ETHIC Intelligence hosts second annual international conference
on corruption prevention Standards and Guidelines

OECD Conference center, Paris, Monday September 11, 2017

ETHIC Intelligence was very pleased to host its second annual international conference on Standards and Guidlines: Recent developments in Anti-Corruption Compliance on September 11, 2017 at the OECD conference centre in Paris. You can now view photos and video from the conference where experts from business, civil society and government exchanged and debated on how best to progress in the fight against corruption.

Click here for photos and videos

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How much due diligence does Validation cover?

The decision to award Validation is based on the following elements:

  • The results of a detailed, declarative questionnaire completed by the candidate SME which includes information on the company’s registration, executive management, JV or consortia activities, shareholders, and links to government;
  • A signed statement by the SME’s CEO expressing his/her unequivocal commitment to banning corruption.
  • The results of due diligence screening on the SME against World Check’s risk database. The information contained in World Check’s due diligence report is used to verify answers provided by the SME in its declarative questionnaire and to determine whether the SME is formally FCPA compliant. Blacklisted companies or individuals are ineligible to continue the validation process.
  • The results of an on-site visit by SGS or DNV to verify information provided in the declarative questionnaire, ascertain the level of anti-corruption awareness and commitment shown by the SME’s upper management, carry out an in-person training on preventing corruption, meet and obtain a signed declaration from the SME’s accountant, and provide simple technical assistance if necessary (provide a sample code of conduct, sample anti-corruption clauses for contracts, etc.).

A summary of all elements listed above are made publicly available via both the business partner’s and ETHIC Intelligence’s website along with a compliance risk rating in the form of a chart indicating:

  • Whether the business partner’s executive management includes a public agent or is linked to a public agent
  • Whether the business partner’s shareholders or ultimate beneficiaries include a public agent or are linked to a public agent
  • Whether the business partner uses subcontractors to carry out its mission
  • Whether the business partner is engaged in a consortium or joint venture.

Due diligence results are accompanied by the Validation terms of reference and a scan of the CEO’s signed statement banning corruption.

What information is included in Validation results? What results are made publicly available?

By accepting Validation, the SME agrees to post the Validation logo on the first page of its website and link it to an ETHIC Intelligence webpage, on which will appear:

  • The Client’s name, location, activity, company structure, compliance risk rating and other descriptive information;
  • The declaration of commitment to integrity signed by the CEO;
  • The date of award and period of validity.

Click here to view the online Validation results of a sample SME.

What is a Compliance Risk Rating?

SMEs having obtained ETHIC Intelligence Business Partner AC Validation are ranked according to the level of their compliance risk. This Compliance risk rating aims to provide general compliance information to potential clients of the SME; however, it does not preclude such potential clients from performing additional due diligence specific to the mission envisaged for the SME. Example of a compliance risk rating, included in Validation results available online compliance_risk_rating

Where can I find Validation results for my business partners?

SMEs having obtained Validation are required to display the Validation’s logo and explanation on their website. The Validation logo must at all times be linked to a page on the ETHIC Intelligence website that includes all information relevant to the SME’s validation, including details on the scope of validation, a summary of results from the on-site audit and due diligence screening, the signed statement of commitment to anti-corruption, and the compliance risk rating. Because a Validation can be revoked at any time under certain circumstances, the information pertaining to a particular validation is legitimate only if available on the ETHIC Intelligence website. In order to ensure transparency and public availability of the SME’s commitment to ban corruption in its activities, SMEs wishing to obtain validation must have a website. Information pertaining to validation may be indicated in any language but at least one version must be in English. Click here to view the online Validation results of a sample SME.

As prescriber, can I have access to my business partners’ due diligence reports and detailed audit reports?

Due diligence reports are strictly confidential and are not included in Validation files transmitted to the SME. However, companies agreeing to cover the cost of their business partner’s due diligence screening may receive the due diligence report for the business partner in question. In these cases, companies may not share the due diligence reports with their business partners or any third party. ETHIC Intelligence treats on-site audit reports as confidential and does not make them publicly available. However, Validated SMEs do receive their detailed on-site audit reports and may share these reports with prescribers or any third party as they see fit.

How long does a Validation last?

ETHIC Intelligence Business Partner AC Validation is awarded for a period of three years, after which SMEs wishing to maintain Validation are required to apply for renewal. Throughout the Validation’s 3-year period of validity, the Due Diligence company conducts yearly checks to ensure that no major non-compliant issues have arisen since the award.

Can a Validation be revoked? What if my business partner ceases to be formally FCPA compliant during its Validation period (ex. convicted for a financial crime)?

Validated SMEs are contractually obligated to report any changes to its organization or legal status that could compromise the validation awarded by ETHIC Intelligence. Each year that a validation is in effect, the SME updates its original declarative questionnaire and the answers are verified via an external due diligence screening. Validation is automatically withdrawn in the event that the updated questionnaire is not received and/or if the due diligence company identifies incorrect or inaccurate information in the updated questionnaire. In the event that Validation is withdrawn or expires without renewal, ETHIC Intelligence removes all information pertaining to the SME’s validation from the ETHIC Intelligence website.

My SME has links to a public agent. Does this preclude me from obtaining Validation?

SMEs with links to a public agent can still obtain Validation. However, the compliance risk rating will indicate that the SME’s shareholding or management has links to the public sector. Companies doing business with the SME may wish to conduct further due diligence to identify which public agents are concerned and to determine whether or not the links affect the project undertaken by the SME.

Can large companies use Validation to avoid conducting due diligence on a business partner?

Companies must adapt their level of due diligence to the degree of corruption risk carried by a business partner and the partner’s intended mission. Validation may suffice if the business partner and the mission the partner carries out are deemed to be low-risk by the company, particularly after having taken into account the compliance risk rating attached to Validation. The compliance risk rating aims at providing general compliance information to potential clients of the business partner; however, it does not preclude such potential clients from performing additional due diligence specific to the mission envisaged for the business partner. Depending on the level of risk a business partner or the intended project are considered to be carrying, companies may wish to either conduct further due diligence or use only Validation results.

Does Validation certify that an act of corruption has not been committed by the business partner?

ETHIC Intelligence Business Partner AC Validation in no way certifies that an act of corruption has not, is not being or will not be committed by the business partner. It does not endorse the business partner’s professional capacity, experience or state of affairs; rather, it attests to the business partner’s awareness of corruption-related risks, regulations and best practices as well as its commitment to conducting business with integrity.

Can my company apply for Validation?

A company is eligible to apply for Business Partner AC validation if:

  • It employs fewer than 10 white-collar professionals;
  • 100% of its shares are held by an individual (as opposed to a legal entity) or if a maximum of 20% of its shares are held by a legal entity which itself does not represent the largest nor the second largest shareholder within the organization;
  • None of its individual shareholders have been convicted of a financial crime within the last 10 years;
  • None of its non-individual shareholders have been convicted of a financial crime within the last 5 years, and;
  • None of the members of its executive management have been convicted of a financial crime within the last 10 years.

Organizations whose shareholders or members of executive management face allegations or are currently under investigation for a financial crime can still be eligible for validation; however, validation is automatically withdrawn in the event of a conviction.

Organizations that do not meet the first two criteria (number of white-collar professionals and percentage ownership by non-individuals) may consider certification of their anti-corruption compliance programs. More on certification.

To ask us a question or obtain more information on validation, please contact us.

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