Are you prepared? Forensic services Protecting your business against economic crime

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1 Are you prepared? Forensic services Protecting your business against economic crime

2 Are you prepared? Protecting your business against economic crime You cannot control unexpected events, however you can control your response. Fraud and other dispute related issues, revenue assurance and optimisation, licensing and revenue leakage prevention are daily concerns for any business. Our Forensic specialists assist you in these key areas of your business. Preventive measures, detection procedures, professional investigations and rapid action these can make the difference, and help you avoid an anomaly escalating into a catastrophe. Peace of mind comes only with the right protection!

3 Expect the unexpected The risk of economic crime and disputes permeates all businesses. The question is no longer what if? The question is when? Despite stricter regulation and increased investment in controls corporate misconduct remains a major threat. A harsh economic climate takes its toll on business partnerships. Agreements are more difficult to honour, conflicts inevitably arise. No company is immune to disputes; settling them is costly, and a dangerous distraction from the core business. PwC s Forensic Services team works with you in order to prevent, detect, investigate and deal with the causes and effects of fraud and disputes, whether internal, with suppliers, customers or regulators. Forensic Services provides the expertise, support and training you need. We assist corporations, law firms and players in the public sector in conducting large scale investigations and implementing fraud prevention measures. Our team of specialists has the experience at the negotiating table, in the courtroom and in law enforcement agencies to help you successfully deal with the unexpected. How we make the difference We offer guidance and assistance with complex technology challenges; we serve as expert witnesses; we conduct fraud and forensic investigations; and we develop value-preserving solutions for companies that have been compromised by weakened processes and controls. Specialist experience Settling disputes regarding failure to respect the terms of a joint venture, recovering hundreds of thousands of Euro in unreported licensing revenues, tracing employee misappropriation of funds via electronic payment systems are examples of what we do for our clients. Our Forensic team has the specialist knowledge and experience to get to the heart of the matter. A practical, hands-on approach Our team members lawyers, forensic auditors, former law enforcement officials have been there before. We use a highly pragmatic approach to assess and prioritise the options and deliver results. Action-oriented team working alongside your people Our dedicated client engagement team is small, flexible and authorised to move things forward rapidly. The team works next to you and your people to ensure smooth cooperation and professional handling of sensitive and confidential issues. Forensic services - Protecting your business against economic crime 1

4 The public often assesses business integrity through a where there s smoke, there s fire lens. Even the allegation that corruption has touched your business can be enough to send consumers and investors looking to the competition rather than your company. Our comprehensive services and deep experience can help you protect your business from this threat. 2 Forensic services - Protecting your business against economic crime

5 Dispute Analysis & Litigation Support Business conflicts are complex and significant amounts are usually at stake. Accounting and legal skills, investigative rigor, deep industry knowledge and advanced forensic technologies are a must if disruption, financial loss and reputational damage are to be avoided. Litigation support helps companies manage the litigation process in disputes with competitors, customers, suppliers, employees, shareholders, business partners, regulators and the public at large. Insurance claims services provides policyholders and insurers with advice and assistance in managing insurance claims and risks. International arbitration support helps clients and their legal advisers to investigate and understand the financial and business consequences of disputes, including breach of contract, construction disputes, acquisition disputes and claims under investment treaties. Securities litigation support helps Belgian and European companies with a US listing to manage, investigate and mitigate securities litigation and regulatory compliance risks, in particular class action lawsuits. How would you deal with a claim for breach of contract? We helped a subsidiary of a major Japanese corporation build a strong case in defence of a claim for breach of contract. Working closely with the company s lawyers, we provided an expert report including a detailed analysis of the contracts and relevant financial information, which bolstered the client s settlement-negotiating position. The lawsuit settled at 30% of the initial claim. Forensic services - Protecting your business against economic crime 3

6 Licensing Management Programmes & Software Asset Management Increasing the bottom line and avoiding extra costs is at the top of the agenda for many companies. Licensing Management Programmes ensure proper revenue collection from licence agreements. The amounts recovered are very substantial, and usually an order of magnitude larger than our fees. Software Asset Management helps avoid disputes and unexpected expenses as a result of vendor audits. We implement software asset management programmes that can save you significant amounts. Do you fully materialise the benefits you anticipated from your licensing arrangements? A worldwide retail manufacturer s holding company had a global patent over a technique it had developed. The patent was licensed worldwide. The client engaged PwC to perform annual licensing inspections, for which we used specifically developed inspection techniques. In around three-quarters of all cases, we found that the client was entitled to higher royalties, and thus significantly optimised their royalty revenue stream. Do you have clear insight in your IT infrastructure, software deployment and appropriate licence metrics? We helped a multinational group of foundries minimise the risk of software licence infringements and optimise its license usage while preserving the efficiency of their business processes. The software licence-compliance review resulted in a waiver of penalties and backward maintenance over a period of four years. Moreover, the client achieved an additional 23% reduction in licence fees thanks to our upping its negotiating power. 4 Forensic services - Protecting your business against economic crime

7 Fraud Prevention Economic crime causes more than just financial loss. Fraud is a real threat to the stability and competitive position of any business; taking the proper measures to prevent it is critical. Fraud risk assessment allows you to identify the types of fraud that may impact your activities. We crystallise these into a fraud heat map that helps you visualise these risks. Fraud risk management and preventive tools help you mitigate the risk of all types of fraud. We help you implement these in your company with customised training and sophisticated assessment methodologies. Integrity needs to be embedded in your organisation. We can assist you in this with an appropriate code of conduct, training and assessment mechanisms to help your people understand integrity and walk the talk. Do you regularly check whether fraud-prevention procedures are being implemented properly? We performed a high-level risk assessment of an overseas branch of an international banking group. The assessment was done preparatory to the group s renewing its crime insurance policy. We reviewed all the relevant documentation, procedures and audit reports to gain an understanding of the fraud-related internal control environment at the branch. We also interviewed key staff and management to verify the existence, roll-out and correct implementation and monitoring of relevant control systems and processes in relation to fraud. We found significant gaps, inconsistencies and deficiencies, and made pragmatic recommendations to improve the bank s fraud controls and environment. The results were shared with the client s crime insurers. Forensic services - Protecting your business against economic crime 5

8 Fraud Detection Fraud can occur anywhere in your organisation. Inventorying the areas in which it is most likely to strike, is indispensable. The fraud scan is a one-week benchmarking exercise that tells you how vulnerable your business is, compared to your competitors and best practices in the sector. Background investigations can be run to check the integrity of suppliers and other business partners, and the background and qualifications of potential employees. Forensic technology solutions are vital for retrieving and examining massive amounts of data in which fraud can be buried and spotting it in a timely manner. Investigative due diligence helps companies involved in mergers and acquisitions to verify the background of their targets and avoid any unpleasant surprises. Do you have all the crucial insights regarding your pending transactions? For a range of entities in different business sectors, we regularly do background searches and reputation checks in the context of business partners and supplier acceptance. Our specialist team has experience in the necessary information-gathering procedures, with worldwide access to a large range of data sources (company and business databases, media, chambers of commerce, legal and credit information, to name a few). Once we ve done detailed analysis on the collected data, we give the client a fact-finding report. If we identify a complex network, we draw up graphics giving a visual depiction of the underlying links. How can you have peace of mind while making high-stakes decisions that can come with great risks? A major US-based media corporation wanted to acquire a media conglomerate s business unit based in an emerging market. PwC s due diligence ahead of the purchase brought to light an ongoing investigation by the local regulatory authorities into one of the media conglomerate s subsidiaries, which was accused of bribing government officials to obtain a business advantage. Upon learning of these allegations, the client significantly altered its acquisition plans to mitigate this newfound risk. 6 Forensic services - Protecting your business against economic crime

9 Fraud Investigation Economic crime takes a dazzling variety of forms: asset misappropriation, corruption, product piracy, industrial espionage, financial misrepresentation and many others. Our network of forensic specialists has extensive experience in uncovering irregularities often overlooked by less seasoned investigators. Corporate fraud investigations focus on alleged misappropriation of corporate assets and their recovery, undisclosed conflicts of interest and improper business relationships, and regulatory non-compliance. Money laundering investigations examine violations of statutes and regulations, suspicious transactions and the verification of legitimate customers, and compliance advice for money laundering reporting. Corruption investigation centres on the search for payment or acceptance of bribes by people within the company, whether in the context of political corruption or preferential relationships (in procurement, for instance). Insolvency and bankruptcy investigations are actively involved in recovering funds on behalf of debtors or creditors. If you detected fraud within your company, would you know what to do about it? The holding company of a global retailer discovered that the members of the board of a European subsidiary had been defrauding the company for over a decade. The holding was told by an employee who spoke up when one of the culprits was leaving the company. PwC forensically examined the servers and computers used by that individual and other board members concerned. Within a short time, using data recovery and forensic analysis techniques, we were able to confirm that, though deleted, confidential data indicative of fraud was still stored on the server and computers. The directors were dismissed and the holding s lawyers were brought in to follow up with a lawsuit. The holding subsequently instructed PwC to do an in-depth forensic investigation of selected businesses and transactions carried out over the past decade. Forensic services - Protecting your business against economic crime 7

10 Forensic Technology Solutions The rise of information technology means that the tools used to detect and investigate fraud need to be in line with the latest technological developments. The Forensic Technology Solutions (FTS) team recovers deleted, hidden, or lost data, analyses it and identifies the systems and personnel that are critical for the investigation. The results are distilled into actionable fraud assessment reports. Our e-discovery service helps companies, faced with litigation or criminal investigations, find, retrieve and analyse a wide range of electronic information. Computer forensics and cybercrime investigation uses data recovered from the IT systems to investigate misuse of information, unauthorised network intrusions (i.e.hacking), software piracy and assets misappropriation. How would you respond to an anonymous whistleblower? The Belgian subsidiary of a global engineering firm discovered that confidential details of senior management pay and bonuses had been leaked to the wider organisation. The client suspected it knew who the culprit was. PwC forensically examined the computers the individual had used. Within a short time, using data-recovery and forensic analysis techniques, we were able to confirm that, although deleted, the data could still be traced. The client subsequently dismissed the individual and avoided a significant severance bill because it could prove his misconduct. How waterproof are your system controls? A large manufacturer needed to quantify the total amount of fraud they had identified within their organisation over the last couple of years. We validated and tested financial systems data from the past six years and did further testing to identify other potential cases of fraud. We identified crooked transactions totalling almost We also made recommendations to put appropriate system controls in place to prevent future fraud. 8 Forensic services - Protecting your business against economic crime

11 which When insiders commit fraud, they erode the company s bottom line, blacken the organisation s brand, undermine employee morale, and shake shareholder trust, all of can take years to restore. Forensic services - Protecting your business against economic crime 9

12 Partner with us to bring global capabilities to your table Corporate fraud is not bound by local, regional, or national borders. Wherever there is business, the potential for corporate crime exists. PwC offers a global team of forensic specialists that can address the full spectrum of situations from local issues to cross-border challenges. PwC s forensic services specialists work in more than 30 countries around the world. These professionals offer local knowledge and practice insight into regional and national differences in business practices, regulatory frameworks, culture, and language. Our global access to these local resources enables us to efficiently investigate and analyse issues in specific countries. Our wide array of solutions extends well beyond forensic services to help our clients worldwide make real-time, intelligent decisions based on accurate and complete information. Americas Corporate Intelligence 50 Forensic Technology Solutions 145 Investigations 300 Other Specialists 225 Europe Corporate Intelligence 70 Forensic Technology Solutions 145 Investigations 210 Other Specialists 145 Australasia Corporate Intelligence 35 Forensic Technology Solutions 60 Investigations 60 Other Specialists Forensic services - Protecting your business against economic crime

13 PwC s Forensic Technology labs PwC has computer forensic laboratories strategically located in over 30 countries to facilitate efficient and quick response to litigation matters and other crises. Our forensic technology specialists in the laboratories employ the most sophisticated tools in the industry to handle evidence and perform complex data mining and data warehousing activities related to a vast range of issues including governmental and internal investigations, fraud detection, network breach response, and e-discovery. Forensic services - Protecting your business against economic crime 11

14 Notes 12 Forensic services - Protecting your business against economic crime

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16 Contact Rudy Hoskens Partner Tel: +32 (0) Jacqueline Gram Director Tel: +32 (0) PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See for more information. PwC is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCIL) operate and provide services. Together, these firms form the PwC network. Each firm in the network is a separate and independent legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way PwC Belgium. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate and independent legal entity.