This article follows up on Part III of this series, FCPA compliance principles, to deal with the Foreign Corrupt Policies Act problems raised by agents and distributors. Because agents and distributors are used so often by many companies in the automotive sector, no compliance program can function unless it successfully deals with these intermediaries.
The starting point for hiring agents, consultants, distributors and other third parties is due diligence intended to verify that there are no red flags indicating that the third-party intermediary may be corrupt. There are three basic goals for any due diligence inquiry: (1) to weed out, to the extent possible, people or firms who are likely to make bribes (or to be otherwise unsuitable for the job contemplated); (2) to document how hiring decisions were made, and why; and (3) to establish that, in the event a violation later occurs, there was no way that the hiring firm could have known about it because the agent or distributor was carefully vetted.
While the nature of the review may vary, depending on the identity of the intermediary, the nature of the circumstances, and other facts and circumstances, the following are steps to consider:
• Contacting any references provided to make certain that they actually exist and are willing to vouch for the character of your agent or distributor.
• Contacting the country desk at the State Department, the commercial attaché at the US embassy in the foreign country and that country’s business desk at the Department of Commerce, and asking whether they have any records of improper conduct by the agent or distributor.
• Conducting a basic background check using Dunn & Bradstreet or similar services, and consulting the U.S. Department of Commerce Commercial Service.
• Checking local databases and/or police records to help determine if the person has a history of being involved in illegal or improper activities. If such resources are not available, local investigatory agencies may serve the same function.
• Establishing written procedures governing how to hire sales agents or distributors.