UNAOIL vs the Compliance Community

UNAOIL vs the Compliance Community

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March 31, 2016

For fifteen years, TRACE has played a unique role in building bridges between good well-governed multinationals and the commercial third parties willing to commit to a high standard of transparency to work with them.  Together with our companies, we've prompted an energetic international conversation about the role of the business community in improving transparency and reducing corruption. 

Tens of thousands of entities have stepped up and voluntarily disclosed otherwise private company information, including true beneficial ownership, financial details and ties to the government, adopted codes of conduct and completed anti-bribery training. 

Most complained about the process, but slogged through it.  They worked through the weeks of back and forth that ensue, seeking clarifications about business references, media stories or similar names found on watch lists.  

TRACE due diligence analysts patiently explained to member companies why the executive summaries for these reports listed "red flags" we had uncovered.  Red flags aren't deal killers, but they indicate that this relationship might be riskier than others.   It might be because of where they operate, how they're structured or compensated, lawful ties to the government or credible negative media stories. 

We worked with member companies relying on TRACEcertified due diligence to help them understand how best to proceed based on the information in our reports and deal-specific information known only to them.

We have conducted due diligence on tens of thousands of good, serious, well-run companies that have been reviewed (and re-reviewed) to a high, common standard with elaborate checks built into the process to assess the accuracy of the information provided.  

TRACE member companies have been full partners in this.  They have helped us "crowd source" better more reliable information; they've been quick to share concerns with us and generous with suggested improvements to our due diligence processes.

And then came UNAOIL.

We are not naive.  We knew that the sheer volume of due diligence we handle meant we would eventually have a UNAOIL in our midst. That is, a TRACEcertified entity under criminal investigation.

We also know that it's good, tenacious reporters who bring much of the world's corruption to light.  We established the TRACE Prize for Investigative Reporting last year to honor and reward the people who do this difficult and often very dangerous work.  We are appalled by the allegations in the UNAOIL story, but we applaud its authors.

And as for our compliance community?  This is a good time to remind ourselves that we work in a difficult field.   We've all met serious, sincere sales representatives in forlorn corners of the world who are honored to represent our members, but struggle with constant petty demands from grasping local officials.  And we've all met slick and scented sales agents who give us pause, but whose records are squeaky clean and who know all the right compliance buzz words.

We can hope these cases come along only rarely.  And we can take some satisfaction at how the compliance landscape has evolved and the lengths, lies and doublespeak these guys were driven to in order to circumvent controls and advance their schemes.  But we'll remain braced for the possibility of others.  The world will never be risk-free and it will never be corruption-free, just as it will never be free of other kinds of crime. 

Contact Information: This post was written by TRACE President & Founder Alexandra Wrage. For more information, on TRACEcertification please visit https://www.traceinternational.org/medium-high-risk. Please direct media inquiries to [email protected].


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