Corporate investigations likely to rise as impact of credit crunch hits
LONDON (June 25, 2008) – Corporate investigations are on the rise as the credit crunch tightens, and companies scrutinise overseas operations and financial accounts in greater detail. Cases that would avoid the spotlight in boom times are now coming to light, and this has increased the external focus on how these investigations are carried out and concluded. With law enforcement agencies and regulators around the world demonstrating an increased focus on investigating and prosecuting overseas corruption around the world, this downturn is not only exposing frauds but also corrupt practices in high risk international operations that senior management are obliged to investigate.
Speaking today at the European Forum on Internal and Regulatory Investigations, Keith Williamson, a Director at AlixPartners’ London office, stressed the importance of companies taking proactive steps to avoid fraud and bribery, and build a culture of compliance. “One of the key tasks for senior management is to ensure they know what is going on in all their operations. The only way to effectively do this is through visiting operations on the ground, to understand both the internal and external environment in which employees are working. In good times and with good results, management teams tend to leave overseas operations to run themselves, but then face large risks such as undiscovered fraud and bribery practices.”
Clearly prevention is preferable to cure, and companies can help themselves through creating a culture of compliance, which deters employees from committing misconduct. “A pro-active culture of compliance is the best defence a company can have,” said Williamson, “It is important that employees know any breeches of conduct will have consequences. Openly and fully communicating with employees the result of an investigation and the sanctions taken against individuals is crucial in developing a compliance culture, so employees see the consequences of misconduct and are not scared to blow the whistle on fraud and corruption.”
“The biggest driver behind misconduct is the need to deliver certain results, whether it be sales targets for an individual or pressure for management teams to deliver financial results that meet expectations.”, he added, “Having an external partner to run an investigation is pivotal to its success, an independent party with senior expertise that can organise and lead the investigation but understand the human motivations behind the misconduct. As the number of companies with international operations increases, it will be the management teams that are pro-active in preventing and investigating corruption and fraudulent practices that will see their businesses thrive rather than be damaged and distracted by the consequences of misconduct.”
About AlixPartners
AlixPartners is a leading global business advisory firm offering services across four main disciplines – operational performance improvement, financial restructuring and bankruptcy reorganization, litigation consulting and financial advisory services. The firm's expertise is in helping clients anticipate, evaluate and successfully resolve urgent, high-impact business challenges in an increasingly complex legal, regulatory and economic landscape. Drawing on the experience of more than 700 employees from 13 offices across North America, Europe and Asia, the firm commits small teams of seasoned professionals to deliver results when it really matters. For more information, visit www.alixpartners.com.
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