The DOJ Expects “Third-Party Management” from Compliance Programs

by K2 Intelligence Investigations · Compliance Solutions · Cyber Defense

K2 Intelligence - Investigations · Compliance Solutions · Cyber Defense

This article was originally published in The FCPA Blog (8 Mar. 2017). Republished with permission.

2016 was a banner year for global anti-corruption enforcement: the U.S. government set records in terms of both the number of FCPA actions brought and the total dollar amount of related fines.

Meanwhile, governments from around the globe—including the United Kingdom and Brazil—brought high-profile actions as well. And 2017 got off to a similar record-breaking start in January.

One feature of several of the most high-profile of these actions—such as the enforcement actions against Rolls-Royce and Och-Ziff, and the recent announcement by Panasonic about an investigation—is a reminder, if any were still necessary, that using third-party intermediaries in foreign markets remains fraught with the potential for illicit conduct.

Indeed, “Third-Party Management” is one of 11 key topics included in DOJ’s recently released guidance on how to evaluate corporate compliance programs.

While engaging and relying on the services of third-party intermediaries may be necessary in some industries and locales, it is vital that companies that do so ensure that they are conducting an appropriate level of due diligence on these intermediaries. Moreover, the due diligence that is performed cannot—or should not—be a “cookie cutter” approach.

Rather, the due diligence must be targeted to the industry and market in question and should seek to identify whether the intermediary has a reputation or history of engaging in corrupt or unethical activity or has any connection to the foreign government. And while public records research is a must, in many jurisdictions the company will also want to conduct targeted and discreet source inquiries, which will require on-the-ground knowledge and a network of sources.

Of course, as the DOJ guidance also makes clear, conducting robust due diligence on third-party intermediaries is not the only measure that companies should take as they seek to avoid the crosshairs of anti-corruption enforcement agencies—especially as those agencies increasingly work and resolve cases multilaterally.

An effective anti-bribery/anti-corruption (ABAC) posture requires measures that are proactive, reactive, and continuously refreshed and updated.

Proactive. Proactive measures begin with companies’ internal governance related to ABAC issues. Specifically, the company must have established and effective ABAC compliance policies, procedures, training, and internal controls designed to constrain, identify, and/or surface possible ABAC concerns. As with the particular due diligence discussed above, these internal governance measures must be tailored to the particular ABAC risks associated with the company’s size, business model, industry, and geography.

To that end, a critical first (and ongoing) step is to perform an ABAC risk assessment to identify potential vulnerabilities and risk areas, such as within the procurement or accounts payable processes or engaging third parties. The risk assessment will also identify the key areas to test underlying transaction or payment data.

Reactive. Companies must also have the ability to respond thoroughly and effectively to allegations of potential corrupt conduct. The response may range from initiating an internal investigation into whistleblower complaints (and protecting the whistleblower from any retributive actions) to conducting a wider investigation with the support of outside experts, such as forensic accountants and investigators with experience and source networks where the conduct allegedly occurred.

Importantly, such outside experts bring distinct skill sets that complement those of outside counsel which also is engaged to help.

An effective investigation to get to the bottom of what may have happened will be increasingly important as the use of Deferred Prosecution Agreements and tangible incentives for voluntary self-disclosure continue, since companies will want to know if there is any “there” there.

Continuously Updated. International ABAC enforcement regimes’ enforcement priorities and interpretations of key statutory provisions can often change, as do the methods that corrupt actors employ to evade those restrictions. (The crackdown on corporate “donations” to charities linked to government officials and the practice of hiring government officials’ otherwise unqualified relatives are but two examples.) Consequently, the steps companies take to constrain, identify, and remediate possible ABAC violations also cannot be static. Rather, constant vigilance is required.

An effective ABAC compliance program thus will repeatedly conduct risk assessments to identify new vulnerabilities and/or risk areas. The program will also refresh the testing performed on relevant transaction and payment data as well as the due diligence performed on critical third-party vendors and/or intermediaries.

Written by:


K2 Intelligence Investigations · Compliance Solutions · Cyber Defense on:

Readers' Choice 2017
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:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.