1. Intermediaries are your greatest FCPA vulnerability.
In almost any regional theater, intermediaries, consultants, third-party representatives, and brokers are an invaluable and necessary asset.
They are also your foremost vulnerability from an anti-corruption standpoint, though, as they generally act autonomously and the Foreign Corrupt Practices Act (FCPA) is interpreted and enforced in such a manner that their corrupt activities can be imputed to your company with relative ease.
2. Secure a signed IPQ upfront.
It is crucial that, as early as possible, your desired intermediary complete an “International Party Questionnaire” that identifies, at a minimum, his/her existing connections to the relevant foreign government(s), whether personal, familial, or otherwise, his/her past performance and business references, the entities with which he/she is affiliated, and his/her knowledge and understanding of applicable U.S. laws and regulations.
3. Train your intermediaries.
Foreign intermediaries cannot necessarily be expected to have a practical understanding of the FCPA or their indigenous anti-corruption laws (if any). Indeed, depending on an intermediary’s culture and experience, his/her perspective on “corruption,” as we know it, may be completely different.
Accordingly, intermediaries should receive training on the FCPA that is tailored to his/her scope of work, translated (if necessary), and in-person if at all possible. The training should include modules that test the intermediary’s understanding of the FCPA’s anti-corruption provisions and should emphasize both the business and legal consequences of making, offering, or promising corrupt payments.
4. Monitor. Monitor. Monitor.
It is not enough to conduct due diligence on intermediaries, train them, and then hope that they will represent your company in accordance with U.S. laws and regulations. Rather, you should develop a sustained monitoring program to ensure that your intermediary’s efforts on your behalf are consistent with the FCPA.
Much of the monitoring will be conducted by your finance/accounting teams, which should maintain ongoing situational awareness of the intermediary’s use of funds and verify that all funds are used for the purposes authorized by the company.
5. Go in-country.
Monitoring intermediaries from afar is necessary but by no means sufficient. Instead, companies should engage their intermediaries in-country on a regular and unannounced basis.
Doing so will deter intermediaries from surreptitiously engaging in misconduct and will also afford them an opportunity to candidly share with your personnel circumstances that suggest an FCPA violation may, without intervention, imminently occur.
About the Authors
Downrange authors Jennifer Huber and Adam Munitz are Partners in Fluet’s International Trade + Transactions Practice. Focusing primarily on the defense, security, and intelligence sectors, Jennifer and Adam help businesses translate their domestic successes into overseas growth and assist foreign entities with sensitive investments in, and acquisitions of, U.S. businesses.
Additional information regarding their capabilities and previous representations can be found on the International Trade + Transactions practice page.
