William Sullivan Participates in a Discussion on Multinational Fraud Compliance Strategy

While establishing the obvious need for awareness and action at the highest levels, Sullivan points out that with so many markets maturing, there’s a natural tendency for companies to look to emerging areas, but that this has its perils.

“A new and untested market can be a fertile ground for fraud,” says Sullivan, “and companies that operate across borders and outside their traditional markets are more vulnerable to corruption risks, just as their size, and separation of business units, departments and functions can magnify the difficulties in managing such risks.”

When asked about important recent regulatory developments aimed at combating corporate fraud and the relative effectiveness of such acts, Sullivan acknowledges the UK Bribery Act and the Dodd-Frank Reform and Consumer Protection Act as ones that “come immediately to mind,” as well as “the whistleblower provisions embodied in Dodd-Frank [which] include incentives and rewards that are potentially enormous.” But Sullivan goes on to point toward another corruption-fighting development of recent years:

“The pace of international law enforcement cooperation in the anti-corruption setting has quickened since 2009,” says Sullivan. “Over the last five years, the U.S. DOJ and SEC have worked closely with partners in a host of the most populated and economically vital developing countries in the world … Moreover, U.S. regulators have developed close working relationships with their counterparts in other jurisdictions that historically have been considered high-risk for anti-corruption or money laundering purposes, such as Costa Rica and Panama.”

As the panel discussion continues, Sullivan notes that “Given the interactive nature of universal anti-corruption enforcement, if a company is facing corruption scrutiny anywhere in the world, it runs the risk of its local challenge metastasizing into a global problem.”

The discussion concludes with a look at the potential risks posed to company directors and officers of a company investigated for fraud, and the question of what can be done to mitigate those risks.

“The starting point to managing and mitigating this risk is recognition of the legal duties and responsibilities that officers and directors owe to their companies,” says Sullivan. “These are often characterized as fiduciary obligations or the highest degree of care and loyalty. There is a level of personal responsibility that directors and officers must recognize and accept.”