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Thought Leaders Global Elite - Forensic Accountants 2021

Q&A

WWL Ranking: Global Elite Thought Leader

WWL says

Derek Patterson has a “deep knowledge of financial analytics” and is commended as a “strong team player” on multi-jurisdictional investigations.

Questions & Answers

Derek Patterson is a principal at FRA’s London office and head of its Nordic business. He has in-depth experience structuring and delivering forensic accounting and electronic data services across multi-jurisdiction investigations, assessing and testing compliance programs, and supporting complex dispute resolutions. He has led a variety of complex fraud and litigation, financial crime and bribery investigations, bringing with him unique insight from years of in-house experience in a variety of finance roles across several industries

Describe your career to date. 

I was lucky to have enjoyed senior roles in finance in major international businesses (Ford Motor Company, British Airways) as well as entrepreneurial growth companies (Go Fly, easyJet) in my career before FRA. I was introduced to the founders of FRA by a mutual friend and realised that here was a great opportunity to use the skills gained in the commercial world to advise and guide clients. Since joining, the most memorable cases have been the cross-border investigations and settlements.

What do you enjoy most about your role as a forensic accountant? 

The complexities, scale and challenges promote the need for problem-solving and communication, and the use of technology in a way that can be clearly communicated to and understood by various stakeholders in the case. That counts as fun for me: when the client is delighted with the outcome, and the outcome is robust and defensible.

What impact has covid-19 had on your work and the forensic accounting market so far?  

Many governments have been quick to roll out schemes to address liquidity issues with programmes such as furlough schemes. But with this speedy implementation, controls were compromised. As the bail-out cash dries up, huge levels of fraud will undoubtedly be revealed, both specific to covid-19 financial measures as well as ongoing fraud from prior years. The economic turbulence resulting from covid-19 raises the risks of fraud, disputes, asset misappropriation, and false accounting and reporting. I can see that this will be an area where corporates, financiers and shareholders are likely to need forensic advisers in the coming years. 

How does Forensic Risk Alliance stand out from its competitors in the market? 

Unlike most accounting firms, FRA thrives as one global firm operating purely in the forensic space. Our independence is at the core of our credibility with clients and regulators. We are market leaders offering extensive multi-jurisdictional data privacy, transfer and protection expertise in order to assist our clients in achieving their objectives with compliance, litigation and investigations. At FRA, we understand that clients dealing with complex matters need technical expertise delivered in an understandable and actionable way. We have built lasting relationships with our clients on this basis.

To what extent is the increasingly virtual nature of investigations in a covid-19 landscape making for a more efficient process? In what aspects is it falling short? 

With the current pandemic accelerating the digitisation of the workplace, businesses have an opportunity to take more advantage of data-driven approaches. However, when you take into account the reduced workforce available to companies and unprecedented revenue pressures, it is inevitable that decision makers’ focus will be on generating new business and controlling cost. Companies must stay vigilant at a time when risks of fraud and corruption are skyrocketing. 

Virtual tools must be deployed with expertise to ensure compliance and effectiveness. FRA is working with partners and clients to ensure data continues to be managed safely. Using portals and data transfer protocols that maximise cyber-security and encryption, the team efficiently gathers data from diverse technologies, ranging from databases to robotics. For interviews, we leverage video and other remote tools in a way that ensures the data acquired during investigations is properly downloaded. Specialist technology teams deploy artificial intelligence and machine learning while working remotely with clients to ensure forensic standards are maintained.

What challenges do you think will arise from the growing amount of data-driven regulations in the industry? 

Data legislation is growing significantly in volume as well as complexity. Technology has a vital part to play for sure in handling big data efficiently and defensibly but the operating framework within which it is deployed requires a lot of care and attention, and calls for precise advice and procedures. This requires the cooperation of internal and external counsel; data protection officers and IT functions; and forensic accountants and investigation teams. Teamwork is vital.

What advice would you give to younger experts hoping to one day be in your position? 

Good, pragmatic, authoritative advice will never go out of fashion, that’s for sure. However, increasingly the ability to deploy and manage a flexible mix of skilled consulting teams with appropriate technology will be vital, and this emphasises the need to be able to communicate clearly and robustly. In the investigative space, forensic accountants increasingly need to be able to speak to and operate within a web of ever-increasing data regulation.

WWL says

The "fantastic" Derek Patterson is a "very strong forensic accountant" according to market commentators.

Questions & Answers

Derek Patterson is a principal at FRA’s London office and head of its Nordic business. He has in-depth experience structuring and delivering forensic accounting and electronic data services across multi-jurisdiction investigations, assessing and testing compliance programmes, and supporting complex dispute resolutions. He has led a variety of complex fraud and litigation, financial crime and bribery investigations, bringing with him unique insight from years of in-house experience in a variety of finance roles across several industries.

How has the market changed since you first started practising?

From a technical perspective, the evolution and importance of data governance and analytics has driven the need to find a way to efficiently process and query vast amounts of transactional and unstructured data. Global investigations nowadays almost always involve hundreds of thousands of documents, if not millions. For larger, more complex matters, AI technology-assisted review will soon be seen as an increasingly efficient cost-effective way to handle large-scale reviews and production. The real breakthrough will come when AI can analyse and link both structured (eg, accounting) and unstructured (eg, email and WhatsApp) communications.

Do you have any advice on how to effectively coordinate collaboration between lawyers, forensic accountants and data experts?

As investigations and legislation grow more complex, it is important that there is experienced project management and leadership that can lay out the bigger picture and ensure everyone understands each other’s roles within those perimeters. In our experience, success means always having the right people in the right meetings, and being able to communicate technical considerations effectively to the wider team. For example, technology has a vital part to play in handling big data efficiently and defensibly, but the operating framework within which it is deployed calls for precise advice and procedures from counsel; data protection officers and IT functions; forensic accountants; and investigation teams. Teamwork is vital.

What are some key factors you are looking to test when assessing compliance programmes?

Compliance should be a key part of the wider business strategy, working harmoniously with the rest of the business. Conduct from the top is one key element: do business leaders respect the compliance function, incorporate it in decision-making and set the right example? A critical assessment factor is the extent to which senior management can override or bypass internal controls. Directors should also have the appropriate experience to ask the right questions, not least because of evolving laws on directors’ liability. Assessing the operation of financial and transaction control frameworks is also key, and there I’m looking carefully at whether the finance function is genuinely performing with a “gatekeeper” mentality rather than simply a transaction processor.

You have been involved in many high-profile cases. Which cases stick most in your mind and why?

The most memorable cases have been the cross-border investigations and settlements. The complexities, scale and challenges promote the need for problem-solving and communication, and the use of technology in a way that can be clearly communicated to and understood by various stakeholders in the case. That counts as fun (and memorable) for me – when the client is delighted with the outcome, and the outcome is robust and defensible.

How do you see the use of deferred prosecution agreements (DPAs) developing in England?

We see the use of DPAs continuing to grow in the UK. At present, there have been only a handful of DPAs, all of which have been approved as an appropriate approach to justice by the UK courts. DPAs provide a route for enforcement agencies to penalise errant companies but with the benefit of focusing precious taxpayer resources on the right investigations. Unlike the USA, we anticipate that UK courts will continue to have a primary role in the administration of corporate resolutions.

What are the main challenges for enforcement agencies in your jurisdiction and why?

Two of the main challenges in the UK are: successfully prosecuting individuals for corporate crime; and convincing companies to self-report. The first has seen setbacks in recent years following the successful conclusion of a number of UK DPAs. It is frequently argued that this is because of current UK legislation regarding the guiding mind of a company. The second challenge of encouraging self-reporting is slowly being addressed by developing a track record – more importantly, the transparency around it. This allows companies to see the ultimate benefits of self-reporting and engagement with the authorities, particularly in bringing multi-jurisdictional investigations to a close.

What are some of the differences in approaches you have noticed when working with the DOJ and the SFO?

The US framework enables the DOJ to readily pursue actions successfully against individuals as well as corporations and that is a clear difference between the two approaches. In addition, the pressure that can be brought to bear regarding settlements in the USA is broader, in that you can have both the SEC and the DOJ pursuing settlement. They would be largely coordinated, but with sometimes-differing approaches on how to characterise the issue and calculate gain and disgorgement.  Furthermore, there are a broader range of settlement sanctions in the USA. Although the UK sentencing guidelines have ushered in material financial sanctions, the UK still lacks a strong post-settlement monitor functionality. This is a tool that is used broadly by the DOJ and others in the USA (eg, the Public Company Accounting Oversight Board) to ensure that companies really do adjust their post-settlement behaviours.

In which direction would you like to steer your practice in the next five years?

One of the side effects of the economic turbulence that covid-19 is creating is to substantially raise the risks of fraud, disputes, asset misappropriation, and false accounting and reporting. I can see that this will be an area where corporates, financiers and shareholders are likely to need support in the coming years.

Global Leader

WWL Ranking: Recommended

WWL says

Derek Patterson has a “deep knowledge of financial analytics” and is commended as a “strong team player” on multi-jurisdictional investigations.

Biography

Derek Patterson is a principal at FRA's London office and head of its Nordic business. He has in- depth experience in structuring and delivering forensic accounting and electronic data services across multi-jurisdiction investigations, assessing and testing compliance programs, and in supporting complex dispute resolutions.

He has led a variety of complex fraud and litigation, financial crime and bribery investigations, in multiple jurisdictions. Derek supported Telia Company's response to bribery allegations arising from its Uzbekistan business, and with disgorgement and pecuniary gain analysis in its US$965 million FCPA settlement with the DOJ, the SEC and the Netherlands. He also supported a major Nordic bank response to allegations of money laundering. Prior to that, Derek led the FRA team assisting Alstom's response to bribery allegations leading to regulatory settlement in Switzerland, and supported investigations in the US and the UK. Furthermore he has provided factual evidence to the Austrian courts with respect to a securities and real-estate fraud claims totalling over €2 billion. Derek also jointly led FRA's compliance program testing of a global corporation as part of the independent compliance monitor team appointed under a DPA. In addition, Derek has conducted a wide variety of compliance program assessments, internal audit reviews, controls testing, and related third-party distributor and agent reviews.

Prior to joining FRA, Derek was the group treasurer for easyJet plc, a senior member of the MBO team, which bought and sold the low-cost airline "go fly" at British Airways plc, and worked in Ford Motor Co in financial control and internal audit roles. Derek completed his training as an accountant and auditor with PricewaterhouseCoopers and holds a bachelor of accountancy degree from the University of Glasgow.

WWL Ranking: Recommended

WWL says

"Derek is a really excellent investigator"
"He is part of a great team at Forensic Risk Alliance"

Biography

Derek Patterson is a principal at FRA's London office and head of its Nordic business. He has in- depth experience in structuring and delivering forensic accounting and electronic data services across multi-jurisdiction investigations, assessing and testing compliance programs, and in supporting complex dispute resolutions.

He has led a variety of complex fraud and litigation, financial crime and bribery investigations, in multiple jurisdictions. Derek supported Telia Company's response to bribery allegations arising from its Uzbekistan business, and with disgorgement and pecuniary gain analysis in its US$965 million FCPA settlement with the DOJ, the SEC and the Netherlands. He also supported a major Nordic bank response to allegations of money laundering. Prior to that, Derek led the FRA team assisting Alstom's response to bribery allegations leading to regulatory settlement in Switzerland, and supported investigations in the US and the UK. In addition, Derek has conducted a wide variety of compliance program assessments, internal audit reviews, controls testing, and related third-party distributor and agent reviews. Derek also jointly led FRA's compliance program testing of a global corporation as part of the independent compliance monitor team appointed under a DPA.

Derek has actively supported a variety of arbitration and litigation cases including providing witness of fact evidence in a group of Austrian shareholder litigation claims arising from a complex securities and real-estate fraud totalling over €2 billion. He has provided expert advice to clients conducting ICC and ICSID arbitrations, and in London to clients conducting Commercial Court litigation including advice on complex data-lead quantum analyses.  He also served as Managing Director of the UK’s first litigation funding provider, IM Litigation Funding, managing funding across a portfolio of litigation cases in the UK and the US, and assessing the merits of quantum and costs.

Prior to joining FRA, Derek was the group treasurer for easyJet plc, a senior member of the MBO team, which bought and sold the low-cost airline "go fly" at British Airways plc, and worked in Ford Motor Co in financial control and internal audit roles. Derek completed his training as an accountant and auditor with PricewaterhouseCoopers and holds a bachelor of accountancy degree from the University of Glasgow.

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