Third Party Agents: What Kind of Due Diligence | Michael Volkov - JDSupra

Third Party Agents: What Kind of Due Diligence | Michael Volkov - JDSupra

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Almost all FCPA enforcement actions involve the failure of a company to adequately screen or prevent a third-party agent from bribing a foreign official. The company’s relationship with the third-party agent is where the rubber hits the road: economic pressure to use the agent is strong when the agent can get the company the contract, and compliance officers know that third-party agents are the ones most likely to bribe a foreign official to win a contract, obtain a license, or secure a regulatory permit. In the absence of a company’s systematic failure to comply with the FCPA, companies need to focus on third-party agent relationships and laser their compliance efforts to make sure they do not cross the FCPA boundary.

Too many articles about this issue have been written without focusing on the structural question that needs to be answered: who in the company is going to be responsible for reviewing the creation or the renewal of a company’s hiring of a third-party agent? This does not mean for each transaction, but for the relationship itself. Where is the responsibility going to reside, and how will it be exercised? What procedure will be used to ensure that due diligence reviews are completed in a timely manner?

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