Editor’s note: “International Business Corner” is a weekly column written by Joan Keston that provides information for people involved in or considering international operations. Keston is an international business consultant. Over the next several months she will be writing about important issues that international businesses face as they compete in the 21st century global business environment. This article is part of a series that addresses corruption.

RALEIGH – You cannot claim ignorance regarding an illegal bribe if you are aware or believe that a bribe exists or are substantially certain that an illegal bribe will take place. Your knowledge of the illegal bribe is established if you are aware of a high probability that the illegal bribe exists or will take place.

That knowing wink of the eye while verbally protesting or prohibiting a suggested bribe or illicit activity is something the Securities and Exchange Commission and the Department of Justice are looking for. (The Securities and Exchange Commission and the Department of Justice are the enforcement entities for civil and criminal liability, respectively, under the Foreign Corrupt Practices Act.)

Red Flags

You must be familiar with a number of red flags and be prepared should they appear. You must also educate your domestic and foreign management teams to identify these red flags or similar types of occurrences.

Although your procedures, education and training should be in place for domestic business and global business in general, consult with www.transparency.org to determine if you are doing business in a part of the world where corruption is common or rampant.

Following is a list of some red flags:

• The agent or consultant resides outside the country where services are to be performed.

• The commission payments are to be made outside the country and/or in a country linked to money laundering.

• Company wire transfers to not disclose the identity of the sender or recipient.

• Cash payments are requested.

• The agent or consultant demands an unusually high level of fees not common in the industry or related to actual services performed.

• The agent or consultant has a close family connection with, or other personal or professional affiliation with a government or political party official.

• You are asked to make political or charitable contributions.

• The relevant industry involves large governmental expenditures, such as vital markets, natural resources, oil, construction, aircraft, defense.

There is lack of transparency in accounting and expense records.

The agent or consultant requests that false invoices or documents be prepared in connection with a transaction.

The list goes on….. When presented with a given scenario you should reflect upon its divergence from a normal business procedure or standard.

What Should We Do If We See a Red Flag?

There are several things you should do if you are presented with circumstances that appear to be questionable.

1. Do not proceed with the transaction until you have done your due diligence. If you become aware of the red flag after it has been performed do not ignore it.

2. Consult with legal counsel experienced in this area of the law.

3. Consul may advise that you consult with the opinion procedures and guidance available at the Department of Justice. Disclosing any questionable activity may assist in your defense.

4. Immediately implement due diligence, compliance, education and training procedures.

(This article is not providing any legal advice regarding the subject discussed in this article. You should consult with legal counsel in that regard.)

About the author: Joan Keston is the Managing Principal of Keston & Associates, Ltd., an international business consulting firm located in Raleigh, NC, and a Partner at Paladin and Associates, Inc. She has 25 twenty-five years of experience with mature as well as entrepreneurial companies, domestically and internationally, coupled with an executive managerial and legal background. Her firm facilitates international business transactions, and assists companies establish, grow and integrate their international operations. She can be reached at (919) 881-7764 and jkeston@kestonassociates.com