August 2, 2012
As noted in Protiviti’s Flash Report, Even Retailers and Consumer Products Manufacturers Must Manage Compliance with the U.S. Foreign Corrupt Practices Act and Other Anti-Bribery Laws, issued on May 3, 2012 and available at www.protiviti.com, recent reports of alleged bribery and corruption risk in the retail industry have sent a strong signal that such activity can affect global companies in all industries, including retailers and consumer products manufacturers with retail outlets. The Flash Report covers several topics, including prosecutions of alleged violations of the Foreign Corrupt Practices Act (FCPA) and other anti-bribery laws on the upswing, how retailers can get into trouble, the warning signs, and how retailers can manage FCPA and anti- bribery compliance.
With recent reports that U.S. authorities are considering launching a wide-ranging examination of the retail industry for violations of anti-foreign bribery laws, Protiviti is issuing an addendum to update our May 3 Flash Report. These reports point out that certain retail companies have reported to U.S. agencies suspicions of their own potential violations.1
As retailers with extensive operations abroad consider the implications of alleged bribery scandals, they should also brace themselves for the specter of an industrywide sweep by the
U.S. Securities and Exchange Commission and the U.S. Department of Justice to review for potential anti-bribery violations. While regulatory inquiry of industry players is not atypical when such corruption issues are reported by major companies, as members of the pharmaceutical and movie industries know all too well, the potential for a review is a matter warranting close attention. At this time, it is unclear what the scope of the review would be or which companies would be included. Nor is it clear what the nature of the inquiries might be.
As this heightened regulatory scrutiny of their global operations looms on the horizon, retailers should reflect on the seven broad categories of illustrative questions we outlined in our May 3 Flash Report, as they may present themselves in any regulatory inquiry. These categories include country risk profiles, extent of the due diligence performed on potential foreign business partners and representatives, nature of payments and expenditures in foreign countries, business model and relationships, etc. While the questions we provide are not intended to give a complete diagnostic, the answers to them may raise “red flags” requiring immediate attention by the organization’s executive management and the board of directors. It occurs to us that the regulatory review may emphasize inquiries around “red flags.”
About Protiviti's Retail Industry Practice
Protiviti serves retail and consumer products companies around the world by helping them identify, measure and manage the risks inherent in their industry. Our experts have the skills, talent and experience to detect red flags, pitfalls and – most importantly – opportunities in retail.
As retailers and consumer products manufacturers and their suppliers continue to address an uneven economy and changing regulatory landscape, they are assessing and, if necessary, modifying their strategies and business processes on an ongoing basis. Technology, distribution, go-to-market campaigns and approaches to retailer-supplier collaboration all may be affected as these organizations seek to streamline operations while pursuing growth initiatives that will help them sustain competitive advantage.
Our professionals specialize in making risk management capabilities and infrastructure practical and value-adding for retailers and consumer products manufacturers with their own retail outlets. We help these organizations assess their capabilities, identify areas for improvement, and collaborate closely with their teams to implement solutions. Our consultants have extensive experience with many leading companies across all sectors of the retail industry. And they are well-versed in the relevant business and industry-specific issues that retail organizations confront in their day-to-day business.
We provide solutions that address the root causes of these challenges – not just the symptoms.
- Supply chain management
- Vendor review
- Store audits
- Internal controls assessment
- PCI compliance
- Loss prevention