As part of a responsible anti-corruption and bribery program, your business should actively monitor not only the actions of your internal employees, but the behaviors and processes of third parties as well.
According to research conducted by the Organisation for Economic Co-operation and Development (OCED), 75 percent of foreign bribery cases prosecuted in the United States in 2014 involved payments that were made through third parties. And your business can frequently be held liable for these ethical oversights.
In a resource guide jointly-produced by the U.S. Department of Justice (DOJ) and the U.S. Securities Exchange Commission (SEC), the agencies clearly state that your organization can be found criminally liable -- even if your business did not directly violate the Foreign Corrupt Practices Act (FCPA) -- as long as your employees are aware of a "high probability" that a bribe will be offered by a third party.
In between training sessions, you should actively monitor your third parties. Read: 6 Red Flags for Third Party Corruption to know what to look for.
While there are a number of measures that your organization can take to reduce the likelihood of third-party corruption affecting your business, training is routinely cited as a useful tool.
According to the official guidance issued by the U.K. Ministry of Justice regarding the Bribery Act of 2010, "[co]mmunication and training deters bribery by associated persons by enhancing awareness and understanding of a commercial organisation’s procedures and to the organisation’s commitment to their proper application."
In pursuit of this deterrence, "[i]t may be appropriate to require associated persons [such as third-party agents] to undergo training. This will be particularly relevant for high risk associated persons."
The previously mentioned DOJ/SEC resource guide similarly states that “companies should undertake some form of ongoing monitoring of third-party relationships. Where appropriate, this may include updating due diligence periodically, exercising audit rights, providing periodic training, and requesting annual compliance certifications by the third party.”
Considering how useful third party training can be, your business would be wise to incorporate these efforts into its ongoing anti-corruption efforts. However, the question then arises -- how frequently should these vendors and suppliers be trained.
Ideally, your third party vendors and suppliers should engage in anti-corruption and bribery training as often as your own employees do -- assuming that you train your internal staff regularly.
Bare minimum, you should require any third parties engaged with your business to conduct anti-corruption training at least once each year. If possible, build this requirement into contracts, outlining certification mandates and minimum education guidelines.
Beyond routine training, there are additional times you should require third parties to complete training.
Depending on the level of risk associated with the business relationship, your company may need to require more frequent educational sessions. Common high risk factors can include third parties that are in:
You should also place a heavy emphasis on training after a case of bribery or corruption has been uncovered either within your own business or within the third party. Few things will exhaust the grace and good will of enforcement agencies than a repeated offense.
Look no further than Zimmer Biomet Inc. as an example. While the organization was able to defer part of the financial penalty associated with its first foreign bribery scandal in 2012, the company was forced to pay out more than $30 million when an additional incident occurred at the hands of a foreign subsidiary in 2016. There was no deferment for this second infraction.
Obviously before beginning a relationship with a new vendor or service provider would also be an ideal choice to enact training. Your company can make it clear prior to the first day of work that ethical business practices are a priority and should be the norm if this fledgling relationship is to continue.
To protect your business, you need to take measures that encourage third parties to behave as responsibly and honorably as your own staff.
At the same time, you should incorporate third-party elements into your internal training program as well. Any of your direct employees that interact with third parties should be educated to identify unethical behavior and recognize potential warning signs of corruption from third parties.
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