Compliance officers face lots of challenges when conducting third-party due diligence. One issue that frequently arises is determining who exactly owns a potential agent or distributor. In many circumstance compliance officers have a difficult time peeling back the layers of legal ownership, examining related party ownership stakes and other complexities designed to obfuscate the true ownership of the third-party. In the financial industry, the inquiry...

The debate over corporate wrongdoing, punishment and deterrence continues.   Corporations are not people but are entities that operate through collective behavior. It is interesting to consider whether individual punishment versus corporate entity punishment effectively deters corporate wrongdoing. After all, a company is only liable for individual conduct that is attributed to the organization. The issue of corporate wrongdoing is on the front burner at the...

It is time for another in my series of profound grasps of the obvious – compliance comes down to people. A company violates its code or the law because of human actions or inaction. Usually it is a conscious decision to act or not to act; sometimes, a violation is unintentional. There is what I call the human factor to compliance. I know this sounds...

A joint venture can create layers and layers of risk for compliance officers. It is always good to start from the inside and work your way out. If your joint venture partner is a state-owned enterprise, or even more difficult, if your joint venture partner includes a state-owned enterprise in its ownership, the headaches can start to mount. Sometimes it is good to graph out...

One of the more challenging areas in the anti-corruption field is navigating joint venture risks.   Companies rely on joint venture partners for a variety of purposes – local partners know the geographic market, have a specific skill set that integrate well with the company’s operations, and offer a cost-effective means to expand company operations into foreign markets. Joint ventures create a distinct set of risks...

Compliance officers need to dig into and understand a company’s internal controls. Many compliance officers tend to leave that issue to Internal Auditors – that is a big mistake. Compliance officers have to be multi-disciplinary experts, ranging from legal, to financial and business strategies. Frankly, in the corporate governance world, compliance officers serve as internal psychologists, cheerleaders, strategists, and overall hand-holders. Compliance officers have to...

An effective due diligence screening program should include instances when a company decides not to engage an agent or distributor. It is hard to persuade the business side of this fact but success does not necessarily flow from blind acceptance of every potential third-party. We are all focused on success and approval of business partners. However, there are situations where a third-party is just not...

Most lawyers are not creative people. After all, there is a reason they went into the law. Lawyers who deal with anti-corruption risks and third parties need to expand their horizons and consider using creative solutions to reduce and minimize risk. In the anti-corruption compliance arena, many companies are following a standard formula for certifications, representations and warranties. Lawyers involved in these issues have passed...

The Department of Justice and the SEC know they can push companies to expand and improve their anti-corruption compliance programs. They are well aware that the requirements set forth in their settlement documents, as well as the critical “Hallmarks of an Effective Compliance Program” in the FCPA Guidance, have resulted in expansion and improvement of anti-corruption compliance efforts. One specific area is the ever-increasing requirement...