Section 2

Building Your Foundation

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Implement what you know with confidence

Discover action-based tools that provide simple steps for program improvement or robust plans for new ways of doing business. 

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Your ethics and compliance program is an ecosystem of moving parts. New laws and regulations, new lines of business, new geographies, mergers and acquisitions become part of a growing enterprise that your compliance ecosystem must support. 

Effective compliance programs are able to deftly navigate these complexities because they have built strong foundations that were developed with the nature of the compliance industry in mind.

This section will give you the expert advice and programmatic best practices to ensure the first steps you take to develop your program are in the right direction. Or if your program is more mature, these resources and insights will give you the necessary guidance to course correct and improve your program’s foundation at whichever stage it is in. 

 

How to Survive a Rogue Third Party Agent

Chapter 4 of The Worst-Case Scenario Survival Guide for Compliance Professionals

It's no surprise that using third-party agents to support business operations is a common practice around the world. Even with thorough due diligence processes, what would you do if one of your agents was caught in violation of the FCPA? 

Tom Fox 09/06/2017

Chapter 4 of The Worst-Case Scenario Survival Guide for Compliance Professionals

It's no surprise that using third-party agents to support business operations is a common practice around the world. Even with thorough due diligence processes, what would you do if one of your agents was caught in violation of the FCPA? 

How to Survive

You’re reading through your morning email when you see this terrible subject line: “Hey, don’t we use this sales agent?”

That’s when you read the details of an email describing a third-party sales agent you know very well who has facilitated an illegal bribe for one of your competitors. Now, both the competitor and the sales agent are the focus of a recent FCPA enforcement action. It’s bad news, and it’s only a matter of time before your company is affected. What do you do?

 

1. Dig Into the Past

Did you take the right steps when you initially approved this third party? You’ll want to backtrack and confirm that your approval process included a written explanation of the business need for the sales agent, as well as a fully answered questionnaire completed and returned from the sales agent. Did you perform an appropriate level of due diligence review based upon the information in the questionnaire? Next, look to see if that due diligence was internally reviewed, did it contain in any red flags, and if so, were they appropriately cleared? Finally, review the compliance terms and conditions, which should include a right-to-audit clause, annual certifications and other Justice Department mandated compliance terms and conditions.

 

2. Sniff Around

Start by reviewing previous audits to ensure that no prior FCPA violations exist and that annual compliance training had been completed. From there, run an enhanced due diligence search to see if there is anything new since you completed your initial due diligence on the sales agent’s history and note any red flags. 

Then, follow the numbers. See what payments have been made to the third party. Is there anything not justified per the terms of the contract? Were any of the payments made to offshore locations? Has there been any increase in the percentage commission rate since the contract had been executed?

If payment has been made, make sure it was within the contract terms. Confirm that all payments made to the third-party match up to a properly submitted invoice. Check if all the services mandated under the contract, or described in an invoice, actually delivered to or performed on behalf of your organization.

Finally, verify an annual compliance training certification exists along and confirm that no known FCPA violations related to the third party’s representation of your company.

 

3. Look at Sales

A sales spike in a high-risk area can be evidence of bribe payments. Sales numbers may seem to have maintained a steady rate, but that doesn’t mean everything is kosher. Cross-check the third party’s invoices against GTE spend by your employees in that country. Specifically GTE involving government officials or employees of state-owned enterprises.  As an additional check, look to see if there was any unaccounted spike in the marketing or charitable donation budget for the third party.