Wal-Mart Stores Inc. is preparing to pay roughly $300 million to resolve a long-running U.S. bribery investigation into allegations of bribery by its employees. The deal, which the people said was being finalised and still could change, would amount to a significant concession by the U.S. government. The Justice Department and Securities and Exchange Commission had sought at least twice that amount as recently as last year as they investigated bribery allegations linked to Wal-Mart’s business in countries including Mexico, China and India. The proposed penalty could be easily absorbed by the world’s largest retailer. A professional due diligence implementation would have avoided this situation.

What is due diligence?

Due diligence is understood as the reasonable steps taken to satisfy legal requirements in the conduct of business relations. An Integrity Due Diligence allows you to reduce risks – including risks arising from the FCPA (Foreign Corrupt Practices Act) and the UKBA (U.K. Bribery Act), to make informed decisions and to pursue takeovers or mergers with more confidence. In the business world, due diligence refers to the investigation and steps taken by the organisation to satisfy all legal requirements, before buying or selling products and services, or entering into a contract or a financial arrangement with another party.

Unlike other kinds of control (audits, market analysis, etc.), it must be independent and thereby rely as little as possible upon information provided by the researched subject. The other significant difference lies in the methodology: commercial or financial due diligence analyses available information, Investigative Due Diligence provides reliable and pertinent, but raw, information.

When conducting an investigative due diligence you can identify key risks, it can enhance your knowledge and understanding of customer, supplier, employee and third-party risk, helping you avoid any compliance 

Protect your reputation and the risk of financial damage and regulator action using our detailed reports. 

Types of transactions

Professionals can be hired to conduct investigations or audits of business deals involving a variety of transactions, such as:

  • merger & acquision;
  • potential investment in securities;
  • real estate transaction;
  • business purchase or sale; and
  • investment in a new product or technology, and so on.

Types of investigations

The standard types of investigations that are conducted include:

  • Conflict of interest investigation;
  • Review of financial records;
  • Confirmation of financials with a bank or other financial institution;
  • Credit checks from credit reporting companies (such as Equifax);
  • Property title checks obtained from a trusted source (e.g. land titles office or your own lawyer); and
  • Confirmation of corporate status, directors, officers, and shareholders (if applicable).

How can a professional fraud investigator help?

  • review client documentation and information to identify red flags of fraud;
  • conduct standard public record searches on the people or issues identified;
  • conduct covert and overt interviews and gather intelligence utilising other covert and overt methods; and
  • after an initial investigation is completed, request that their clients meet with the proposed parties to the transaction to gauge their credibility against the information that the investigator has found about them.

Personal due diligence

Due diligence is vital to prevent many types of fraud, and while professional services can be used in some cases, it is also up to the consumer to do their own due diligence.

Tips for avoiding fraud

There are many things you can do to protect yourself against any number of other types of scams and potential fraud. These tips will help protect you whether you are having home renovations done, renting a property, buying insurance, getting a mortgage, or entering a new romantic relationship.

  • Know who you are dealing with, ask questions and verify the information;
  • Check with the governing body for licensing and insurance requirements;
  • Don’t sign anything you don’t understand;
  • Don’t sign anything for large amounts of money without having it reviewed by your lawyer;
  • Do not give out your personal information without verifying who is getting it;
  • Be cautious if you are asked to make up-front payments;
  • Get company information, including name and address and ensure that all verbal promises are backed by a written contract;
  • Have a contract in place for things like construction work;
  • Never give an unsolicited caller access to your computer;
  • Do not give out a credit card or online account details over the phone, unless you made the call and the number you are calling came from a trusted source;
  • Never wire money unless you’re absolutely confident that you’re sending it to someone you know;
  • Be suspicious of any calls from supposedly distressed relatives who don’t give their names. After hanging up, try calling the family member with the phone numbers you have to see if they actually need help;
  • Be suspicious of any calls from a supposed government agency (such as CRA) or other businesses demanding payments;
  • To avoid real estate fraud, buyers can do some investigations themselves. This includes checking the licensing and reputation of the realtor and visiting the property. However, as real estate transactions are usually a large financial commitment, having their own lawyer check property title and complete the legal enquiries and transaction, buy title insurance, and deal with known financial institutions are very prudent measures that a potential buyer should also take; and
  • Landlords should check references (in some cases a police criminal record check), credit reports, and employment information of potential tenants.

Tips for avoiding fraud online:

  • Change online passwords regularly and make them secure (don’t use standard information about yourself);
  • Don’t post personal info such as date of birth, mailing address, or SIN on social media sites;
  • Have the most current anti-virus software and firewall on your computer;
  • Don’t send financial information by email or text;
  • When purchasing online, make sure the site is secure. It should begin with HTTPS;
  • Don’t open links that appear in an email asking you to start a financial transaction. Go directly to the organisation’s website;
  • Don’t download apps or software programs from an unsecured source; and
  • Don’t use unsecured wifi (such as in a coffee shop) if the device you are using has personal information on it (such as your phone contacts, apple id, banking records, residence or employment information).

If you discover you are a victim of fraud, it is a good idea to contact a fraud recovery expert for advice.

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