided to compile a 2020 list too. In no particular order, ABAC® Center of Excellence collated the top bribery and corruption stories we’ve seen so far in 2020.

In no particular order, here are 10 of the top bribery and corruption stories we’ve seen so far in 2020.

#10. Airbus

In February, French-based Airbus agreed to pay a record $4 billion in fines for alleged bribery and corruption spanning at least 15 years. The company reached a plea bargain with prosecutors in Britain, France and the United States. According to prosecution documents, Airbus used a global network of agents or middlemen for corrupt transactions, included payouts disguised as commissions to push airplane sales.

“Fallout from the Airbus bribery scandal reverberated around the world on Monday as the head of one of its top buyers temporarily stood down and investigations were launched in countries aggrieved at being dragged into the increasingly political row.” (Reuters, 2020)

#9. Novartis

While the investigation into suspected corruption at Novartis began seven years ago, it appears that 2020 is the year the company can finally close this damaging chapter in its history. The resolution comes at a steep cost. The Swiss-based pharmaceutical company will pay a staggering $1.3 billion in a settlement for kickbacks, bribery and price-fixing.

“The latest settlements cover two different cases. In the first, federal prosecutors claim Novartis used ‘tens of thousands of’ speaker programs and events — some entailing exorbitant meals — as disguise to provide bribes to doctors. The goal, according to prosecutors, was to encourage doctors to prescribe its drugs, including Lotrel, Valturna, Starlix, Tekturna, Tekamlo, Diovan and Exforge.” (Fierce Pharma, 2020)

#8. Ohio House Speaker Larry Householder

While political corruption is nothing new, his constituents were nevertheless shocked when Ohio House Speaker Larry Householder was arrested, along with four alleged co-conspirators, as part of a $60 million racketeering and bribery investigation. The alleged scheme is being described as one of the biggest public corruption cases in Ohio, U.S. history.

“All the charges are tied to what federal prosecutors said was a criminal enterprise dedicated to securing a bailout for two nuclear power plants in northern Ohio owned by FirstEnergy Solutions of Akron. The bailout is expected to cost the state’s utility ratepayers $1 billion.” (Cincinnati Enquirer, 2020)

#7. Alexion Pharmaceuticals

Charged by the SEC with violating the FCPA by bribing officials in Turkey and Russia, Alexion Pharmaceuticals will pay $21.4 million to resolve an investigation that began in 2015. The Connecticut, U.S.- based company was also accused of failing to keep accurate financial records at subsidiaries in Brazil and Colombia.

“In Turkey and Russia, Alexion paid government officials and doctors at state-connected hospitals to promote use of its blood-disease drug, Soliris. Alexion retained a consultant in Turkey from 2010 to 2015 with ties to health officials. Alexion Turkey paid the consultant over $1.3 million for ‘consulting fees and purported expense reimbursements,’ the SEC said. … In Russia, Alexion paid doctors at government hospitals over $1 million from 2011 to 2015 to increase Soliris prescriptions. … The bribery resulted in Alexion being ‘unjustly enriched’ by about $6.6 million in Turkey and $7.5 million in Russia, the SEC said.” (FCPA Blog, 2020)

#6. Taiwan Presidential Office Secretary-General Su Jia-chyuan

In Taiwan, a scandal embroiling some top legislators prompted Presidential Office Secretary-General Su Jia-chyuan to resign from office. Su Jia-chyuan’s nephew, Democratic Progressive Party (DPP) Legislator Su Chen-ching, is reportedly under investigation in a bribery case related to the ownership of a department store. Su Jia-chyuan said he has “nothing to hide” and insisted he is stepping down to avoid letting the controversy continue to affect the president.

“Taipei prosecutors on Saturday filed a motion to detain Su Chen-ching, along with four other former and incumbent lawmakers as part of an investigation into bribery allegations against six current and former legislators and their aides. The court hearing on whether to grant the prosecutors’ request to detain them was ongoing as of press time last night. The DPP’s anti-corruption committee convened a meeting at 8 pm to discuss the penalties for Su Chen-ching and former legislator Mark Chen, who has also been implicated in the case and was released on NT$500,000 bail early on Saturday.” (Taipei Times, 2020)

#5. Former Malaysia Prime Minister Najib Razak

As part of the 1MDB corruption scandal, former Malaysian Prime Minister Najib Razak was convicted on seven counts for charges that include money laundering, abuse of power and criminal breach of trust. Investigators said he transferred about $10 million from a 1MDB affiliate to his own bank accounts, and the Malaysian High Court agreed. Razak was forced out of office in 2018 during the scandal.

“In 2015, the Wall Street Journal reported that Najib deposited about $700 million from 1MDB into his personal accounts. He has always denied the allegations. He faces more trials in Malaysia on at least 35 additional corruption charges. The judge Tuesday imposed a 12-year prison sentence on Najib, 67, but suspended it during any appeals.” (FCPA Blog, 2020)

#4. Alstom

A multi-year, multi-million-dollar bribery and money laundering investigation involving Alstom Indonesia resulted in more indictments this year. Reza Moenaf, former president, and Eko Sulianto, former director of sales, for Alstom Indonesia were charged along with a former deputy general manager of Marubeni Corporation’s overseas power project department. They are accused by the U.S. Justice Department of violating the Foreign Corrupt Practices Act (FCPA) and of conspiracy to commit money laundering.

“According to the Justice Department, Kusunoki, Moenaf, and Sulianto engaged in a conspiracy to pay bribes to officials in Indonesia — including a high-ranking member of the Indonesian Parliament and the president of Perusahaan Listrik Negara, the state-owned and state-controlled electricity company in Indonesia — in exchange for assistance in securing a $118 million contract, known as the Tarahan Project, for Alstom Power and its consortium partner, Marubeni, to provide power-related services for Indonesian citizens.” (Compliance Week, 2020)

#3. Los Angeles City Councilman Jose Huizar

Corruption in local politics is still a major issue, especially in a major city like Los Angeles, U.S.  That’s where City Councilman Jose Huizar is alleged to have engaged in a wide array of bribery and corruption acts to enrich himself and his associates. He now faces a laundry list of charges after a federal grand jury returned a 34-count indictment against Huizar.

“Huizar was charged last month with one count of conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act. Thursday’s indictment charges Huizar with the following criminal charges: 12 counts of honest services wire fraud; two counts of honest services mail fraud; four counts of traveling interstate in aid of racketeering; six counts of bribery; five counts of money laundering; one count of structuring cash deposits to conceal bribes; one count of making a false statement to a financial institution; one count of making false statements to federal law enforcement; and one count of tax evasion, according to prosecutors.” (CBS News, 2020)

#2. Asante Berko, Former Goldman Sachs Executive

Former Goldman Sachs executive Asante Berko was charged by the SEC as a result of their investigation into his alleged bribery plot. Berko is accused of FCPA violations in his effort to help an energy company based in Turkey secure a contract for a power plant in Ghana. He was charged in a civil complaint in New York, U.S., for “aiding and abetting violations of the FCPA anti-bribery provisions.”

“According to the SEC, Berko helped the Turkish energy company pay at least $2.5 million to a Ghana-based intermediary, ‘all or most of which was used to bribe Ghanaian government officials’ to secure approval of an electrical power plant project. … In 2015, Berko negotiated a contract for the Turkish energy company to pay the intermediary $2.5 million at first, and up to $42 million over five years, the complaint said.” (FCPA Blog, 2020)

#1. Cardinal Health

Ohio, U.S.-based Cardinal Health paid the SEC $8.8 million Friday to settle FCPA offenses related to a Chinese subsidiary that provided marketing services. Cardinal Health allegedly violated provisions for maintaining books and records, as well as internal accounting controls. Cardinal Health first began doing business in China after acquiring an existing company and rebranding it. It appears the company made voluntary disclosures and has been taking proactive steps to address the corruption issues in its ranks.

“In 2016, Cardinal China learned that the marketing employees and the dermocosmetic company had disguised some ‘marketing payments’ that were funneled to healthcare professionals who provided marketing services, as well as other employees of state-owned retail entities. The state-owned entities had influence over purchasing decisions related to the dermocosmetic company’s products. Cardinal took steps to stop the suspect payments in 2016 when it learned about the misconduct, the SEC said. In December 2016, Cardinal voluntarily disclosed the results of its internal investigation to the SEC.” (FCPA Blog, 2020)

Staying one step ahead of any critical risk to your organisation is part of being an effective business leader. Contact us today to get started on implementing a robust program that will serve you well for years to come. Get your FREE QUOTE now!

We Welcome You To Have Free Gap Analysis of Highest Ethical Business Survey: prove that your business is ethical. Complete our FREE Highest Ethical Business Assessment (HEBA) and evaluate your current Corporate Compliance Program.

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Find out if your organisation’s compliance program is in the line with worldwide Compliance, Business Ethics, Anti-Bribery and Anti-Corruption Frameworks. Let ABAC® experts prepare a complimentary gap analysis of your compliance program to evaluate if it meets “adequate procedures” requirements under UK Bribery Act, DOJ’s Evaluation of Corporate Compliance Programs Guidance and Malaysian Anti-Corruption Commission.

The HEBA survey is designed to evaluate your compliance with the adequate procedures to prevent bribery and corruption across the organisation. This survey is monitored and evaluated by qualified ABAC® professionals with Business Ethics, Legal and Compliance background. The questions are open-ended to encourage a qualitative analysis of your Compliance Program and to facilitate the gap analysis process.

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About CRI Group

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk ManagementEmployee Background ScreeningBusiness IntelligenceDue Diligence and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management SystemsISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

Stay tuned for Part 2 or follow us on LinkedInFacebook or Twitter for more industry news and insights.

The Role of a Fraud Investigator

Fraud investigators are the front line of establishing the facts of suspected fraud or other unethical business behaviour. A fraud investigator’s skillset and wide knowledge of fraud laws, evidence gathering and interviewing make them the go-to expert for investigating insurance fraud, financial fraud, procurement fraud, asset recovery, cyber fraud, healthcare fraud, retail fraud and other areas.

A fraud investigator can either be part of a team of experienced investigators, or the leader of such a team. If part of a team, the fraud investigator generally works with the other team members to handle reports of suspicious activity. If in charge of a team, the fraud investigator would typically report to the head of a department, such as corporate security, compliance or audit. A fraud investigations manager at a typical retail business, for example, would be responsible for the day-to-day monitoring, investigation and resolution of fraudulent activity relating to delays in the repayment and refunds processes. They will take the lead on the implementation of strategies to prevent fraud and financial crime, thereby mitigating risk to the business.

Fraud Investigator Key Functions

Fraud investigators provide subject matter expertise on claims and associated fraud risks, helping to ensure effective resolution of investigations. The effective fraud investigator adheres to relevant security standards, internal and external procedures and legislative requirements. Their role often involves developing and maintaining close working relationships with relevant law enforcement agencies, ensuring that cases are developed and prosecuted to a criminal standard.

When working with an organisation in a preventative fashion, a fraud investigator will perform fraud risk assessments across the business relating to both external and internal threats; implementing mitigation measures as required. They also build appropriate fraud prevention and detection processes and implement them. Some fraud investigators manage the day-to-day operation of an expanding fraud team, ensuring that KPIs are met and regular reports produced for the management team. In this capacity, they will also work closely with the senior management team to ensure that operational capacity is correctly aligned to combat a variety of fraud types.

Here are some of the other key functions performed by fraud investigators:

  • Evaluate potential fraud indicators and the impact of current fraud trends and make recommendations as to appropriate mitigation.
  • Conducting investigations into allegations of fraud, waste or abuse committed by clients against our company
  • Reviewing and researching evidence/documents to analyse the overall fact pattern of a claim and synthesise data into a professional report with recommendations
  • Preparing and coordinating field assignments to obtain relevant evidence and information
  • Conduct objective, fair, thorough, unbiased and timely investigations into allegations of fraud, waste or abuse committed by clients against our company
  • Review and research evidence/documents to analyse the overall fact pattern of a claim and synthesise data into a professional report with recommendations
  • Prepare and coordinate field assignments to obtain relevant evidence and information
  • Coordinate with defence attorneys to provide deposition strategies and use law enforcement resources for assistance
  • Manage and prioritise a large and varied caseload effectively and efficiently to achieve positive results
  • Prepare prosecution packages and restitution proposals.

Responsibilities

As a fraud investigator often wears many different hats, they also have many ongoing responsibilities. These include monitoring transaction reports to identify any suspicious transactions and conducting detailed investigations as required. They must also proactively identify financial crime trends through data analysis and share findings with leadership as and when needed. A few other responsibilities of a fraud investigator include:

  • Working to a high standard, meeting strict time-frames whilst working under pressure.
  • Communicating directly with customers as part of ongoing fraud investigations through in-app messages or via telephony with potential victims of fraud to establish circumstances and additional information, before providing a fair and logical decision, with supporting rationale.
  • Work as part of a team and supporting colleagues as and when required to reduce workload(s).

Personality Traits of a Fraud Investigator

There are some common traits among the most successful fraud investigators. This includes being a self-starter who is results-driven with high levels of self-motivation, energy and initiative. An effective fraud investigator has a proven ability to work under pressure to and meet tight deadlines, without compromising the quality of output. One key trait that can’t be overlooked is the ability to be an effective communicator – a fraud investigator must have excellent written and verbal skills. Here are some other key traits among successful fraud investigators:

  • An ability to thrive under pressure amidst changing business priorities
  • Effective cost management and analytical integrity
  • Experience in leading and developing a team
  • Keen interest in stopping fraud whilst considering the impact of how an investigation can impact customers

Knowledge and Skills

A successful fraud investigator brings to the table a broad range of security/ fraud detection and prevention experience. A fraud investigator must be a subject matter expert on fraud for their related field, such as insurance fraud, financial fraud, procurement fraud, asset recovery, cyber fraud, healthcare fraud, retail fraud and other areas.

Many fraud investigators have specialised skills such as:

  • Experience of interviewing in accordance with the Police and Criminal Evidence Act following the PACE framework.
  • Strong knowledge of cyber risk and common fraud typologies, along with the emerging trends affecting fraud and financial crime.
  • Familiarity with key AML, TF, Financial Crime and Sanctions legislation and associated Regulatory Guidance.
  • Demonstrated experience working with customers on fraud prevention and detection strategies.
  • Sound understanding of the customer impact of a transaction monitoring system; able to balance fraud prevention with the need to provide an excellent customer experience.

As previously mentioned, an effective fraud investigator must have strong interpersonal and communication skills, including the ability to interact with clients, upper management and law enforcement. They also need to have an ingenuity and persistence to obtain case information not readily available with an eye for detail. Dealing with various different cases and different types of evidence requires strong organisational skills. For insurance fraud, investigators must be proficient with the insurance procedures, regulations and investigation methods

Perhaps most important, fraud investigators must set a positive example for their colleagues. They need to be honest and ethical, with high levels of integrity and confidentiality.

A fraud investigator has many different responsibilities, and the role requires an individual with some specific traits. CRI Group’s fraud investigators are experts at uncovering the facts and evidence of a case, but they also implement proactive anti-fraud measures to help an organisation be better protected against future incidence of fraud. Fraud investigators specialise in insurance fraud, financial fraud, procurement fraud, asset recovery, cyber fraud, healthcare fraud, retail fraud and other areas. It’s important that organisations hire trained, qualified fraud investigators who understand the laws, are effective at evidence collection and fact-finding, and are good communicators (since interviewing is one of the key processes of fraud investigation). A fraud investigator might work with a team, or they might lead their team and report to another division. Being able to work under pressure and meet deadlines is critically important. Properly evaluating and securing evidence is of equal importance. CRI Group has only the best expert fraud investigators to meet these challenges.

Are you a fraud investigator? Tell us about your day-to-day job, we would love to hear it.

 

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

 

 

 

7 Traits of a Resilient Leader

Every successful leader has encountered a challenging scenario at some point in their career. The unprecedented COVID-19 pandemic, however, has forced leaders to face unforeseen new challenges. With the pandemic’s colossal impact on operations, workforces, profits and supply chains across the globe, all eyes are on leadership to guide their businesses through this crisis. Resilient Leader

Resilient leaders are generally seen as more effective, making them an asset to any business; but what is resilience and how can it be applied to your management skills?

What is Resilience?

Resilience is the capacity to recover quickly from difficulties; it is a further evolution of stress management. This makes it a “no brainer” as to why resilience is such a popular concept in today’s business environment. Many businesses are pushing the concept of resilience as a way of helping workers better cope with the stresses and strains of the modern-day office and unlock their performance potential.

In this article, we look at seven essential qualities that characterise resilient leaders, and how to increase your resilience. In general, resilient leaders:

  1. Show empathy
  2. Are adaptable and able to improvise
  3. Are self-aware and open to feedback
  4. Take calculated risks
  5. Keep a positive attitude
  6. Develop others
  7. Communicate effectively

1. Resilient Leaders Show Empathy

COVID-19 has generated one of the greatest challenges and, simultaneously, one of the greatest opportunities for resilient leaders – at all levels. According to a Gallup U.S poll, six in 10 people are “very” or “somewhat worried” that they or a family member will be exposed to COVID-19 (Gallup, 2020). During this crisis, emotional management is even more crucial than ever. According to studies carried out by Development Dimensions International (DDI), empathy is the most critical leadership skill. Leaders who display compassion, authenticity and vulnerability – and are capable of apologising when they’re wrong and handle criticism without blame – create strong emotional bonds with their teams (DDI, 2020).

The most resilient (and effective) leaders can demonstrate empathy and a high level of emotional intelligence. When your team feels understood, they feel more motivated and more confident to contribute cultivating stronger conversations, ideas and debate. As Mark Cuban shared in a recent interview: “How you treat your employees today will have more impact on your brand in future years than any amount of advertising, any amount of anything you literally could do” (Just Capital, 2020).

2. Resilient Leaders Are Adaptable

With COVID-19 infecting approximately 311,641 people in the UK alone, health officials suggested using hand sanitiser as the easiest way to prevent the spread of the disease. Consequently, these announcements led to panic buying (Euronews, 2020). In this type of situation, a resilient leader should be able to visualise this action as an opportunity – for example, dozens of spirit manufacturers across the UK started to produce hand sanitisers (i.e. BrewDog and Leith Gin). This is a classic example of an instant attitude adjustment – looking at what they can do as opposed to what they can’t (Telegraph, 2020).

When faced with change, resilient leaders can focus on the things within their business that they can still control. Whether impacted by new technologies, environmental challenges or even ethical dilemmas, the modern business landscape is always changing. A resilient leader needs to be flexible and adaptable to succeed. Is flexibility part of your leadership style?

3. Resilient Leaders Are Self-Aware and Coachable

According to Health Care Business Today, self-awareness and coachability are “The Two Most Important Leadership Traits” (Health Care Business Today, 2019). We think so, too. Resilient leaders are self-aware, confident, and most of all, able to recognise their strengths and overcome their weaknesses. Resilient leaders are open to feedback, ask for feedback and are always demonstrating a real effort to improve.

4. Resilient Leaders Take Calculated Risks

Successful leaders earned their success through taking calculated risks. When Amazon CEO Jeff Bezos launched AmazonFresh, he was scrutinised by others because he didn’t choose a successful delivery or supermarket executive to run the venture. Instead, Bezos selected a team that had previously run a web-based food delivery service in the ‘90s (which collapsed after two years in business). Why? Bezos knew that the team had learned from their failure, which made them the perfect choice to succeed with a new project.

Resilient leaders like Bezos take calculated risks while accepting that failure is a by-product of innovation and success. They learn to become comfortable with being uncomfortable, and flourish as the world changes around them.

5. Resilient Leaders Can Keep a Positive Mindset

The impact of COVID-19 is tough to manage. It is vital to have a positive mindset that can influence fellow professionals and raise team morale while maintaining business momentum.

Under the challenging circumstances posed by the COVID-19 crisis, a resilient leader needs to be enthusiastic, offer praise for success, and give credit when it’s due. American psychologist Carol Dweck has stated in her book “Mindset: The New Psychology of Success” that “a change of mindset must happen before other positive transformation can occur.”

Resiliency is needed when we encounter failure. As a resilient leader, you shouldn’t view failure as final, but as a necessary step to move further along your journey.

6. Resilient Leaders Develop Others

The most resilient leaders are concerned about the development of their teams. Developing others helps everyone to learn from their mistakes. We continue to find that leaders who want and accept honest feedback for themselves are more likely to give productive feedback and coaching to others.

7. Resilient Leaders Communicate Effectively

Effective communication helps teams understand changes, expectations and new directions. This understanding is the key to the success of any team. The most resilient and best leaders always communicate their intentions effectively to others and are willing to help their teams understand a new strategy or direction.

The COVID-19 pandemic is proving to be the ultimate test for business leadership. In times of crisis, only certain individuals can adapt and stand tall amongst the crowd. When it comes to leaders, being able to implement resilience tools and strategies will not only make you a better leader but help the company overall.

 

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301:2021 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

Ethical code of conduct: What should be covered?

Business leaders are usually quick to communicate their expectations to employees, especially when it comes to financial goals or tasks that they want accomplished. However, what is often lacking is a clear, concise explanation of what the organisation expects in terms of ethical behaviour. The recent article “Puffery or Not? Courts Examine Corporate Codes of Conduct” explains that although a number of federal courts have found code of conduct statements to be non-actionable puffery, given the uncertainty in the face of the novel CODIV19 pandemic, public companies are ought to review their codes of conduct and revise them if necessary to mitigate litigation risk. Ethical code of conduct:

Does your organisation have an ethical code of conduct? If not, you might be making assumptions that your employees know to conduct themselves in an ethical manner, when, in fact, this expectation only exists in a grey area in their minds – if at all. In fact, some employees who have engaged in fraud, corruption or other unethical situations have claimed that while they knew their behaviour was wrong, they thought it was implicitly accepted by their bosses and, in some cases, their company on the whole.

Rather than assume that ethical rules “go without saying,” every organisation should spell out what they expect of their employees when it comes to ethical behaviour. At CRI Group, we counsel business leaders on the principal that every organisation should have a written, carefully considered ethical code of conduct as part of their fraud prevention strategy. CRI’s Certification program through the ABAC Center of Excellence includes developing an ethical code of conduct as part of the training and development phase for clients.

What should be covered?

An ethical code of conduct should be tailored to your company and your organisation – no two will be exactly the same. What are the risks inherent in your organisation? What about in your industry? A pharmaceutical company will have some different risk areas than a retail store, for example. A nonprofit organisation might have concerns that relate to fundraising, a government agency might be focused on preventing bribery or collusion.

The goal of an ethical code of conduct is to help all employees understand the expectation that they behave in a legal and ethical manner at all times, and that the organisation has zero tolerance for unethical behaviour. It should include the following focal points:

1. Business values

This can include your organisation’s mission and vision, and should help set the tone for how the organisation relates to its clients, partners, its own employees and the public at large.

2. Guiding principles

The principles that guide your company likely include customer satisfaction, financial success and profitability, improvement and growth. Your company might also follow policies of corporate responsibility, such as respect for social and environmental issues, and support of the community and/or nonprofit efforts.

3. Role of leadership

This section of the code of conduct should state that management has clearly endorsed the code, and that employees can approach any manager or executive with ethical concerns or complaints.

4.Regulatory and compliance

This section should communicate the organisation’s commitment to meeting all compliance requirements, from OSHA and EPA to Sarbanes-Oxley and Dodd-Frank. This reinforces leadership’s expectation that employees must act diligently and ethically to uphold those standards, as well.

5. Employee responsibility

Every employee, from top to bottom, shares the responsibility toward upholding the ethical standard defined in the code. Contractors and volunteers are also expected to follow the standard of behaviour.  Furthermore, the code should make clear that if unethical behaviour is detected, turning a blind eye or deciding “it’s not my problem” is unacceptable. That, in itself, is a breach of the ethical code.

CRI Group can help your organisation with the finer points of drafting and implementing an ethical code of conduct. ABAC Center of Excellence includes this critical piece as a part of any robust fraud, bribery and corruption prevention program.

After the ethical code of conduct is approved by company leadership, it should be read and signed by all employees (with the signed copies kept on file by the organisation). And it should be displayed prominently in the office. Unethical behaviour, including fraud and other corruption, is everyone’s problem, and it must be prevented, detected and reduced. Staying one step ahead of any critical risk to your organisation is part of being an effective business leader.

ISO 37001:2016 Anti-Bribery Management System certification is offered under CRI Group’s ABAC® Centre of Excellence, an independent certification body established for Anti-Bribery Management System training and certification, Compliance Management System and Risk Management System certification. The program will be tailored to your organisation’s needs and requirements. For assistance in developing and implementing a fraud prevention strategy, contact ABAC today or get a FREE QUOTE now!

6 challenges for compliance officers in 2020

The job of a compliance officer can be a difficult one. Organisations from large corporations down to small government agencies rely on their compliance officers to keep them within ethical and legal boundaries. They also rely on them to maintain monitoring and reporting requirements, and stay abreast of any changes in the compliance landscape. For professionals in this field, the bad news is that challenges will continue to increase in the near future (as we’ll explain in this article). The good news is that there are trained experts available to work hand-in-hand with organisations’ compliance officers to minimise risk and help them remain in compliance.

The stakes are high, as organisations in both the public and private sectors face new laws and regulations in jurisdictions around the world, along with increasingly strict enforcement and punishments. Investigations of violations can, and often do, lead to heavy fines. In some cases, criminal charges may result – and these can be levied against the organisation, or individuals, or both. Here are some of the biggest challenges facing compliance officers today:

 1. Anti-money laundering (AML) regulations

The Panama Papers and other major scandals, including the illicit funding of certain terrorist actions, brought money laundering issues firmly into the spotlight. Many governments have been stirred to action to create stronger measures meant to prevent the illegal funding of criminal or terrorist enterprises. In the European Union, this resulted in the 5th Money Laundering Directive (5MLD), which takes effect in January 2020. 5MLD impacts organisations most directly in how they handle their know-your-customer (KYC) processes.

In the run-up to the 5MLD, there was increased attention on high-risk countries. Clients or transactions engaged in high-risk countries are now subject to enhanced due diligence when performing onboarding checks. Compliance teams need to ensure KYC is not a simple “tick box” exercise during the onboarding phase, and ongoing monitoring processes need to be implemented to manage changes throughout the customer lifecycle.

5MLD requires enhanced due diligence when dealing with high-risk countries. In addition to obtaining evidence of the source of funds and source of wealth, information on beneficial ownership and background to the intended transaction must also be recorded. The EU may also designate a ‘blacklist’ of high-risk countries for money laundering.

2. Conflicts of interest

Risks related to conflicts of interest are significant at every level of the company. Starting with the board of directors, an effective board must be transparent about potential conflict issues and address them on an ongoing basis. Board decisions that either suffer from actual conflicts can risk the board’s adherence to its duties and create real legal risks. Even the appearance of a conflict can raise real issues and transparency becomes even more important in these contexts.

This same level of risk can undermine the integrity of senior management. When senior executives fail to address real and significant conflicts, the integrity and overall leadership trust factor can deteriorate. A compliance executive must be willing to take on these issues, even when it is difficult to confront senior executives.

Within the private equity (PE) industry, conflicts and their adequate disclosure remain problematic. In recent years regulators have made examinations of PE firms and their complex structures top priorities. Most major organisations – and their compliance officers – see outside business activities as a risk.

3. Innovation driving new demands

New innovations are providing increased efficiency in compliance processes, which is a major plus for organisations. Always a double-edged sword, however, technology also creates more issues in data security, not to mention the training and expertise required to master it.

For many ‘non-tech’ professionals such as compliance officers, rapidly changing technology can be a concern, as the importance and integration of technology into the compliance suite continue to evolve. Compliance officers may not need to become technology experts, but they do need to ensure that tech-related risks are addressed within their firm’s framework. Compliance must be aware of rules and regulations from every jurisdiction with authority over the firm’s activities. This is another area where partnering with an outside firm that provides training and technology resources can be a major advantage.

4. Regulatory and political change

Recent years have seen a flurry of new regulations from various governmental bodies and jurisdictions, from the General Data Protection Regulation (GDPR) act to 5MLD. The GDPR, for example, has extraterritorial reach. It also serves as a model for future possible regulations in the critical area of data privacy and cybersecurity.

In Europe, Brexit creates real uncertainty for the UK’s regulators, and the industries that they regulate. But Brexit also impacts EU member states and any organisations doing business within or through the UK. The impact is far-reaching, and regulators face major challenges in responding to profound changes in policy, the legislative framework and the wider economic context.

Politics in the United States and other nations have also seen similar dramatic shifts in governmental control and resultant effects in policy, which can impact regulatory laws and how they are implemented and enforced worldwide. One thing is certain – investigations and legal actions based on violations of the Foreign Corrupt Practices Act (FCPA) continue to increase, and organisations must remain diligent in conducting risk assessments and implementing control measures to remain in compliance.

5. Personal liability

One area of concern sure to grab the attention of any compliance officer is the issue of personal liability. Recent news stories have reported criminal convictions, some leading to prison sentences, of executives, “middle men” and other individuals involved in various scandals. Compliance officers should take heed, as their responsibilities to their company can also extend to their own professional conduct being placed under a microscope. Many compliance professionals are aware of this, as a recent Thomson-Reuters survey found that 60% of them expect personal liability to increase.

New initiatives underline this reality, such as the Senior Managers and Certification Regime (SCMR) in Europe. It places a focus on firms’ senior managers and individual responsibility, and extends to all Financial Conduct Authority (FCA) solo-regulated financial services firms. The FCA itself has been increasing enforcement notices against individuals. We can expect an increase in these types of measures and they will apply to industries beyond those in the financial sector.

6. Ethics and integrity

Today’s business landscape brings an increased emphasis on the culture of an organisation, with an eye toward ethical practices and principles. With growing scrutiny from both regulators and stakeholders, the pressure is on for compliance professionals and their superiors to take broader responsibility for policies, procedures and controls to create a truly ethical business.

The Cambridge Analytica scandal is a notable example of how data misuse has serious brand and societal implications, on top of legal and compliance penalties. The public outrage was so intense that governments were forced to act, calling on Facebook and other involved parties to testify and explain themselves. The market’s reaction was also punishing, with more than $100 billion knocked off Facebook’s share price in days, while Cambridge Analytica went out of business.

In conclusion, AML regulations, conflicts of interest, innovation driving new demands, regulatory and political change, personal liability, and ethics and integrity issues are among the biggest challenges facing today’s compliance professional. This is the time to address solutions. There is expert help and a wealth of resources available, with no better time to leverage them than the present.

Let us know if you would like to learn more! Contact us today and get your FREE QUOTE now!

 

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

 

Pharma and Healthcare Companies can Benefit from ISO 37001

Pharma and Healthcare Companies can Benefit from ISO 37001

When global pharmaceutical giant GlaxoSmithKline found itself in the Chinese government’s crosshairs for an alleged large-scale bribery scandal, there was perhaps little doubt that the consequences would be large-scale, as well. GSK was accused of systematically paying bribes and “gratuities” to doctors and hospitals in return for favourable product use and promotion. Pharma and Healthcare Companies ISO 37001 Benefits

China was in the midst of an emerging anti-graft campaign and imposed tough penalties against GSK and its executives: In the end, various company leaders were arrested and eventually given suspended prison sentences; GSK was fined $490 million; and the corporation published a statement of apology to the Chinese government and its citizens.

GSK’s fraud was arguably symptomatic of a widespread problem among pharmaceutical companies and healthcare providers (also called “life sciences” providers) with bribery and corruption in economies and healthcare markets around the world. Despite increased awareness of the problem and the application of sophisticated anti-fraud mechanisms, individual actors and agencies continue to defraud public and private health systems in the same ways exemplified by GSK in China.

Generally speaking, healthcare and pharma presents a target-rich environment for fraud. Quantitative data indicate that healthcare fraud has already risen starkly in recent years. The World Health Organisation (WHO) estimates that, where losses have been measured and the types of health expenditure have been covered, the average annual cost of fraud totals 7.29 per cent of healthcare budgets (Gee and Button, 2014). With rapidly ageing populations and the increased costs of providing long-term care, placing substantial pressure upon already overburdened health and social care sectors, healthcare spending will continue to increase worldwide. Unfortunately, this will also bring increased fraud schemes, as fraud perpetrators follow the money.

Bribery and corruption will continue to be a part of this upward trend in fraud. Certainly, not all cases are as broad and sweeping as GSK’s – in some cases, corruption occurs simply because the pharma or healthcare entity doesn’t have proper controls in place to uncover red flags. This also raises serious compliance issues in a landscape that has increasingly stringent regulations and enforcement measures to punish organisations that fail to implement proper anti-bribery and anti-corruption management procedures.

CRI Group investigates: Pharma corruption case included CFO

A major pharma company suspected bribery and corruption among some of its senior employees. The client’s corporate security department had received conflict of interest complaints that reportedly involved a range of employees, from sales personnel on up to the chief financial officer (CFO).

An outside investigation firm was called in launch a risk assessment of the company’s third-party relationships, which included several interviews with identified vendors and suppliers to help ascertain the engagement process and associated risks. This process uncovered the fact that the client had no policy or code of conduct concerning ethics, compliance and standards for appointment of vendors, suppliers and local agents. Most troubling was the fact that in most cases, senior management referred business opportunities to friends and family members.

Investigators found that one of the vendors, which was deeply engaged in procurements and the supply of services for the pharma company over the past five years, raised serious red flags. The vendor’s letterhead lacked a physical address, and the only contact information listed was a single cell phone number. It was clear this vendor warranted further investigation.

Investigators used site visits, background checks and interviews to determine that the suspicious vendor was not a company at all – but a single person. Not just any person, however – a public records check with a national database revealed that this individual, who was posing as a major vendor, was none other than the brother-in-law of the client company’s CFO. Worse still was the fact that this blatant fraud was being conducted right under the noses of procurement and finance professionals at this large and well-known pharma company.

The individual’s residence was being used as a warehouse to help facilitate the fraud. A comprehensive litigation records check found that he was previously convicted in federal court and spent three years in prison for the charges of selling counterfeit products, physician samples and expired medicines; further regulatory checks found that his pharmacist license had been cancelled.

A high fraud risk environment was created through the non-compliance of specific procurement rules, and a lack of integrity due diligence and proper risk management. Also, severe conflicts of interest were exposed, connected to high-level executive positions and benefiting those in positions of power.

The pharma company was exposed to highly unethical practices and could face regulatory and other government action. Furthermore, the company was at risk of civil and criminal investigations and liability, damage to its reputation, and loss in shareholder trust, all of which could adversely affect the company’s financial well-being.

A solution through ISO 37001:2016 ABMS

The case study above is not an outlier – such corruption cases are relatively common in such a broad and complex industry. The pharma company could have prevented the scandal altogether, however, had it proactively implemented a proper anti-bribery management system (ABMS). There is a solution that pharma and healthcare companies can implement to help prevent and detect bribery and corruption: the ISO 37001:2016 Anti-Bribery Management System standard. ISO 37001:2016 is designed to help global organisations implement an anti-bribery management system (ABMS), as the standard specifies a series of measures required by the organisation to prevent, detect and address bribery, and provides guidance relative to that implementation.

CRI Group’s ABAC Certification Services is fully accredited to offer independent ISO 37001:2016 certification to ensure that an organisation is in compliance with the standard, which is recognised and practised worldwide.  CRI Group’s auditors and analysts work with pharma and healthcare companies to develop measures that integrate with existing management processes and controls, and include:

  • Adopting an anti-bribery policy
  • Establishing buy-in and leadership from management
  • Training personnel in charge of overseeing compliance
  • Communicating the policy and program to all personnel and business associates
  • Providing bribery and corruption risk assessments
  • Conducting due diligence on projects, business associates and other third-party affiliations
  • Implementing financial and commercial controls
  • Developing reporting and investigation procedures

In the case study outlined above, having such an ABMS in place would have detected the red flags of bribery and corruption before the scandal was able to proliferate and cause so much damage to the company. Risk assessments, in particular, would have uncovered the lack of due diligence procedures and alerted organisation leaders to the trouble areas that were points of opportunities for the CFO and his brother-in-law. Also, having proper due diligence procedures in place to vet and uncover fraudulent third-parties would have detected the problem with this vendor from the outset.

Once certified, an organisation must continue surveillance and undergo a recertification audit over three years to ensure that the organisation still complies with the ISO37001:2016 standard. During this time, any changes to processes and any new relationships with vendors and other third-party partners are carefully reviewed.

Long-lasting benefits of ISO 37001:2016 certification

ISO 37001 provides a strong framework for addressing and isolating risk factors, and the benefits of certification are far-reaching, impacting not just the primary organisation but also influencing contractors, clients, and raising the profile of the company as an ethical entity that is a good trading partner.

By achieving ISO 37001:2016 certification, a pharma or healthcare organisation will ensure that the organisation is implementing a viable anti-bribery management system utilising widely accepted controls and systems. It will also assure management, investors, business associates, personnel and other stakeholders that the organisation is actively pursuing internationally recognised and accepted processes to prevent bribery and corruption. Today, companies cannot afford to be reactive to threats of bribery and corruption. By achieving ISO 37001 Anti-Bribery Management System certification today, an organisation will remain in compliance and better positioned to address risks head-on.

 

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

3 ways to protect your Company’s Reputation

In today’s connected business world, there are very few secrets. United Airlines, for example, recently learned the hard way that one ugly incident can go viral and spread around the world in a matter of minutes – not hours, days or weeks. protect company reputation

United initially faced criticism over the rough treatment of a passenger being removed from one of their planes. Then, the company learned a second lesson when its CEO’s response to the crisis seemed somewhat disconnected and uncaring. United was in the middle of a reputational crisis, and its first official response to angry consumers only added more fuel to the fire. Later, the CEO offered an apology and a more compassionate statement – but the damage was done.

There are lessons to be taken from this and other high-profile cases where companies have seen their reputation, which they’ve worked hard to cultivate, trashed in the public spotlight. The fact is, things happen, and no company has a guaranteed way to safeguard their reputation from ever being dinged or facing scrutiny, whether fair or not. But there are ways to mitigate the damage and help ensure your company survives the crisis, and can rebuild its reputation in a positive way.

Know that people are talking about you

In the age of Twitter, Facebook, Yelp and other social engagement sites, people are keen to talk about what they like, dislike, what they wish would be better, and anything else on their mind. That includes your company and your products or services. Accept this and embrace it. Engage with people who post on social media when appropriate, and always in a polite and respectful manner. When there is a legitimate problem, communicate that you are taking the matter seriously and looking to resolve it, and then do so.

1. Be transparent

A way to be proactive in your engagement with others is to ask for feedback. Then be prepared to address it, good or bad. Consumers, stakeholders and even your own employees will be impressed by the open lines of communication and an honest dialog. In this way, you can strive to improve your services and offerings and show that you are receptive to your client’ needs.

2. Protect your customers’ data

Nothing can destroy your reputation among your clients and customers quicker than having to tell them their personal information, which was entrusted to you to remain private and protected, is now in the hands of hackers or criminals because you suffered a security breach. Even worse is when they learn that your company did not take all the measures necessary, or even the most basic ones, to prevent such a breach from occurring. Not only might you be criminally liable, but customers will run from you, not wanting to take a risk that something like that could happen again in the future. In today’s high-risk environment, you must have the most sophisticated and up-to-date security measures in place to protect your date – and your reputation.

3. Conduct due diligence

How much do you know about your third-party partners – those suppliers and contractors that you’ve trusted for years, or new ones with whom you seek to engage? An unethical partner can have serious effects on your own company’s reputation – bribery, corruption, supply chain problems are all issues that can end up tainting your own business and causing your customers to lose trust in your products or services. Conducting thorough due diligence, with background checks and full risk assessments, is the only way to help protect your reputation from potential harm.

It may feel sometimes like your company’s reputation is out of your control. However, there are steps you can take to help manage your reputation and help steer the conversation. It becomes more difficult when you wait, and try to undo later the damage that has already been done. That’s why being proactive in maintaining a positive reputation is the best strategy. Contact CRI Group today and let us help you stay on the path to managing your message and your reputation.

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

Top 4 Red flags during a Merger & Acquisition

The business world is often transitional, and the landscape changes as entities grow or industries change – and the players involved have to change with it. Mergers and acquisitions are examples of these “transitional times,” and they are also among the most critical times to conduct proper and thorough due diligence.

There are inherent risks involved with the “unknown factor” that outside entities represent. By nature, merging with another entity, or acquiring it altogether, can be an exciting time, but background screening is especially crucial at this juncture.

When conducting due diligence before a merger or acquisition, what are some of the red flags that should make you take a closer look?

CRI Group has conducted numerous due diligence engagements for clients undertaking major business deals. Our agents have also conducted many investigations for organisations that failed to do proper due diligence, and as a result became victims of fraud. Our findings in those investigations have provided a road-map of things to look for, and be cautious about, when in the pre-merger or pre-acquisition stage.

Here are a few red flags for any organisation undergoing a merger or acquisition:

1. Legal issues

When merging with or acquiring another entity, due diligence will uncover legal proceedings, including any troubling issues that the entity might have been trying to keep hiding. Past or current litigation or even criminal proceedings have been uncovered in background checks.

2. Credit risks

Some potential partners might be financial landmines, bringing the kind of baggage your organisation cannot afford. Has the entity claimed bankruptcy? Have they dissolved prior companies or are they faced with debtor filings? Proper due diligence will uncover these and other financial risk factors.

3. Lack of experience

If your organisation is looking to partner with a contractor or service provider, what is their experience level in the industry? Have they successfully completed past projects of a similar scale? Nothing can hurt your reputation with clients and customers more than having your deliverability affected by a contractor that cannot handle to job.

4. People problems

Hopefully, your organisation conducts thorough employee background screening of all potential and current employees. Can you say the same for the entity you are considering for a merger or acquisition? If not, the risks are great: fraud risks, criminal conduct, even employees without the needed training or skill level doing dangerous jobs could all come back to damage your own organisation and reputation. Comprehensive and thorough background screening, including of owners and principals (perhaps these are most important) will uncover such risks.

None of these red flags, on their own, are necessarily absolute roadblocks to a proposed merger or acquisition. Some scenarios can be explained, and certain circumstances simply require a fuller explanation.

But the key is having the information. In business, being surprised is generally not a good thing. This is never more true than when dealing with mergers and acquisitions.

Staying one step ahead of any critical risk to your organisation is part of being an effective business leader. Contact us today and get your FREE QUOTE now!

 

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business IntelligenceDue Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.