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 – One of the strongest defenses to any allegations that might be made against you or your company under the Foreign Corruption Practices Act (FCPA) is the due diligence procedures that you have implemented at your business.
It is highly recommended that you be proactive in this area.
1. Consult with legal counsel experienced in this field to provide you with recommended procedures and documentation.
2. Consult with an accountant to determine the level of internal accounting controls and procedures that are recommended for implementation at your company.
Following is a list of recommended due diligence steps in this area:
1. A corporate policy statement should be adopted that states your intention to comply with all laws including the FCPA. The FCPA should be explained and procedures for reporting violations and sanctions established. This policy should clearly state that no payments be made to foreign government or party officials without the approval of your general counsel or other officer.
2. As part of your company’s risk management, education and training programs should be implemented globally.
3. Contract provisions and/or certificates should be created such that all parties commit to the following:
• Confirmation that the parties are aware of the FCPA
• An agreement not to violate the FCPA
• An agreement not to make payments of anything of value to a foreign official or undisclosed party
• A representation that the party is not an employer, agent or officer of a foreign government or a candidate for public office
4. Maintain a file of any investigation made regarding a person or entity working for you internationally, i.e., consultations with accounting or law firms, banks, US embassy, Department of Commerce, other companies, private investigators, etc.
“Our Company Is Too Small”
Clearly the type of due diligence that should be implemented will vary from company to company depending on the size and financial capacity of the company, whether your company is a public or private company, the nature of the transaction, international scope of your business, etc. However, even the smallest company must be aware and implement minimal procedures for its protection, especially when dealing with developing countries.
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 email@example.com.