IPSA

1. ANTI-BRIBERY & CORRUPTION FOR EMERGING ECONOMIES
Compliance Advisory, Risk Assessment and Due Diligence Investigations
PRESENTED BY
Kim Marsh, CFE, CAMS
Executive VP, International Operations
33 Cavendish Square
London, UK W1G 0PW
Phone: 44 (0) 207.182.4098
kmarsh@ipsaintl.com

2. Margin Call
“There are three ways to make a living in this business:
be first, be smarter or cheat.”
John Tuld (Jeremy Irons)
CEO of fictional investment bank
in Margin Call (2011)

3. About IPSA International, Inc.
IPSA International, Inc. (IPSA) has a 20-year history of successfully
completing complex multi-jurisdictional investigations in the areas of:
Anti-Money Anti-Bribery &
Laundering Corruption
Litigation Investigative
Support Due Diligence
Assignments include large-scale Criminal, White Collar and Financial
Investigations for multinational corporations, banking/financial
institutions and law firms.

4. Track Record
• Mid-size Firm > Top-tier Experts > Competitive Rates
• Preferred AML service provider to 5 major international banks
• Research capabilities in 20 languages
• Resources in over 75 countries
• Emerging markets expertise in Former Soviet Union, Latin
America, Middle East, Nigeria, China & Taiwan
• Offices in New York, London, Phoenix and Vancouver

5. Team
Dan Wachtler, President & CEO - 20+ yrs industry veteran; large-scale AML remediation for global
financial institutions; security program development, international due diligence, off-shore asset
location.
Kenneth (Kim) Marsh, CAMS, CFE, Executive V.P. International Operations - 35+ yrs industry
expert, due diligence investigations, 25 yrs RCMP Organized Crime Unit focus on large-scale money
laundering.
Robert Weiner, JD, CIPP, Managing Director & Regional Counsel - 20+ yrs legal, investigation and
compliance. Former Director BDO consulting; specialist in anti-bribery/corruption, focused on US FCPA
and UK Bribery Act, and litigation support.
William Goss, CAMS, Senior Director Anti Money Laundering - 25+ yrs AML investigations, due
diligence and fraud. Charter officer of RDC, an AML/EDD database by 20 global financial services
companies including Goldman Sachs, Morgan Stanley, Citigroup and Bank of America.
Jim Oakes, CFCI, CFE, Senior AML Consultant - 30+ yrs experience investigating international fraud,
AML and financial crime prevention with Citigroup, Barclays, Standard Chartered Bank, GE Money and
Abbey Santander. Regent of the Board of the ACFE.
Robert Cone, MBA, Managing Director, Special Projects - 25+ yrs senior manager with international
banks in treasury and broker dealer functions, foreign exchange, derivatives and money markets.

6. Services
Anti-Money Laundering
Intelligence at Work® AML services for a wide array of organizational
conditions, business lines, geographic markets, regulatory situations
and implementation timetables.
Investigative Due Diligence
Intelligence at Work® Investigative Due Diligence services deliver
credible and timely intelligence to support corporate decision making
on acquisitions, investments, business partners, clients, supply chains,
competitors, employees and board members.
Litigation Support
Intelligence at Work® Litigation Support group designs, manages and
conducts comprehensive investigative solutions for commercial
litigation, financial and fraud investigations, regulatory proceedings
and dispute resolution.

7. Services
Anti-Bribery & Corruption Due Diligence
• Compliance advisory, risk assessment and due diligence investigations
for corporations, investment banks, private equity & hedge funds
• Defensible procedures for M&A, investments, litigation support and
regulatory enforcement proceedings
• Initial assessment, key interviews, evidence gathering and
analysis, reporting and implementation of remedial action
• Conducted in accordance with provisions of the FCPA, the U.K. Bribery
Act & anti-corruption laws of OECD signatory countries

8. Services
Emerging Economies Due Diligence
• Advanced investigative capabilities and established network of well-
placed, highly credible in-country resources
• Access to expertise and information not readily available - one of the
greatest challenges encountered in emerging economies due diligence
• Due to the volume of requests from our clients, we excel in the following
countries:
Argentina, Brazil, Chile, Colombia, Peru, Venezuela and Mexico in Latin
America; Russia, Ukraine and Kazakhstan in the Former Soviet Union;
China and Taiwan in Asia; Nigeria in Africa; and UAE, Qatar, Saudi
Arabia and Egypt in the Middle East.

9. Regulation & Enforcement
• Increasing globalization of Anti-Bribery & Corruption regulations
• Collaborative cross-border investigations and aggressive international
Enforcement
• Requirements to Conduct Anti-Bribery and Corruption Due Diligence
Across Multiple Jurisdictions
• Risk of Criminal & Civil Penalties for Corporations, Directors,
Management and Individuals
• Fines, Litigation, Debarment, Reputational and Financial Damage
• See Appendix for Comparison of U.K. Bribery Act & U.S. FCPA

10. Global Regulation
U.S. Foreign OECD Anti- Council of Africa Union Russian Anti- U.S. SEC Dodd-
Corrupt Bribery Europe Convention on Bribery Laws Frank Extraction
Practices Act Convention Convention Preventing & (Amended – Issuers/ Conflict
OECD
(1977) (1999) on Corruption Combating 2011) Minerals (2012)
(2002-2003) Corruption (2006)
1977 . . . . 1997 1999 2002 2005 2006 2010 2011 2012 . . 2013
Inter-American Canada UN Convention U.K. Bribery Chinese Anti-
Convention Corruption of Against Act (2010) Bribery Laws
Against Foreign Public Corruption (Amended –
Corruption Officials Act (UNCAC) 2011)
(1997) (1999) (2005)

11. Commonly Encountered Risks
Country Risk
Perceived high levels of corruption, absence of effectively implemented anti-bribery legislation and
failure of foreign government, media, local business community and civil society to promote
transparent procurement and investment policies.
Sectoral Risk
Some sectors are higher risk than others. Higher risk sectors include the extractive industries and large
scale infrastructure sector.
Transaction Risk
Certain types of transaction give rise to higher risks, for example, M&A transactions, licences and
permits, transactions relating to public procurement and charitable or political contributions.
Business Opportunity Risk
Such risks might arise in high value projects or projects involving many contractors or intermediaries;
or projects not apparently undertaken at market prices, or which do not have a clear legitimate
objective.
Business Partnership Risk
Certain relationships may involve higher risk, for example, the use of intermediaries in transactions
with foreign public officials; consortia or joint venture partners; and relationships with politically
exposed persons where the proposed business relationship involves, or is linked to, a prominent public
official.

12. Emerging Markets Risk
• Dependence on large government contracts, critical licenses and
permits
• Reliance on agents, distributors and third-party intermediaries to
obtain business or secure licenses/permits
• Off-the-record payments to facilitate contracts & licensing
• Foreign public officials associated with intermediaries & customers
• Unusual payment arrangements and excessive commission structures
for subsidiaries, intermediaries & third-parties
• Payments made to offshore entities
• Differing cultural values and social realities

13. Third Party Risk
Third party intermediaries have been identified as the greatest risk to
enforcement of anti-bribery and corruption regulations. (Source: KPMG, 2012)
Analysis of U.S. SEC and DOJ enforcement actions indicate alleged use of
third-party intermediaries to pay bribes to foreign governments increased
to:
100% of U.S. FCPA enforcement actions, from 42% in 2005.
(Source: Sherman & Sterling, 2012)
Conducting „adequate due diligence‟ on third party
intermediaries is one of the six guiding principles of the U.K.
Bribery Act. (Source: SFO, 2010)

14. IPSA International, Inc.
Compliance Advisory, Risk Assessment and
Due Diligence Investigations
• In-depth investigation of principals, management, subsidiaries, supply
chains and intermediaries
• Background and reputational checks to establish prior association with
bribery, corruption, money laundering and fraud
• Payments to host governments, off-shore entities and related-party
transactions
• Arrangements for securing high-value licenses, permits and contracts
• Use of middlemen and off-shore vehicles to hide beneficial ownership
and financial information

15. Third Party Due Diligence
Risk Assessment determines Identify
the extent of Due Diligence Review
required.
Six Stages for conducting
Due Diligence on: Due Diligence Risk
• M&A Targets Assessment
• JV Partners Monitor - High Level -
• Investors Process
• Principals
• Management
• Board Members
• Subsidiaries Audit Research
• Supply Chains
• Intermediaries

16. Third Party Due Diligence Process Review
Third-Party
Collect documents from third-
Identify party (incorporation docs, etc)
Risk Assessment
Simplified Due Diligence High Level Due Diligence
(Low Risk) (High Risk)
Company Check Person Check Company Check Person Check
Key company data ID Verification Key Company Data ID verification
Sanctions & Watchlists PEPs Sanctions & Watchlists PEPs
Senior Executives Sanctions & Watchlists Negative News Associates
Person Checks on all Sanctions & Watchlists
Directors Directorships
Person Checks on Key Shareholdings
Shareholders Negative News
Report Monitoring and Review

17. Summary
• Industry leader in risk management
• Senior multi-disciplinary team with deep emerging markets expertise
• Decades of experience conducting complex white collar crime, anti-bribery
and corruption, and AML investigations across high risk sectors and
geographic regions
• Network in 75 countries, research capabilities in 20 languages
• Ready access to expertise and resources not available in-house
• Offices in U.S., U.K. and Canada

18. Contact Us
PRESENTED BY
Kim Marsh, CFE, CAMS
Executive VP International Operations
IPSA International, Inc.
33 Cavendish Square
London, UK W1G 0PW
Phone: 44 (0) 207 182 4098
Email: kmarsh@ipsaintl.com
New York | London | Phoenix | Vancouver
800-997-4772 | www.ipsaintl.com

19. Appendix

20. Transparency International :: 2011 Corruption Index
VERY
CLEAN
HIGHLY
CORRUPT
Natural resources are often located in
countries that rank as ‘highly corrupt’ on
Transparency International’s Corruption Index.
For example Venezuela, Russia, Guinea, Democratic Republic of
Congo, Nigeria, Nicaragua, Mongolia and Kazakhstan all scored less
than 2.9 on the 2011 Corruption Index. By contrast, the U.K. scored
7.8

21. Extractives Industry
Extractive Industries Transparency U.S. Dodd-Frank Wall Street Reform Act (2011)
Initiative (EITI, 2002) SEC approval of Section 1504
Voluntary regime of 35 participating countries Oil, gas and mining companies listed on a U.S.
calling for disclosure by oil and gas, mining exchange are required to disclose what they pay
and timber companies of payments made to to foreign governments as part of their annual
governments to further the commercial filings to the Securities and Exchange Commission.
development of their resource projects.
U.S. Foreign Corrupt Practices Act (1977)
UK Bribery Act (2011)
U.S. headquartered multinational companies are
Covers overseas operations of firms doing held to a higher standard of forgoing bribery even
business in the UK, requires companies to have in countries where it is commonplace.
„adequate‟ provisions against bribery
Kimberley Process (2003)
“Any company that carries on a business in the UK
can now incur liability for the corrupt actions As of January 2012, 76 countries committed to KP
(anywhere) of rogue employees or associated which sets out requirements for controlling rough
third parties, even if the company’s management diamond production and trade to stem the flow of
knew nothing about the bribery.” conflict diamonds.

22. U.K. Bribery Act versus U.S. FCPA
Provision U.K. Bribery Act U.S. FCPA
Bribe Not limited to foreign officials Only bribes (anything of value),
Prohibits bribes paid to any person to paid or offered to a foreign
induce them to act “improperly” official are prohibited
Advantage Obtained Focuses on Improper action rather Payments must be to
than commercial advantage or “obtain or retain business”
benefit (except in strict corporate
liability).
Active vs. Passive Two offenses: (1) “Active Offense” Passive Offense – only the act of
Offense of bribing another; and (2) “Passive payment, rather than the
Offense” of being bribed receipt/acceptance of payment is
prohibited
Corporate Strict A new strict liability corporate Strict Liability only under
Liability offense for failure of a commercial accounting provisions for public
entity to prevent bribery - subject to companies – failure to maintain
defence of having “adequate adequate systems of internal
procedures” designed to prevent controls.
bribery in place.

23. Continued…
Provision U.K. Bribery Act U.S. FCPA
Jurisdiction Organizations that are either U.S. citizens and companies, foreign
established in the UK or conduct companies listed on a U.S. stock
some part of their business in the exchange, or any individual acting
UK; and individuals who are UK while in the U.S.
nationals or are ordinarily residents
in the UK
Enforcement – Criminal enforcement only by the Both criminal and civil proceedings
Civil / Criminal UK Serious Fraud Office (SFO) can be brought by SEC and DOJ
Potential Penalties For individuals, up to 10 years‟ Bribery: for individuals, up to five
imprisonment and potentially years‟ imprisonment and fines of up
unlimited fines; for entities, to $250,000; for entities, fines of up
potentially unlimited fines to $2 million.
Books and records/internal control
violations: for individuals, up to 20
years‟ imprisonment and fines of up
to $5 million; for entities, fines of
up to $25 million.
Source: VistaLaw

24. Continued…
Provision U.K. Bribery Act U.S. FCPA
Facilitation Payments No facilitation payments Exception for payment to a
exception, although guidance is foreign official to expedite or
likely to provide that payments of secure the performance of a
small amounts of money are routine (non-discretionary)
unlikely to be prosecuted government action
Promotion Such expenditures are arguably Affirmative defence for
Expenditures not “improper” and therefore not reasonably and bona fide
a Bribery Act violation. No similar expenditure directly related to
defence to FCPA the business promotion or
contract performance
Allowable Under No violation if payments Affirmative defence if payment is
Local Law permissible under written laws of lawful under written
foreign country – applies only in laws/regulations of foreign
cases of bribery of foreign public country
official; otherwise a factor to be
considered
Source: VistaLaw

25. Global Regulation
• U.S. Foreign Corrupt Practices Act (1977)
• Inter-American Convention Against Corruption (1997)
• OECD Anti-Bribery Convention (1999)
• Canada Corruption of Foreign Public Officials Act (1999)
• Council of Europe Convention on Corruption (2002-2003)
• UN Convention Against Corruption (UNCAC) (2005)
• Africa Union Convention on Preventing & Combating Corruption (2006)
• UK Bribery Act (2010)
• Russian Anti-Bribery Laws (amended – 2011)
• Chinese Anti-Bribery Laws (amended – 2011)
• U.S. SEC Dodd-Frank Extraction Issuers / Conflict Minerals (2012)

26. Transparency International (2010)
“Anti-bribery due diligence is the research, investigation, assessment
and monitoring that the company will carry out on business
relationships to ensure that it is associated with companies and
personnel that will behave in a manner consistent with the company‟s
anti-bribery programme.”
Source: The U.K. 2010 Bribery Act Adequate Procedures
(Transparency International)