GSK case shows the importance of internal audits

The GSK case quickly gathered momentum in July (see box) with many observers blaming the pharmaceutical giant for missing what now seems like obvious fraud. It has also highlighted how easy it is for whistleblowers to expose fraud. Under the UK Bribery Act and the US FCPA, companies are responsible for transactions completed on their behalf by vendors, partners and agents.

“Companies must be confident that these parties are acting ethically when conducting business on their behalf. Companies need to conduct a background check on its vendors to identify any history of corrupt practices, and question if the vendors compliance protocols are not transparent,” said Violet Ho, senior managing director, Kroll Advisory Solutions.

“However, for a company that has thousands and thousands of vendors globally – adopting the same level of background screening for all will be prohibitively expensive and arduous. Instead clients should adopt a risk-based approach to due diligence, by determining which third parties present the highest level of risk to their organisations and then undertaking an appropriate level of due diligence.” she added.