Following the data where others couldn’t
A specialized KPMG team brings forensic risk assessment and data analytics to an internal bribery investigation.
Client
A global pharmaceutical company
Industry
Healthcare and life sciences
Primary goal
Analyze internal company database to assess bribery allegations
Methodology
Gather, structure, and apply data analytics to identify red flag events in company records
When a major pharmaceutical company faced internal allegations that employees in its Russian office had facilitated bribes through third-party event organizers, senior management recognized the seriousness of the threat and acted quickly. They asked KPMG LLP (KPMG) to help the company’s outside legal counsel investigate the allegations by conducting an in-depth analysis of transactions, events, and other records.
We mounted a specialized, cross-functional team combining healthcare industry knowledge, forensic accounting skills, and industry-leading data analytics capabilities from the KPMG Lighthouse Center of Excellence. Even as sanctions imposed on Russia after its invasion of Ukraine made access and analysis more difficult, we uncovered data to support or refute existing claims and guide the client and outside counsel in real time. While the matter has yet to be resolved, KPMG has already helped protect the client from further action and potential penalties by acting as a trusted, qualified, and objective adviser.
Key outcomes
Making a measurable difference
32
risk events analyzed after initial review by outside counsel
66
total high-risk events uncovered via applied risk weighting
Improved protection
and compliance after a thorough, objective investigation
Client transformation journey
Click on each part of the journey to learn more about our client’s transformation.
It is tough for consulting firms to separate themselves from their competitors in this market, as everyone has great talent and resources. Your excellent work in making KPMG so easy to do business with is truly a differentiator that separates KPMG from the rest of the pack and definitely influences our decisions on selecting a firm for particular projects.
In-house counsel, KPMG client company
1. Assessment phase
Bringing order to unstructured data
Gaining access to the client’s data proved to be a significant challenge in itself. In March 2022, KPMG stopped working with its Russian firm after the start of the Russia-Ukraine war. Not only were we unable to draw on our usual local resources, but new regulations made it impossible to access data directly from companies based in Russia. But since the relevant databases were actually stored on servers located in Europe, our team was able to work around this constraint.
Our first step was to gather, clean, and structure Structured Query Language (SQL) data from the client’s system records. We then performed an exploratory data analysis to gain a better understanding of its structure, elements, and relevant event characteristics.
Data analysts from the KPMG Lighthouse team played a critical role by reworking unstructured data to make it more understandable and usable, both to our own life science compliance specialists and the client’s outside counsel.
2. Analysis phase
Applying analytics to anomalies
We began this stage by developing hypotheses for analyzing the data and applying models to validate them. These included a series of risk-weighted analytics that were used to test the hypotheses.
Then, working from the assembled SQL database and local compliance event spreadsheets, we performed trend and outlier analysis to identify potential irregularities in the event processes, parties, and fields that could require a deeper dive or red flag identification. Examples included:
- Anomalies between the various event populations provided, such as missing events, missing fields, or conflicting key fields
- Anomalies around event costs or counts based on key fields associated with the allegation, such as irregularities in average event costs by type, business unit, business owner, organizer, and participants.
We also performed a trend analysis of anomalous activity by parties cited in the allegations, including HCOs, doctors, other HCPs, and other third-party businesses and individuals.
Finally, to support our findings we conducted a follow-up technical analysis of invoices, payments, contracts, and other documentation.
3. Reporting phase
Uncovering new risks, meeting new deadlines
Throughout our analysis, the KPMG team delivered real-time reporting on our progress and results to help guide the ongoing legal investigation. Our findings were reported to outside counsel and the client to enable review of higher-risk transactions and their associated risk factors and to identify next steps on document review or witness interviews.
Along with our analysis of risk events or anomalies initially targeted by outside counsel, we also uncovered new higher-risk events based on our own risk rating and scoring methodology. These included monetary inconsistencies, control variations, and other red flags derived from analysis of specific allegations. By applying additional risk weighting to an original base of 32 events under review, we more than doubled that figure to 66 higher-risk events or transactions.
The issue of access to data returned suddenly when new legislation barred the removal of data pertaining to any individual working in Russia after September 30, 2022. At this point, the investigation team had identified five hard drives within the country that needed to be imaged. To find a way to do this before the new deadline, the client approached other major accounting firms, none of which were ready to take on the challenge. But after close study and quick response by KPMG Advisory leadership and the client’s outside counsel, we concluded that gathering the data would be both possible and legal. Our recommendation ultimately led the client to work through a smaller firm within Russia, but without the help of this smaller firm, this critical evidence could have been lost.
At another level, our ability to deliver valuable analysis on a tight schedule helped the client demonstrate that its internal investigation was backed by an objective, qualified third party. KPMG also supported the client by offering control recommendations and improving their current existing compliance monitoring practices to avoid future allegations.
4. Evolution phase
Lessons learned from a versatile team
While the legal investigation continues, our compliance and forensic risk assessment work on the case is complete. But the same KPMG team is still helping the client assess allegations related to bribery and corruption in other countries. As in the Russia investigation, our ability to mount a cross-functional team with in-depth knowledge of healthcare, compliance, and data analytics has proven invaluable, along with our willingness to act quickly and take every step needed to deliver results for the client and its legal team.
Turning threats into opportunities
Our work in Russia is just one example of how KPMG is using the power of advanced data analytics to help healthcare and life sciences companies manage risk and protect themselves from legal action or penalties. Learn more about our Risk and Compliance Services and our KPMG Lighthouse data analytics center of excellence.
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Matthew McFillin
Partner, Forensic Services, KPMG US
Lauren Polana
Director Advisory, Forensic, KPMG US
Matthew McFillin
Partner, Forensic Services, KPMG US
Lauren Polana
Director Advisory, Forensic, KPMG US