Fraud management

Fraud management: When the legislator is interfering into the supplier relationship

05/12/2016 Franck Le Tendre - Executive Vice President for Western Europe and Managing Director France
Facing new challenges such as compliance, traceability and fraud management, the legislative environment of the supplier relationship is evolving. Discover the latest trends.
The supplier relationship is first and foremost seen in terms of the opportunities offered by the agility, commitment and innovation of a partner that is motivated to develop their market share with a big group. But we cannot ignore the risk this (new) dependency represents, or the need for traceability as an important point to consider in this relationship.
If we add to this what the legislator is doing, at a time when trade is largely globalised, then pro-activity becomes more than ever a must for procurement departments. When it comes to compliance and fraud prevention, procurement is clearly given ever-greater responsibility in businesses. The solutions provided by SynerTrade can help procurement departments to transform this risk into opportunity. Franck Le Tendre, SynerTrade’s Managing Director, explains how.

Ever more transparency and fraud management

Up until very recently prevention happened in segmented chunks, like sworn statements on undeclared work and other declarations around bids. The legislator had started to set out the requirement for transparency with legal documents and a framework, but it remained fairly incomplete and, shall we say, very superficial. The legislator is now going further and further, asking businesses to guarantee that their suppliers and sub-contractors are compliant with ever-increasing precision. When we think of the 460 million euros of adjustments for undeclared work recuperated by the French state in 2015, it is clear that this monitoring will be steadily reinforced. This requirement goes beyond the framework of French law and extends internationally, more or less strictly depending the country we look at. On this point it is interesting to focus on the United States. Their legal arsenal is one of the most complex in the world, if not the most constraining for businesses.

Traceability: a critical issue when faced with complex legislation

We can take the example of the FCPA* introduced by the United States (Anti Trust & Anticorruption Act ). As soon as a foreign company starts a commercial relationship with the United States, whatever the size of the business, they are required to submit declarations guaranteeing zero collusion between the client and the supplier as such. This type of legislation moves traceability backwards a notch. Beyond ethical criteria, it is a matter of guaranteeing that there is no link between any company that works on American soil and their supplier. This becomes even more complex when the applicant is not from the procurement department, because it is up to procurement to classify the supplier and take into account this type of legislation. This illustrates the crucial importance of traceability in the context of anti-corruption laws, and how strategic the information system is for this. The information system should be able to provide evidence that throughout the procurement process legal requirements have been observed scrupulously.

The procurement information system: an ally for virtuous businesses

The trend for total transparency will only intensify in the future, driven by the legislator, on both the national and the international level, in favour of agreements between States and companies. Our solutions are designed with consideration for not only the changes in technology and uses but also the changes that come from the upheavals that trade experiences depending on the legal framework. This frees our clients from complex and essential tasks, and allows them to focus on the core of what they do and tasks with high added value for their performance. With our solutions the company can protect itself against the risk of fraud in itself and pro-actively eradicate the possibility of fraud, right from the start of the supplier relationship. The supplier’s responsibility is clearly engaged because they work with procurement via the tool. So responsibility is also moved onto the supplier, protecting the company from the risks that are incumbent on the supplier.
This means the guarantee of business ethics itself is strengthened, vis-a-vis the legislator but also all the third parties. This can become a major defence in the relationship with clients and financial partners or stakeholders. We have seen that the Internet will extend opportunities and trade. From now on having an information system that is adapted to this trend is an essential way for companies, beyond shielding themselves from risk, to seize the chance to be a model and sought-after actor in their market.
*Foreign Corrupt Practices Act
Franck Le Tendre - Executive Vice President for Western Europe and Managing Director France

Franck Le Tendre - Executive Vice President for Western Europe and Managing Director France

Franck Le Tendre - Executive Vice President for Western Europe and Managing Director France