Many businesses today, particularly those that operate internationally, are heavily reliant on intermediaries – independent third parties that act on a company’s behalf. Intermediaries are critical to helping businesses bring their products and services to market; however, their actions also can lead to liability for the organizations they represent. In fact, most corruption enforcement actions relate to bribes allegedly paid by intermediaries.
An effective third-party anti-corruption program is an important component of an organization’s overall anticorruption program, and helps the business to identify potentially problematic commercial partners. For those stakeholders striving to build a sustainable third-party anti-corruption management program, this white paper will provide important guidance and best practices to help ensure optimal results.
An effective third-party anti-corruption program is similar to a progression of funnels − each component should reduce the number of third parties to be scrutinized. We break these stages down as follows:
- Determining the scope of the program
- Using a risk-scoring process to group intermediaries quickly into categories of high, medium and low risk
- Utilizing an open source, media-centric approach for initial due diligence
- Performing enhanced due diligence on an exception basis
As part of a discussion on developing a forward-looking process, this white paper goes on to describe a sample workflow for a third-party anti-corruption program:
- Business sponsor initiates onboarding or contract renewal.
- Third party completes questionnaire.
- Sponsor reviews questionnaire and submits for risk scoring.
- Risk score establishes whether investigative due diligence is needed.
- Due diligence investigations are performed on high-risk third parties.
- For those reports with findings and associated action items, compliance ensures that each action item is carried out, and the results are documented.
- Compliance reviews due diligence report and changes disposition.
- Monitoring timetable is established once the third party is approved.
Potential bribery and corruption issues are a significant concern for any global company that relies on intermediaries. It is therefore critically important for these organizations to take steps to understand the risks each third party represents and to apply a heightened standard of care or even perhaps terminate relationships with intermediaries that pose the highest risk. A third-party anti-corruption program will help an organization bring greater focus to this aspect of its business risk landscape.