Business Partner Due Diligence: Selecting and Managing Agents, Joint Ventures, and Consultants
CCI featured author Thomas Fox, an FCPA compliance attorney who has practiced law in the Houston area for 25 years, recently contributed an article to the August edition of the SCCE’s Compliance and Ethics Magazine. Mr. Fox currently consults with companies on matters related to FCPA compliance, risk management, and international transactions.
His article in Compliance and Ethics Magazine deals with business partner relationships, and specifically discusses best practices for performing due diligence as it relates to selecting and managing agents, joint ventures, and consultants.
Here is the introduction to the article, as excerpted directly from Compliance and Ethics Magazine:
U.S. companies have long utilized foreign business partner relationships to leverage their global reach and assist in the growth and development of overseas business relationships. When a U.S. company enters into this type of business relationship, it enables the company to expand their commercial reach in a cost effective manner. One key component of this foreign business relationship is that the U.S. company must manage compliance by the foreign business partner under the Foreign Corrupt Practices Act (FCPA).
Although the FCPA itself does not speak directly to the foreign business partner’s issue, the Federal Sentencing Guidelines for FCPA violations, and related U.S. government commentary, make clear that U.S.-based companies bear the same legal responsibility for the actions of foreign business partners as they do for the actions of their own employees. The Securities Exchange Commission (SEC) and Department of Justice (DOJ) Deputy Attorney General Paul McNulty each confirmed that the quality of a company’s due diligence on foreign business partners will be considered when fashioning penalties for companies whose business partners violate FCPA.
Mr. Fox goes on to provide guidance on how to properly execute sound due diligence while establishing a relationship, stating that the due diligence process should contain inquiries into the following areas:
- Need for the relationship
- Credentials
- Ownership structure
- Financial qualifications
- Personnel
- Physical facilities
- Reputation
He also says that the following methods should be used when performing background checks:
- References
- Embassy check
- Compliance verification
- Foreign country check
- Cooperation and attitude
Essentially, Fox sees three key components to properly ensuring FCPA compliance with foreign business partners:
- Due Diligence when establishing the relationship
- Compliance while formalizing the relationship
- Monitoring as an ongoing focus during the relationship
To download the article in PDF format and read it in its entirety, click the following link:
Business Partner Due Diligence:
Selecting and Managing Agents, Joint Ventures, and Consultants
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Follow the link to learn more about Compliance and Ethics Magazine, presented by the Society of Corporate Compliance and Ethics.
Tags: Compliance and Ethics Magazine, DOJ, due diligence, FCPA compliance, scce, sec, Thomas Fox
