Tom begins this episode by summarizing his favorite Marx Brothers movie Duck Soup. The scene where Pinky and his cohort report to Trentino is a fitting metaphor for surveillance and aptly introduces Microsoft’s FCPA Enforcement Action of July 2019.
Microsoft’s Hungarian subsidiary admitted to 3rd party vendors engaging in bribery and corruption. Discounts of up 28-32% were granted without documentation to support their justification. This money was routed to corrupt foreign officials as bribes.
As part of their remediation, Microsoft has taken steps to increase its capability to prevent violations by using Machine Learning to help identify transactions and automatically flag those that pose heightened risk. A compliance team then applies scrutiny to these flagged transactions.
Microsoft devised a Transaction Monitoring system into which Business Development employees have to input information about business opportunities. This information is run through the Machine Learning tool which assigns it a risk rating. The tool is prepopulated with risk management strategies and techniques which salespeople can implement right away. Transaction monitoring is done pre-contract, which allows Microsoft to respond in a quicker and more expeditious manner. It also positively impacts the company’s profitability.
A similar compliance solution is an efficient way for a company to come up with bids, respond to true market forces, and protect against third-party misconduct, says Mike. Control persons and gatekeepers are key players in such a solution and therefore, need to be trained to give them the tools to raise compliance issues. Data analytics would make the process even more effective.
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