With increasing impacts of globalization and growing interdependence among financial markets of the world, the importance of complying with the regulations and being transparent with your dealings has reached the highest levels. Whether it is exploiting accounting loopholes to show inflated profits like energy giant “Enron” or mismanaging investment funds like private equity mammoth “Abraaj,” the end of such wrongdoings is always disastrous.

Being the Chief Compliance Officer of W&W Inc., the apparent situation is very alarming. While enjoying a high growth rate for the last 15 years in emerging countries where corporate bribes and loopholes in the regulatory environment are not uncommon, the sudden and mysterious exit of the former COO within a year raises red flags. Furthermore, obtaining store permits faster than in Europe, hiring of shady Third Party Intermediaries (TPIs) without carrying out proper due diligence and paying them higher commissions, and overlooking of controls which were supposed to stop improper payments to TPIs and government officers demonstrate that there must be something going on which is not righteous.

Such allegations can probe regulatory compliance institutions, which can result in the proper investigation against W&W Inc. And a case of a finding of any significant proof, our organization can face risks of hefty fines, loss of reputation, and even rescinding of working license.

As a new COO of W&W. Inc, this situation will give me tough challenges. To cater to the issues systematically and adequately, I will go with the following strategy.

My Strategy:

• Know the reality:

Being a new COO, my priority would be to know what has been happening with the organization internally. How accurate such allegations are and what are their backings. To understand such things, I would curate a committee mostly consist of outside individuals whose task would be to carry out a detailed and comprehensive audit check of the organization for the past years. That committee would go through the allegations and see what their realities are. The committee won’t be including officials from the organization as this will increase the risk of biases as it has been mentioned in the allegations that even the top leadership of our subsidiaries have been involved in such malpractices.

The committee would also be interviewing the former COO so that we can know why she left and if she knew more than us.

• Take action:

After the audit and review committee has done its work, it will generate a comprehensive report regarding their findings. If the report points out any wrongdoing, deceit, fraud, or misalignment from the code of conduct, proper action against the notified personally would be taken.

• Precautionary measure:

Taking action after the misconduct and punishing the culprit is not the end and accurate solution for such issues. To prevent such cases from happening again, I would take proper precautionary measures, which can help in preventing such incidents from happening again, which can significantly damage the reputation of W&W Inc.

Such precautionary measures may include forming a board of governance that would look after the compliance with regulations, ethical conduct, and transparency of deals and transactions. The committee would consist of external directors to make it hard to influence that board. After setting up a board, we will curate a properly documented set of policies and procedures which would tell what and how to do organizational affairs and deals. A proper check and balance procedure would be introduced, which will focus on the review and segregation of duties. This will help in preventing individual level frauds and also in catching up innocent mistakes. Furthermore, a particular focus will be put on communicating the drafted policies and conducts; without proper communication, the desired results of such drastic steps might not be fruitful.

Detailed Strategies:

Setting up a board of governance:

To improve processes according to compliances, among other aims and objectives, align with ethical practices, honesty, and transparency in our business, W&W Inc. should focus on adhering to external and internal laws, methods, and regulations. To enforce the implementation of such a plan which aims to enhance and improve the current compliance environment, compliance and government board should be created (if not already in existence), which should include constituents executives from the government department and executivesfrom the compliance department. If such a board already exists, I would try to remake it through shuffling and adding more executives who have relevant working experiences related to executing ethical practices, making effective external and internal control systems, and transparency mechanisms.

The first task of this board of governance would be to examine and audit the past track records and available data to know the reality about the rumors regarding the violations of regulations.

Documented processes:

Even though there are generally available systematic manuals regarding ethical conduct and regulatory compliances for offices to pursue and follow, an organization ought to build up its very own comprehensive and intensive code of conduct for its internal usage and transactions related procedures. Having a complete set of policies and procedures would serve different capacities, such as communicating openly to all employees of the organization the ethical and regulatory policies of the organization so that the employees know what the organization is expecting from them. Properly drafted a set of policies guides the employees regarding how to deal with business transactions and what to do when they observe something happening, which is not harmonious with the values and policies of the organization.

Without such a drafted set of policies, there would be an element of ambiguity, and the employees may get a chance of pursuing an act which is against the values of the company and not harmonious with the regulatory compliances.

Review of transactions:

At the point when an operation is performed inside an organization, there should be another degree of audit and endorsement performed by an individual that is not involved in that particular transaction. The reviewer ought to have the relevant experience and knowledge to recognize blunders and oversights. The endorsement should be recorded to confirm that a review or audit has been finished. Such analysis and audit help in lessening errors mistakes happening in the proper recording of the transactional data, and even might catch frauds and deceits.

Segregation of Duties:

Separation of duties is an essential and vital internalcontrol and one of the most challenging tasks to accomplish. At the most fundamental level, it implies that no single individual ought to have command over more than at least two phases of any business or financial transaction. It is used to guarantee that mistakes or anomalies are counteracted and identified conveniently by the leadership in the daily routine of business. Separation of duties gives advantages like it makes committing conscious deceit more troublesome as now it would take at least two persons to commit fraud or misrepresentation.

Amendments to HR Policies:

It has been mentioned that “top management is aggressively setting goals for the frontline company officials to achieve stiff targets, which is taken into account for performance evaluation and setting annual bonuses.” Policies like this force top management to set high and sometimes pragmatically unachievable goals for the frontline managers to avail of high bonuses. To fulfill the expectations and achieve those high targets, managers can be negatively influenced to take unethical steps which can violate compliance and transparency standards. To fix this policy, I would align with the human recourse department to make the relevant amendments in the annual bonuses policy.

Communication:

Communication is the key to the effective implementation of any policy. After drafting up the compliance, ethics, and transparency guidelines and procedures, I would communicate them to the employees of the organization.

Moreover, Iwill curate a specific draft on compliance issuesand it would be available to every employee featuring the main plans carried out, the ethics guidelines, other internal and external procedures, the laws, and other vital documents, like the code of conducts, code of ethics and morality, and code of transparency.

 

Training:

I will primarily focus on the continuous provision of instructions to employees to deepen their knowledge of compliance guidelines, fundamentals, and legislative responsibilities. I would also conduct training which helps employees in identifying, stopping, and communicating situations of misconduct, threats, or risks with signals of deceit and corruption in business transactions.

I would also implement specialized training and workshops for executives who hold positions that are at higher stakes and risks so that they can know the importance and exposure of their roles and the precautions they must take while doing their duties.

Time Frame:

Indeed, implementing such drastic changes will take time. When dealing with issues like misconducts and allegations regarding fraud, bribes, and deceits, we often face hurdles and challenges, which can take a little amount of time to sort out.

However, my priority would be to form the audit committee, which will be completed within the time frame of a month. To review the allegations and audit the records or transactions, the review committee will be provided for two months. After the report of the audit committee, we won’t take much time to make the relevant and recommended actions. However, the “preventing” part of the strategy may take time as it implementing new policies, communicating them to the employees, and providing them with the relevant training would be a timely process.

Expected Outcome:

The expected outcome would be positive. With all the steps mentioned above, I hope W&W. Inc would be able to deal with the regulatory issues in a better way in the future.