31 Days to a More Effective Compliance Program - What is your distributor compensation protocol?

Thomas Fox
Contact
One of the issues in any compliance program is the compensation paid to a third-party as FCPA exposure arises when companies pay money, either directly or indirectly, to fund bribe payments. Another area that leads to exposure from third-parties is with distributors. In a distributor relationship, the distributor purchases a product; taking risk of loss and title, at a discount from a manufacturer. The distributor resells at an uplift and that spread between purchase price and sales price is the distributor’s income. If a product is See more +
One of the issues in any compliance program is the compensation paid to a third-party as FCPA exposure arises when companies pay money, either directly or indirectly, to fund bribe payments. Another area that leads to exposure from third-parties is with distributors. In a distributor relationship, the distributor purchases a product; taking risk of loss and title, at a discount from a manufacturer. The distributor resells at an uplift and that spread between purchase price and sales price is the distributor’s income. If a product is purchased at an inflated discounted rate and then sold, the difference between the purchase price and resale value could be used for corrupt purposes. Commission payments and excessive distributor discounts can be channeled to pay bribes.

Three key takeaways:

The creation of well-thought out process which operationalizes your compliance program around distributor compensation, in a manner which documents your decision-making calculus is key.

Require multiple levels of approval for an out of range distributor discount.

Tracking distributor discounts globally make your company more efficient. See less -

Embed
Copy

Other MultiMedia by Compliance Evangelist

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Thomas Fox, Compliance Evangelist | Attorney Advertising

Written by:

Thomas Fox
Contact
more
less

Compliance Evangelist on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.