[Music]
you know when Chan Kai asked me to join
this TEDx program they told me the the
topic for this this year is the
disruption in paradigms and I thought
that’s perfect for me I feel I’ve been
disrupting paradigms my entire career so
I’ll tell you a little bit about it I
started my career out of college with a
bachelor’s in business and I became an
auditor at Arthur Andersen I did that
for three years and I thought this is
great but I think I can help my clients
in a different way not just look at the
historical information but let’s see if
we can help them a different way so one
of my partners and I decided we want to
change what we’re doing and I was from a
small town in Michigan in a small office
where we did we had no consulting
practice so we decided we would start
our own consulting practice at Arthur
Andersen there we had clients like Kmart
and other large corporations that were
interested in doing mergers and
acquisitions so I redefined my skills I
redefined my activities and started
servicing clients and mergers and
acquisitions that was another three
years then I thought I need to change
again we have to shift the paradigm
again so I said what am I going to do I
need to leave Michigan I need to move to
a bigger community and I need to do a
different things so I left Arthur
Anderson I went to
PricewaterhouseCoopers and join the
corporate investigations practice this
is where I found my true place in
corporate investigations at first I was
looking at accounting investigations for
board of directors and audit committees
and those investigations were heavily
involved fraud embezzlement managing
earnings adjusting financial statements
all things like that but very quickly
after two or three years of doing
accounting in visit
Shen’s I realize most of the fraud
investigations I was looking at dealt
with corruption corruption represented
nearly half of the investigations that
we were doing starting in the early
2000s which this study is from 2016 even
to this day more than half of fraud
schemes involve corruption what is
corruption well it takes place in many
different forms but a couple of the key
ways that most large corporations do
corrupt activities is they’ll bid rig
what is a bid rig it’s when one of my
clients I’ll give you a perfect example
one of my clients was looking to buy the
telecom landlines from the government of
an Eastern European country and that
client of mine put a bid to buy those
landlines and the bid that they said
that they would pay was the lowest of
all of the other companies bids and yet
they were the winner how did they win
why would the government not want to
have more money from another buyer how
do they win because they paid
consultants who then transferred money
to government agents and those
government agents allowed my client to
win this bid and unfortunately
corruption exists that way there’s other
ways you can do it sometimes you can
overcharge a client sometimes you can
get a kickback from a distributor or an
agent but corruption happens in lots of
different ways and when I was teaching
my staff about corruption and how we can
identify it in transactions one of them
said to me you know I get it that we
need to investigate corruption and big
corporations shouldn’t be allowed to
move forward and get ahead by using
corruption to do to move forward but how
does it affect me well it affects every
one of us in society when large
corporations and even small companies
pay bribes to move forward in their
business they’re paying bribe
local agents government agents and what
happens you know you have Plus justice
justice is delayed health care is weaker
because more money is being spent on the
ones paying the bribes obviously the tax
rates are going to be higher because the
money’s to cover these bribes are paid
by the others also crime is increased
because the corrupt politicians and the
corrupt police are not going after the
crime the way they should be because
they’re busy trying to get bribes and
the most I think significant impact is
on the infrastructure of the global
economy our roads our water our air all
of the things that government funds
should be spent on get detracted when
corrupt activities occur and so whether
a large corporation pays bribes to win a
land deal and that actually does have an
impact on every one of us so there’s
been a paradigm change in the last 10
years in my opinion about how corruption
has changed and how the enforcers are
making a change how the companies are
making a change and how the consultants
that help investigate these crimes are
making a change so here’s the first
change in 1977 President Jimmy Carter
signed the Foreign Corrupt Practices Act
that was the very first anti-corruption
act of its kind that was in the u.s.
since then there’s corruption acts
exploding all around the world the
entire global economy is concerned about
this the enforcers are going after this
globally and they’re cooperating with
each other so the Brazilian government
is cooperating with the Department of
Justice the Mexican government is
department is cooperating with the
Brazilian government it’s a significant
change and that’s only been occurring in
the last several years the other thing
you know I’m sure you all may have heard
about the Petrobras
bribery scheme that was nine point five
billion dollar
of money that affects the entire global
economy and in particular Brazil it was
the largest scheme of all time companies
are becoming more and more aggressive
and the enforcers are becoming more and
more aggressive here’s how they did it
Petrobras paid the government they paid
oil and construction companies and the
citizens of Brazil suffered and the
citizens of a global economy also suffer
but what are they doing companies are
now getting benefits for cooperating
with enforcers you look at the potential
fines that Petrobras could have could be
three billion dollars but look at other
companies that are cooperating with the
government their fines are significantly
lower because they’re cooperating and
the enforcers are accepting compliance
plans remediation plans and other
well-to-do things to help clean up the
environment so the amount of penalties
for cooperating companies is nearly half
but here’s where I think there’s the
most significant change the companies
the enforcers and their council their
outside service providers need to
investigate this kind of activity how do
you find the corrupt payments it’s very
difficult to find the corrupt payments
when I started my career many many years
ago and I did my first anti-corruption
investigation I was looking at Excel
files using my expertise to hone in on
certain vendors that I thought hmm why
are they paying this consultant what do
you think that payment is for and I had
to use my own judgment and my own
expertise to sort of weed through
details and details and Excel files
well the companies are so large these
days and there’s so much massive amounts
of data available these days that it’s
not possible for a single human or a
team of humans to eyeball data of that
magnitude so we have to rely on
technology to assist us and lucky for us
there’s a lot of amazing technology
available
that uses artificial intelligence that
uses data analytics that uses all kinds
of data processing so that I can take my
expertise program a machine to
understand what qualifiers I’m looking
for what kind of vendors do I think make
bribe payments
I think it’s consultants its agents its
distributors sometimes it’s business
development partners I think those are
the ones also if I were to record a
bribe payment how would I record that on
my financial statements I would say
maybe I would record it as marketing or
maybe I would record it as operational
expenses other or some other thing I can
program program my artificial
intelligence to identify that kind of
activity and I can use my years and
years of experience and apply that over
large databases how does the companies
benefiting from that well before and I’m
talking about 15 years ago enforcers
would go to a company and say we want to
investigate you and a company would say
okay I don’t know what to do
and they would call their outside
counsel and they would call some
forensic accountant like myself and we
were working in vacuums completely
separately the regulator’s would talk to
the corporation’s the corporation’s
would talk to us now the paradigm has
changed because more companies are
cooperating with the enforcers and they
have the luxury of consultants and
lawyers that have tons of experience and
investigating this kind of behavior and
in communicating with the enforcers we
have a 3-way channel now and I think
that’s a significant impact in the fact
that the enforcers have gotten to know
the service providers they can rely on
the work that the service providers are
doing and the companies can know that
they’re being properly defended by
someone who has diligently reviewed
their financial statements so some of
the tools have changed we used to use
calculators and Excel files but now
we’ve got the artificial intelligence
and the ways that we do work has changed
you know there’s a lot of information
out there that’s in social media that’s
on Facebook that’s an email that’s in
other communications and it is so
difficult to put those stories together
like in a case where I had a transaction
in a general ledger that was a payment
for a million dollars and separately one
of the senior executives of the company
had written an email saying I’m gonna
put this expense and I’m gonna I’m gonna
stuff it up my sleeve
well to find that email and that expense
and the contract that goes with it and
the other correspondence that goes with
it it was a manual task historically now
with artificial intelligence and with
the data analytics we can bring those
data points together rapidly and to the
benefit of our clients and put together
a story very quickly and that is how I
believe the paradigm of corporate
investigations has changed in the last
10 to 15 years
[Music]
[Applause]
[Music]
you know when Chan Kai asked me to join
this TEDx program they told me the the
topic for this this year is the
disruption in paradigms and I thought
that’s perfect for me I feel I’ve been
disrupting paradigms my entire career so
I’ll tell you a little bit about it I
started my career out of college with a
bachelor’s in business and I became an
auditor at Arthur Andersen I did that
for three years and I thought this is
great but I think I can help my clients
in a different way not just look at the
historical information but let’s see if
we can help them a different way so one
of my partners and I decided we want to
change what we’re doing and I was from a
small town in Michigan in a small office
where we did we had no consulting
practice so we decided we would start
our own consulting practice at Arthur
Andersen there we had clients like Kmart
and other large corporations that were
interested in doing mergers and
acquisitions so I redefined my skills I
redefined my activities and started
servicing clients and mergers and
acquisitions that was another three
years then I thought I need to change
again we have to shift the paradigm
again so I said what am I going to do I
need to leave Michigan I need to move to
a bigger community and I need to do a
different things so I left Arthur
Anderson I went to
PricewaterhouseCoopers and join the
corporate investigations practice this
is where I found my true place in
corporate investigations at first I was
looking at accounting investigations for
board of directors and audit committees
and those investigations were heavily
involved fraud embezzlement managing
earnings adjusting financial statements
all things like that but very quickly
after two or three years of doing
accounting in visit
Shen’s I realize most of the fraud
investigations I was looking at dealt
with corruption corruption represented
nearly half of the investigations that
we were doing starting in the early
2000s which this study is from 2016 even
to this day more than half of fraud
schemes involve corruption what is
corruption well it takes place in many
different forms but a couple of the key
ways that most large corporations do
corrupt activities is they’ll bid rig
what is a bid rig it’s when one of my
clients I’ll give you a perfect example
one of my clients was looking to buy the
telecom landlines from the government of
an Eastern European country and that
client of mine put a bid to buy those
landlines and the bid that they said
that they would pay was the lowest of
all of the other companies bids and yet
they were the winner how did they win
why would the government not want to
have more money from another buyer how
do they win because they paid
consultants who then transferred money
to government agents and those
government agents allowed my client to
win this bid and unfortunately
corruption exists that way there’s other
ways you can do it sometimes you can
overcharge a client sometimes you can
get a kickback from a distributor or an
agent but corruption happens in lots of
different ways and when I was teaching
my staff about corruption and how we can
identify it in transactions one of them
said to me you know I get it that we
need to investigate corruption and big
corporations shouldn’t be allowed to
move forward and get ahead by using
corruption to do to move forward but how
does it affect me well it affects every
one of us in society when large
corporations and even small companies
pay bribes to move forward in their
business they’re paying bribe
local agents government agents and what
happens you know you have Plus justice
justice is delayed health care is weaker
because more money is being spent on the
ones paying the bribes obviously the tax
rates are going to be higher because the
money’s to cover these bribes are paid
by the others also crime is increased
because the corrupt politicians and the
corrupt police are not going after the
crime the way they should be because
they’re busy trying to get bribes and
the most I think significant impact is
on the infrastructure of the global
economy our roads our water our air all
of the things that government funds
should be spent on get detracted when
corrupt activities occur and so whether
a large corporation pays bribes to win a
land deal and that actually does have an
impact on every one of us so there’s
been a paradigm change in the last 10
years in my opinion about how corruption
has changed and how the enforcers are
making a change how the companies are
making a change and how the consultants
that help investigate these crimes are
making a change so here’s the first
change in 1977 President Jimmy Carter
signed the Foreign Corrupt Practices Act
that was the very first anti-corruption
act of its kind that was in the u.s.
since then there’s corruption acts
exploding all around the world the
entire global economy is concerned about
this the enforcers are going after this
globally and they’re cooperating with
each other so the Brazilian government
is cooperating with the Department of
Justice the Mexican government is
department is cooperating with the
Brazilian government it’s a significant
change and that’s only been occurring in
the last several years the other thing
you know I’m sure you all may have heard
about the Petrobras
bribery scheme that was nine point five
billion dollar
of money that affects the entire global
economy and in particular Brazil it was
the largest scheme of all time companies
are becoming more and more aggressive
and the enforcers are becoming more and
more aggressive here’s how they did it
Petrobras paid the government they paid
oil and construction companies and the
citizens of Brazil suffered and the
citizens of a global economy also suffer
but what are they doing companies are
now getting benefits for cooperating
with enforcers you look at the potential
fines that Petrobras could have could be
three billion dollars but look at other
companies that are cooperating with the
government their fines are significantly
lower because they’re cooperating and
the enforcers are accepting compliance
plans remediation plans and other
well-to-do things to help clean up the
environment so the amount of penalties
for cooperating companies is nearly half
but here’s where I think there’s the
most significant change the companies
the enforcers and their council their
outside service providers need to
investigate this kind of activity how do
you find the corrupt payments it’s very
difficult to find the corrupt payments
when I started my career many many years
ago and I did my first anti-corruption
investigation I was looking at Excel
files using my expertise to hone in on
certain vendors that I thought hmm why
are they paying this consultant what do
you think that payment is for and I had
to use my own judgment and my own
expertise to sort of weed through
details and details and Excel files
well the companies are so large these
days and there’s so much massive amounts
of data available these days that it’s
not possible for a single human or a
team of humans to eyeball data of that
magnitude so we have to rely on
technology to assist us and lucky for us
there’s a lot of amazing technology
available
that uses artificial intelligence that
uses data analytics that uses all kinds
of data processing so that I can take my
expertise program a machine to
understand what qualifiers I’m looking
for what kind of vendors do I think make
bribe payments
I think it’s consultants its agents its
distributors sometimes it’s business
development partners I think those are
the ones also if I were to record a
bribe payment how would I record that on
my financial statements I would say
maybe I would record it as marketing or
maybe I would record it as operational
expenses other or some other thing I can
program program my artificial
intelligence to identify that kind of
activity and I can use my years and
years of experience and apply that over
large databases how does the companies
benefiting from that well before and I’m
talking about 15 years ago enforcers
would go to a company and say we want to
investigate you and a company would say
okay I don’t know what to do
and they would call their outside
counsel and they would call some
forensic accountant like myself and we
were working in vacuums completely
separately the regulator’s would talk to
the corporation’s the corporation’s
would talk to us now the paradigm has
changed because more companies are
cooperating with the enforcers and they
have the luxury of consultants and
lawyers that have tons of experience and
investigating this kind of behavior and
in communicating with the enforcers we
have a 3-way channel now and I think
that’s a significant impact in the fact
that the enforcers have gotten to know
the service providers they can rely on
the work that the service providers are
doing and the companies can know that
they’re being properly defended by
someone who has diligently reviewed
their financial statements so some of
the tools have changed we used to use
calculators and Excel files but now
we’ve got the artificial intelligence
and the ways that we do work has changed
you know there’s a lot of information
out there that’s in social media that’s
on Facebook that’s an email that’s in
other communications and it is so
difficult to put those stories together
like in a case where I had a transaction
in a general ledger that was a payment
for a million dollars and separately one
of the senior executives of the company
had written an email saying I’m gonna
put this expense and I’m gonna I’m gonna
stuff it up my sleeve
well to find that email and that expense
and the contract that goes with it and
the other correspondence that goes with
it it was a manual task historically now
with artificial intelligence and with
the data analytics we can bring those
data points together rapidly and to the
benefit of our clients and put together
a story very quickly and that is how I
believe the paradigm of corporate
investigations has changed in the last
10 to 15 years
[Music]
[Applause]
[Music]
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