Jeff Klink on Kickback Schemes and Due Diligence in Asia [Podcast]


By Adam Turteltaub

As CEO of Klink & Co., Jeff Klink has a unique and broad perspective on the challenges of global compliance programs, especially those operating in Asia.  Lately, he reports in this podcast, he has seen a rise of troubling kickback schemes plaguing large global manufacturers.  Employees are finding creative ways to get kickbacks, even setting up fictitious shell companies that appear independent.

It’s a problem that, while not exactly a compliance issue, that should send up red flags for the compliance department because it points to weaknesses in third-party due diligence efforts that rely on database searches.  It often takes a site visit – one that exposes that the “company” address is actually just a studio apartment – to reveal the problem.

What else should compliance teams do?  First, he advises, use a risk-based approach which invests more resources into higher risk areas.  In addition, focus on high-dollar vendors.

Then don’t stop with the initial due diligence.  Ongoing auditing and monitoring are essential.  He notes that many companies do comprehensive due diligence of existing vendors every few years, especially those that interact with government officials.

Listen in, and maybe share the podcast with your fraud team