How integrity due diligence can protect your company from a world of risks Dr. Onkar Nath

Agenda What is IDD Why it is needed Talking points Methodology Focal points Phases of IDD The Strategic Dimension Legislation(s) Is there any choice? Conclusion https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg

Integrity Due Diligence (“IDD”) is the gathering of independent information to gain an understanding of the integrity and corruption risks associated with a third party. It provides companies with a means to both identify these risks and confirm (or otherwise) information provided to them by a third party. https://www2.deloitte.com/uk/en/pages/financial-advisory/solutions/third-party-integrity-due-diligence.html integrity due diligence is the act of investigating the counterparty with whom you are doing business – whether they are employees, board members, agents or representatives, customers, suppliers, JV partners or acquisition targets. http://www.garancie.com/integrity-due-diligence/what-is-integrity-due-diligence

Why it is needed? “The Days of thinking that suppliers who do unethical or illegal things can’t hurt you are over.  You can, and will, be held responsible for the people working for you in the supply chain, whether you like it or not.” https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg

Why it is needed? Globalization Use of technology https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg

Why it is needed? To improve risk management in the broadest sense and to support better decisions on new investments and partnerships in all forms, including acquisitions, joint ventures, minority investments, strategic cooperation agreements or supplier-, distributor- or local agent relationships. https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg

Talking points Case of VW and Tesco Domestic companies https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg

Methodology for IDD Secondary records available in public domain (includes National and International Media) Interview of experts to confirm the information This leads to development of risk profile https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg

Focal points Major focal points in this phase of the investigation include: The existence of any connections between the business and any political figures, as well as how the company interacts with regulators, government entities, etc. The nature and strength of any such connections and whether any of those connections have been leveraged for the benefit of the company The extent, nature and credibility of any allegations made against the company or its key principals relating to bribery, corruption, money laundering, large-scale tax evasion, fraud or asset stripping Any alleged connections between the company and organized crime or terrorist groups or broader risk of exposure to such groups https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg

Phases of IDD https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg

The Strategic Dimension Passed due-diligence checks without concern. Further action or investigation is required. Area failed due-diligence checks.  https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg

https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg

Legislation(s) https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg

Is there any choice? substantial legal penalties reputational damage litigation exposure and financial losses through fraud. Understanding the risks of doing business and learning how to prevent or mitigate these risks — is vital to informed, effective transaction decisions. https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg

Conclusion Corporations and institutions can attain a strategic and competitive advantage by pursuing an integrated approach to integrity due diligence.  By assessing the trustworthiness and reliability of customers, business partners and any third parties, organizations ensure the fulfillment of compliance requirements, whilst concurrently facilitating a concerted effort to combat money laundering, fraud and corruption. https://www2.deloitte.com/content/dam/Deloitte/uk/Images/header_images/General/deloitte-uk-forensic-dollsb-1400.jpg/_jcr_content/renditions/cq5dam.web.1400.350.desktop.jpeg integrity due diligence is an essential risk prevention and risk mitigation tool which will add value to any strategic decision making process.

Dr. Onkar Nath CISSP(USA), CISA(USA), CISM(USA), CloudU dronkar@yahoo.com CISSP(USA), CISA(USA), CISM(USA), CloudU CFE(USA),CNSM(India), CAIIB(India),IPIAM(USA), CCSK, IDLA(USA), ISO 27001 LA, ISO 22301 LA, BS 25999 LA, M. Sc.(Maths.), PGDCM, PGDHRD, PGDIM, PGDMM, PGDFM, MBA (HR), Ph.D.(P.U, India), Ph.D. (AMSE, France), FRAS(UK), FAMSE(France), FUWAI(India)

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