Leveraging Sapin 2 Anti-Corruption Program and Effort, to Fight Corporate Fraud and to Protect Company's Value

In recent years, there has been a slew of new legislations (Sapin 2, UKBA, FCPA, Ofac, GDPR, CSR, etc.), each with their compliance requirements, in order to adequately address company’s risks, whether legal, financial, business or reputational.

Each set of rules demands – or recommends – dedicated measures or actions, such as implementing frameworks, programs, controls & procedures, reporting etc. If a company addresses each compliance requirement as a separate objective, it is likely that those initiatives will fall into different part of its organization, requiring separate resources, task forces and methods put in motion. As consequence, administrative costs will sky-rocket, while resources and organization will mushroom out of control.

Common Methods and Patterns

As a sound corporate approach, it is essential to look for synergies amongst all those initiatives, not only to be more efficient but also to provide a consistent message within the organization at large; that compliance requirements are aligned with corporate objectives, rather than contributing to the pile-up of unproductive red-tape.

Corruption and Corporate Fraud

Along with the increasing focus on addressing corruption worldwide, comes the virtue of fighting against corporate fraud. While the motivations for fraud or corruption might be different, the methods used to perpetrate these offenses are very similar. Fraud can be defined as perpetrating by individuals (or group) involved within the company’s organization and sometimes in collusion with external parties, for their own benefit. Corruption is perpetrated by individuals within the company’s organization to benefit an individual or group outside the company, and often motivated by the misguided impression that this is also to the advantage of the company, such as gaining access to a market, facilitating business relationship, etc.

Common Methods and Patterns

Because these two vulnerabilities in the corporate world are much alike, there is a unique opportunity to develop synergies and to leverage from existing resources and frameworks deployed for an anticorruption program; as these standards can provide an excellent platform upon which, a comprehensive and robust fraud prevention strategy could be shaped.

Methods used to organize, to hide and to evade cash, services or to siphon out any other form of company’s value, are using the same patterns and subterfuges; transactions must be disguised as donations, reimbursements, payment of services, etc.

For all these reasons, the preventative and detective actions, derived from an anticorruption program already put in place, such as a robust control environment, a whistleblowing mechanism, data analytics reviews…; would fit perfectly to a fraud-fighting initiative within the company’s organization.

In conclusion, for a very modest marginal effort, synergies with a solid Sapin 2 anticorruption program can trigger a corporate fraud-fighting initiative, as an additional benefit to the company. In addition, there is no doubt that developing those synergies, to transform the burdensome perception of a compliance framework into an efficient internal system and to better protect the company’s value, would likely gain necessary traction from stakeholders and also shareholders.

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