Once again, Rolls-Royce is making news for all the wrong reasons. Allegations of bribery have swirled around the UK’s leading manufacturing multinational since 2012, and a recent BBC/Guardian investigation suggests that corrupt practices were an established business practice, used regularly to win lucrative contracts around the world.

The first wave of allegations surfaced in 2012, when former employee Dick Taylor, who had worked at Rolls-Royce for more than 30 years, raised the alarm after discovering suspicious activity in Indonesia. Taylor took early retirement and began publishing his allegations online. The Serious Fraud Office began investigating his claims. Specifically, Taylor alleges that Rolls-Royce paid Tommy Suharto, son of the former Indonesian president, £12m, and gave him a Rolls-Royce car, to secure an order for their aircraft engines.

Network of bribery

The latest round of allegations are made in a BBC/Guardian documentary. In Panorama: How Rolls-Royce Bribed Its Way Around the World, they claim that Rolls-Royce used a network of agents to win business in at least 12 different countries – in some cases using bribes to land lucrative contracts

Rolls-Royce have said little about the allegations: “Concerns about bribery and corruption involving intermediaries remain subject to investigation by the Serious Fraud Office (SFO) and other authorities. We are fully cooperating with the authorities and we cannot comment on ongoing investigations.”

Corrupt connections

One claim is that Rolls-Royce paid millions of pounds to Sudhir Choudhrie, a businessman listed on India’s blacklist of people suspected of ‘corrupt or irregular’ practices. The report also alleges that Rolls-Royce engaged a network of agents to operate in Angola, South Africa, Iran, Iraq, Kazakhstan, Nigeria, Azerbaijan, India, China, Brazil, Indonesia and Saudi Arabia.

As if the SFO investigation was not enough bad news for Rolls-Royce, the German authorities announced in July that they planned to investigate alleged bribes in seven Asian countries.

A colonial legacy?

Jonathan Guthrie, writing in the Financial Times in May 2016, has a theory regarding the extraordinary allegations against Rolls-Royce: “British multinationals have traditionally behaved overseas in ways they would never have got away with in Croydon. Order-hungry local agents and corrupt officials were interlocking components in a mechanism oiled with backhanders. High-ticket procurement fraud is a colonial legacy…”

Anti-Bribery and Corruption training from VinciWorks

Doing business overseas can increase the risks posed by unfamiliar business cultures and working practices. VinciWorks offers online training to highlight the risks associated with contravening the Bribery Act 2010.

If you need to train your employees to recognise and safely report bribery and corruption, be sure to check out our global anti-bribery and corruption course. We also offer an Introduction to anti-bribery and corruption.

Compliance is one of the most fast-moving divisions in the corporate world. The rapidly-evolving demands on our function is driven by a whirlwind of ever-changing technology, risks and regulations. So where do we find ourselves in 2016? And what are the biggest challenges facing compliance professionals?

PwC recently released their State of Compliance Study 2016. Let’s explore their findings and see what we can learn from their global survey of 800 executives – including chief compliance officers, chief ethics and compliance officers (CECO), chief legal officers, general counsels and chief audit executives.

The report focuses on business strategy, and how well this is aligned with compliance management. Compliance success starts with the board, and how well senior leaders set the tone and focus attention on ethics and compliance.

Compliance is key, but not always prioritized

The report suggests that this, in general, is happening; 98% of respondents have senior leaders who are committed to ethics and compliance. But this commitment does not always translate into hands-on ownership: 55% claim that senior leaders provide only ad hoc oversight – or delegate many of their compliance and ethics oversight activities.

How to strengthen the ‘tone at the top’

PwC recommend a range of measures for clarifying the tone at the top, including regular communications about the importance of ethical and compliant behaviour, recognition of employees who embody these virtues, and disciplinary action against ethics and compliance violations. They also recommend that organisations aim for a 95% completion rate for compliance and ethics training within three months of deployment.

The report finds that compliance and ethics teams are aligning with other assurance functions, but greater coordination can be achieved: 54% conduct compliance and ethics-specific risk assessment activities beyond traditional risk management efforts. Organisations might be missing out on insights from people on the ground: only 21% use employee surveys to gather information on risk assessments.

The strain of regulation

While organisations recognise the importance of compliance, many CEOs view these demands as a burden. In PwC’s 19th Annual Global CEO Survey, 79% of CEOs cite over-regulation as a threat to their growth prospects. Could this frustration with regulation make life harder for compliance professionals? It could explain why so few compliance divisions (36%) claim to be ‘inherently integrated’ in their organisations’ strategic planning.

Perhaps the biggest challenge facing compliance and ethics professionals is the puzzle of how to get greater participation from the C-suite, and to encourage them to set the ‘tone at the top’ – when those same professionals are growing to resent what they perceive as ‘over-regulation’.

Compliance training from VinciWorks

VinciWorks provides convenient, online training for compliance professionals. Browse our compliance training now.

Director of Best Practice Gary Yantin hosted the first continuing competence user group this week. Over 19 firms convened on a conference call to discuss how firms are implementing continuing competence, and to share best practice.

Early Takeaway – Education is Key

The firms on the call agreed that it is still early days for continuing competence and many solicitors haven’t even begun their 2016-2017 learning plan. However the firms stressed that educating solicitors over the next month on the new requirements is a key first step. There have been some creative education initiatives at firms, including ‘chair drops’ of learning material on every chair, small workshops and video tutorials.

Some of the other best practice recommendations that were shared were:

  • Incentivise learning and development by tying it to remuneration
  • Modify performance appraisals to include continuing competence
  • When enrolling a solicitor in a course or suggesting training – also suggest some SRA competencies that are related to that training

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November 2016 marks the beginning of the SRA’s new approach to continuing competence. Solicitors in England and Wales are no longer required to track 16 hours of continued education. Rather, they are required to reflect on their practice and identify personal learning and development needs.

These regulatory changes require a shift in the way learning is recorded in your learning management system. VinciWorks has recently updated its Learning Management System to accommodate these changes.

From recording diverse learning methods to producing completion certificates, the VinciWorks system makes adapting to the changes to CPD simple and straightforward. The changes are only relevant to law firms operating in England and Wales, and do not affect historical data in the system.

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50 Dollar Notes in a Jeans Pocket

VinciWorks Releases a New Course on Fraud and Market Abuse

This 20 minute course explores two of the most common forms of financial crime: fraud and market abuse. The course will expand on terms related to fraud and market abuse such as “inside information”, “insiders”, “insider lists” and “insider trading”. Enrolling your staff on this course will provide them with an understanding of the different factors affecting fraud and market abuse. It will also help them identify red flags in the company or industry. Continue reading

Under the SRA’s New Approach to Continuing Competence, solicitors are required to reflect on the SRA’s Competence Statement, identify knowledge gaps and undertake learning to bridge those gaps.

All of VinciWorks’ courses correspond to competencies in the Competence Statement and can be used to bridge learning gaps. The guide below is a complete mapping of our courses with the Competence Statement.

Download the guide

During International Fraud Awareness Week, we consider the typical profile of a fraudster – as well as what you can do to reduce the risk of being a victim of fraud.

In KPMG’s new study, Global Profiles of the Fraudster, they analyse the findings of investigations into 750 fraudsters operating in 81 countries. So what can we learn from KPMG’s findings?

The true face of fraud is shockingly familiar

Many of us imagine that crime is something that stalks us from a distance, and that crimes against us will be perpetrated by strangers. The facts suggest we should shift our fear closer to home; 65% of the victims in 750 incidents of crime were employing the perpetrator. Another 21% were former employees, perhaps enabled by their knowledge and experience of security controls and weaknesses.

We might imagine that fraudsters are new joiners, or people who are less loyal to the company. Not so: 38% had more than 6 years’ service.

Familiarity breeds contempt?

And think that the typical fraudster is a low-earning staff member? In fact, 58% were managers and directors – the senior personnel most trusted with authority. And this authority is frequently used to undermine or circumvent controls and security systems: 44% of the perpetrators had unlimited authority.

While 66% of the fraudsters caught were motivated by greed, the report highlights an interesting subset of criminals: those motivated by a desire to conceal poor performance, or create the appearance that targets had been met, amounted to 35%.

Most fraudsters are male. Just 17% were female. And 68% were between the ages of 36 and 55.

This tells us that the average fraudster might not be a desperate, down-on-their-luck chancer with nothing to lose. The greatest risk to your organisation might come from your senior management team – or even your chief executive. As KPMG state in their report: “Outwardly, fraudsters in general are three times as likely to be regarded as friendly as not and are rarely perceived as loners. They tend to be highly respected and don’t necessarily have a showy lifestyle. In short, they may not conform to the stereotypical view of how people expect a fraudster to behave.”

Weak controls enable fraud

The report from KPMG states that fraud is often facilitated by technology, but it’s the weak internal controls that leave organisations vulnerable to fraud from within. KPMG quote Lem Chin Hok, Head of KPMG Forensic, KPMG in Singapore: “Internal controls are weak when they are poorly designed and are not followed by employees. A thorough fraud risk assessment is likely to show where the gaps are.”

During International Fraud Awareness Week, it’s vital that organisations don’t just look beyond their walls when implementing fraud prevention controls. KPMG’s study adds to the evidence that points to internal agents as likely perpetrators of corporate crime, and this potential risk must be considered when developing fraud prevention plans and procedures.

Modern Slavery Victim Working in Mines

The 2015 UK Modern Slavery Act Hits Big Brands

It has now been just over a year since the 2015 UK Modern Slavery Act came into effect. Large companies have been investigated, with some business owners seeing the inside of a prison cell. The following examples show the importance of ensuring your company is not associated with modern slavery.

The Not-So-Free Range Eggs

In June 2016 Jaqueline Judge and Darrell Houghton were found guilty of exploiting 6 Lithuanian men and of breaching the Modern Slavery Act. The six men had been trafficked to the UK and required to catch chickens from farms around the country. They were usually not given time to eat proper meals and deprived of appropriate facilities to wash and rest, being required to urinate in bottles and defecate in plastic bags while traveling between jobs. Wages were often withheld, as well as having a salary well under the agricultural minimum wage.

These workers were also intimated by fighting dogs if they ever complained. They were abused by “supervisors” who were employed by the couple to watch over them. One of the workers said “[Our Lithuanian supervisor] Edikas sometimes punished one person and sometimes punished the whole house for one person’s mistake.”

Being a Free Range Eggs provider, the irony of this case is striking. Further, this company distributed eggs to large chains including McDonald’s, Tesco and Asda. For them to be found guilty Modern Slavery charges is a reminder of the importance of verifying a company’s supply chain. Knowing potential red flags to look out for and having an effective reporting procedure in place is now more vital than ever.
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Compliance Week Europe 7th and 8th November 2016

More than 150 compliance professionals from over 120 organisations came together for 2 days in Brussels to discuss the challenges facing the sector. With the dust barely settled on the conference Darren Hockley, VinciWorks Internationals Managing Director offers his reflections on the conference.

Keeping pace with the changing regulatory landscape

The primary challenge for most compliance teams remains keeping pace with the changing regulatory landscape. Compliance teams are still juggling with recent legislation such as the UK Modern Slavery Act and the EU Solvency II regulations, whilst planning ahead for major changes in data privacy with GDPR looming on the horizon.

Many of the delegates felt they were keeping abreast of this challenge, particularly around the development of policies and employee awareness training. However more work needed to be done in terms of monitoring and identifying issues. Most attendees acknowledged a gap between policies and what is actually happening on the front line, particularly in areas of the world where is it still culturally accepted/expected that illegal bribery payments will be made. Pressure on middle managers who are striving to meet targets/incentives and to stand out from the crowd can also lead to a compromised position.

Bridging the culture gap

Although awareness of compliance issues is more common in employees and the vast majority have no intention of crossing the line, one worrying trend is the reluctance of people to blow the whistle it they do spot wrong-doing. This is despite an increase in legal protection and implementation of anti-retaliation policies by most organisations.

In some cases employees don’t want to harm the organisation they work for whereas in other cases they keep quiet to protect themselves. They simply don’t believe they will be protected and their careers will be unaffected and many are simply worried about taking this to their line managers. Most organisations cite zero tolerance to compliance issues; but there is more work to do to create a culture that reflects this.

Extending the reach

Perhaps the biggest challenge facing compliance teams is extending the reach of their compliance programme through complex supply chains. In some cases there are regulatory requirements to do so (such as anti-bribery and data privacy), in other cases it is about reputation and brand management (preventing modern slavery). The challenge is to understand the complexity of the supply chain and to have sufficient resources available to complete adequate due diligence and monitor performance across all compliance areas.

VinciWorks Data Protection Course Coming December 2016

Knowing how to protect your data and use it correctly has never been more important for businesses. Regulators are racking up fines in the millions. One big breach or one misplaced laptop can have an even bigger impact on reputation than ever before.

VinciWorks is launching a brand new data protection course, combining the latest in policy and law with best practice guidelines. We provide real-world scenarios and a customisable tool to design your own policy.

The course will be available in December 2016.

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