Energy and Telecom Cable Manufacturer

Brief

Allegations under the Foreign Corrupt Practices Act (FCPA) were made against the Thai subsidiary of a global energy and telecom cable systems group headquartered in the United States. The company was suspected of violating the FCPA’s anti-bribery and books and records provisions while making improper payments – both before and after its acquisition – to various state-owned entities.

The U.S. parent company appointed an HKA forensic accountant and Certified Fraud Examiner to lead an independent investigation in full cooperation with the U.S. Department of Justice (DOJ), Securities and Exchange Commission (SEC), and Federal Bureau of Investigation (FBI).

What we did

Working closely with counsel of the U.S. parent company, HKA examined the Thai subsidiary’s books and records to identify suspicious and high-risk transactions. This analysis involved millions of lines of ledger entries and transactions totaling hundreds of millions of dollars across six countries. Drawing on our expertise in data analytics and our experience detecting accounting anomalies, we flagged potentially dubious payments and examined the supporting documentation. Meanwhile, an extensive review of email and other correspondence shed further light on suspect dealings.

Our investigation confirmed several lapses in FCPA compliance involving payments to state-owned entities in three of the six countries. These included transactions masked in the general ledger as commissions to third-party agents and freight forwarding charges. We also identified and documented the attempts of lower-level managers to cover up the violations.

The team advised on information requests, developed questions, and conducted interviews of accounting personnel; issued a detailed report; and provided testimony before the DOJ, SEC, and FBI.

Outcomes

HKA’s expertise in forensic accounting, data analytics, staff interviewing, and expert testimony – along with the capacity to distill complex accounting procedures in a clear and conclusive report – all play a part in successful investigations.

The U.S. authorities looked favorably on our client’s cooperation and the transparency and thoroughness of our investigation. Damages, including punitive penalties, in these cases can be a multiple of the unlawful transactions’ value. The fines and penalties applied to the Thai subsidiary were set at 50% of the typical floor mandated for FCPA matters.