How do you build trust as you scale and conform?
Effectively meeting legal requirements was crucial — but that was just the starting point for Teva.
Managing the risks of corruption arising from third parties is one of the most difficult challenges facing global organizations. Enforcement of the US Foreign Corrupt Practices Act (FCPA) has increased significantly in recent years, with companies paying a record US$2.9 billion to resolve cases in 2019, according to the FCPA Blog. The FCPA Clearinghouse shows third-party intermediaries have been involved in 89% of enforcement actions. Worldwide, anti-corruption efforts have intensified, with increased cooperation among different jurisdictions.
Teva Pharmaceutical Industries, headquartered in Israel, is a global leader in generic and specialty medicine. In 2016, it agreed to a settlement with US authorities over FCPA violations. Teva agreed to enhance its compliance program and improve due diligence for third parties while reporting to an independent compliance monitor for three years. And if that wasn’t a big enough challenge, the pharmaceutical giant underwent a corporate restructuring program designed to cut US$3 billion in costs.
Teva was processing up to 2,000 requests to use third parties every year.
Lori Queisser, who became Teva’s Global Chief Compliance Officer in 2015, knew meeting legal requirements would just be a starting point. The company’s lengthy compliance processes were hurting productivity, without necessarily reducing third-party risk. Teva’s official goal became to “build the best and most respected global compliance program in the industry — a program that works in partnership with the business to prevent issues.”
Queisser discovered that a spate of corporate acquisitions had saddled Teva with a dozen legacy systems, each with its own finance and procurement processes, some of them manual. Getting approval to engage a third-party representative could take weeks or even months. Teva, which has roughly half a million vendors and customers, was processing up to 2,000 requests to use third parties every year.
“We were spending millions and millions of dollars on third-party due diligence, as does every US-listed public company, but we weren’t reducing our risk,” Queisser says.