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If an illegal kickback by an employee is discovered, not only will the party be held criminally responsible, but the company will also suffer great damage.This article explains the risks and damage that illegal kickbacks by employees pose to companies, measures to prevent them, and how to collect evidence.In addition, we will introduce actual kickbacks and their investigation cases, as well as how to choose a forensic investigation company.
What is kickback
We will explain the meaning of the word kickback, the difference between rebate and embezzlement, and examples of kickbacks that are legally prohibited.
Kickback meaning and overview
A kickback is a “bounty” or “gratuity” paid by the seller (manufacturer, etc.) to the buyer (agency, etc.).It is a non-illegal business practice for promotional purposes in which payment is made when a certain amount of sales or transactions are achieved.However, in cases where there is no agreement between the companies involved in the transaction and an individual employee secretly receives a kickback, or in which the company suffers a loss by adding the kickback cost to the order amount, the illegality will be pursued. may be
The difference between kickbacks, rebates and embezzlement
Both rebates and kickbacks are words that refer to "sales rebates" in Japanese in business.Substantial meaning is the same.
Embezzlement, on the other hand, has a different meaning.Embezzlement is the unlawful taking of someone else's property, which is illegal.There have been cases of illegal kickbacks and kickbacks resulting in charges of embezzlement.
Risks and damages that illegal kickbacks pose to companies
Illegal kickbacks by employees cause various damages to the company.In addition to the economic loss, social credibility has been lost as a company that has committed illegal acts.It may even lead to litigation.In the worst case, it could develop into a situation that threatens the very existence of the company.
Examples of illegal kickbacks
・Kickbacks for the purpose of illegally increasing personal profits
A person in charge of a certain manufacturer colludes with B, a sales representative of an agency.Suppose that the original order amount of 1000 million yen is padded to an estimate of 1200 million yen, and each person puts 100 million yen into their pockets.This is a kickback for personal gain and is illegal.
・Cash or equivalents that are illegally provided to business partners or business related parties
Purchasing manager C at a company received excessively expensive entertainment before purchasing merchandise from sales representative D. Suppose that D has charged this entertainment fee on top of the original price of the product.Since the billed amount includes the entertainment fee that the company should not pay, C may be charged with fraud or breach of trust for causing damage to the company.This is the same even if this is not entertainment, but cash delivery.
Measures to prevent illegal kickbacks
What should companies do on a daily basis to prevent illegal kickbacks?Here are some effective countermeasures.
Importance of employee education such as compliance training
Let's inform employees through employee education such as compliance training.Legal kickbacks are a common business practice, so it's important to understand what's legal and what's illegal.Making employees aware that they will be punished will act as a deterrent.In addition, by making it known that it will be a blow to the management of the company, it will also encourage employees to report whistleblowing.
Be ready to consult with a specialized research company at any time
Immediate action is required in the event of fraud.Develop a response flow and be prepared to cooperate with lawyers and specialized research companies at any time.
How to get evidence of illegal kickbacks
In the event of an illegal kickback, objective evidence must be secured promptly.Here's how.
Review documents such as transaction history and invoices
In order to grasp the actual situation of kickbacks that are suspected of fraud, we check documents such as transaction history and invoices.
Check emails, chats, call history, etc.
Documents are not the only evidence of fraud.Rather than leaving documents, there are cases where exchanges are exchanged by e-mail using jargon, so it is necessary to collect e-mails, chats, call history, etc.
Preserve evidence and check backups
Emails and chat histories can be easily deleted, so you need to preserve the evidence before they get caught.If it has already been deleted, you will need to restore it from a backup or restore the data.
``Forensic investigation'' is effective for investigating evidence of illegal kickbacks
For a detailed investigation of illegal kickbacks, a "forensic investigation" by a specialized investigative company is effective.I will explain why.
What is a Forensic Investigation?
A forensic investigation is an investigation that collects and analyzes information related to an incident to reveal evidence of fraud.If evidence in digital data such as e-mails, chats, and electronic forms is suspected, we will clarify the evidence and background of the fraudulent activity from the information stored in the digital device.
For forensic investigation, it is recommended to consult with a specialized investigation company.
Forensic investigations should be outsourced to an investigative company rather than conducted in-house.By utilizing the specialized software and know-how of a research company, we are able to conduct research reliably, efficiently, and at a cost appropriate to the scale.
[Related article] What is a forensic investigation?Commentary on necessary cases, points to note, and examples
Forensic Investigation Case for Illegal Kickback
We will introduce actual cases that FRONTEO responded to forensic investigations into illegal kickbacks.
Fraud investigation into employee kickback of outsourcing costs
Company B, to which Company A is requesting the production of promotional materials, pointed out to the legal department of Company A that ``Mr.After conducting an internal investigation, we also contacted Company B, and when we compared the amount billed for the promotional item with the amount paid, we discovered that there was a discrepancy in the amount.
Upon receiving the request, FRONTEO extracted emails from A's server without being detected by Mr. X in order to investigate the exchanges related to transactions between Company A and Company B, and used its own document review tool and AI detection technology. , conducted a survey on monetary transactions.
As a result, we confirmed the existence of Mr. Y of Company B who was kicking back. Between Mr. X and Mr. Y, jargon was used in the exchange of kickbacks.We conducted a personal correlation investigation using the recipients and senders of the emails, and confirmed two people who are believed to be accomplices.
After that, company A and legal counsel conducted an interview about the facts, and criminal charges were filed against the parties involved, including Mr. X.
[Related article] What is an internal fraud investigation?Introducing common fraud methods, countermeasures, and investigation cases
How to choose a forensic investigation company to capture evidence of kickbacks
I will explain the points to look for when choosing an investigation company to request a forensic investigation.
Do you have a high level of expertise and a wealth of experience?
Companies with a large number of investigation results have accumulated high technical capabilities and know-how on data recovery, so they can select the appropriate method for each case and respond at a reasonable cost.In particular, whether or not there is a track record of requests from listed companies, the police, government agencies, etc. is an important point in judging reliability.
Do you have high technical capabilities such as AI utilization?
The results of the survey will vary depending on the equipment the company has and the skill level of the engineers.Be sure to check it in light of your achievements.In particular, data recovery requires specialized tools and advanced technical skills. The use of AI (artificial intelligence) is also an important point.Utilizing AI, which is good at analyzing large amounts of data, not only improves the efficiency of investigations, but also improves accuracy by allowing experts to concentrate their resources.
Is it offered at a fair price?
Forensic investigation costs include data processing and search costs, analysis and analysis (review) of whether evidence can be obtained, and data hosting, but usually the review process accounts for the majority of costs.The final amount varies greatly depending on the scope and contents of the investigation, and ranges from tens of thousands of yen to several million yen.We recommend choosing a vendor with a clear cost structure, including additional charges.
The use of AI in surveys has also been widely recognized recently, and significant cost benefits can be obtained by using AI to dramatically improve the efficiency of surveys.When collecting quotations, be sure to ask for the total cost including AI and reviews, and compare not only the unit price but also the overall cost.
Evidence investigation of illegal kickbacks to "FRONTEO" with a reputation for forensic investigation results and technology
Since its founding in 2003, FRONTEO has been working to solve the problems of various companies as a pioneer of forensic investigations in Japan.Depending on the case, the key to investigating illegal kickbacks is a reliable and prompt response, such as proceeding with the investigation and preserving evidence so that the parties are not aware of it. FRONTEO supports investigations with its wealth of knowledge and advanced technical capabilities, including AI.
Utilizing our in-house developed AI engine KIBIT, we have achieved significant labor saving and cost reduction during document review. By combining our experience in dealing with projects and our in-house AI engine, we have achieved high accuracy and efficiency that other companies cannot. is realized.
