Detecting Third-Party Corruption
Doing business in emerging markets presents big opportunities, but it also poses big risks. In 2009, third parties were involved in 90% of federal investigations of Foreign Corrupt Practices Act (FCPA) violations.
Help identify and prevent third-party corruption with these tips:
- Know Who Third Parties Are
The term “third party” is used broadly to refer to almost any person or company who is not employed by your organization but works with or on behalf of your organization. This includes distributors, sales agents, resellers, joint ventures, consultants and independent contractors.
- Be Aware of Cultural Nuances and Social Practices
Some socio-cultural practices may seem harmless. But bear in mind that in foreign countries, what third parties deem acceptable may be unacceptable to your organization or improper under U.S. law or other global regulations.
- Learn to Recognize the Red Flags
Here are four categories of violations that should at least raise suspicion: unusual payments in amount, type, or structure; questionable government connections; documentation problems; and reputation and rumor.