Editors

Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Bill Steinman
Contributing Editor

Fearing Third Parties

U.S. executives know that most Foreign Corrupt Practices Act compliance risks come from third parties — overseas acquisition targets, joint venture partners, agents and others. Despite that knowledge, about three quarters of them think their company’s due diligence of intermediaries isn’t working. That’s according to KPMG’s 2008 Anti-Bribery and Anti-Corruption Survey.

Here are some findings from the survey based on responses from 103 executives at U.S. multinational companies:

  • 82 percent of the respondents said they face difficulties performing effective due diligence on foreign agents and other third parties.
  • 76 percent said they cannot adequately audit third parties for compliance.
  • 73 percent said their mergers and acquisition due diligence is sub par.
  • 27 percent said their level of M&A due diligence is minimal.

Eighty-five percent of the respondents said their company has a formal FCPA or anti-corruption compliance program. That’s good. What’s not good is that the programs aren’t dealing effectively with the greatest compliance risk of all — third parties. No wonder Justice Department and SEC enforcement actions under the FCPA are still rising — they more than doubled last year — and why most U.S. company executives are still worried about violating the FCPA.

Recent cases involving individuals illustrate how FCPA offenses can harm anyone caught in the mess. That’s why, even in tough times, U.S. executives should demand the protection of an effective compliance program. They shouldn’t accept compliance risks from third parties that can damage or destroy their companies, their careers, and their families.

View the 2008 KPMG Anti-Bribery and Anti-Corruption Survey here (courtesy of the White Collar Crime Prof Blog).

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