Corporate corruption scandals are an organisation’s worst nightmare, as the ensuing consequences are difficult to detach from once they have been uncovered.

Incidents that are classified as ‘corporate scandals’ include acts such as bribery, money laundering, terrorist financing and fraud. When uncovered, such actions should be dealt with swiftly and decisively, but never ignored, says Rudi Kruger, General Manager of LexisNexis Data Services as the potential consequences are tough to recover from. These include:

  • Damage to company’s brand, reputation and overall market value
  • Local and international legal liabilities such as hefty fines, penalties and jail time
  • Loss of revenue and operational downtime
  • Legal expenses from exposure investigations
  • Loss of investor and shareholder trust as well as loss of their financial support
  • Loss of customers/clients
  • Weakening of employee morale, resulting in a decline in performance and productivity
  • Lawsuits from various parties, who may have been negatively impacted by the scandal
  • And as a last resort, closure of the company.

“With these risks in mind, it is in every organisation’s best interests to mitigate risk and avoid opportunities for scandal with the support of comprehensive due diligence policies and procedures,” said Kruger. “Scandal aside, companies have ethical and legal responsibilities to ensure that their due diligence efforts pertaining to business associates are effective enough to detect and prevent unethical and criminal links/associations.”

Risk prevention and money laundering

Risk prevention begins with vetting and due diligence in line with anti-money laundering (AML) and Know Your customer (KYC) regulations, as well as the UK Bribery Act 2010, which should be conducted on all parties associated with the business including leaders, suppliers, partners, investors, acquisition targets, contractors, resellers and grant applicants.”

While effective due diligence is a multi-faceted activity, the overwhelming research can be simplified with LexisNexis Data Solution’s Nexis Diligence, an online solution that provides access to the intelligence needed to carry out screening. The solution is a highly advanced research tool that highlights the rule of law and provides rules and guidelines to ensure the legality of all client and company procedure.

It comprises a comprehensive database of more than 40 years of global archived news and data, designed to help a company perform the necessary due diligence in the areas of risk, compliance and fraud. Nexis Diligence also enables compliance officers to review data from the UK, EU, US and selected Asian jurisdictions.

Practically, Nexis Diligence enables users to select a prospective third party, perform a company or person check, explore associated entity interests, check against sanctions, check for red flags and politically exposed persons data, search for negative news, check the litigation history, assess country risk and confirm as partner/ supplier/ distributor.

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