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Aci Houston Due Diligence


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FCPA Due Diligence for Third Party Agents used in ACI Houston FCPA Bootcamp

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Aci Houston Due Diligence

  1. 1. Uncovering Connections: A Third-Party Due Diligence Checklist<br />Michael Volkov<br />Partner<br />(202) 263-3288<br /><br />January 2011<br />
  2. 2. Purposes of the Due Diligence Checklist<br />Screen the Initial Terms of Relationship with Third Party<br />Review the creation of relationship, or any subsequent changes to responsibilities or countries where agent operates<br />Establish procedure for centralized review of contracts to ensure consistent standards<br />Depending on size of company, should establish review at highest level within the company <br />Develop a Different Checklist for Review of Individual Transactions<br />
  3. 3. Basic Issues to Cover<br /><ul><li>Existence of Relationships with Foreign Government Officials
  4. 4. Purchasing Authority
  5. 5. Licensing or other regulatory authorities
  6. 6. Prior History of Bribery and other Crimes
  7. 7. Nature of Services, Compensation and Payment Method
  8. 8. Written contract
  9. 9. Representations and warranties on compliance
  10. 10. Right to inspect and audit third-party books
  11. 11. Right to terminate contract if believe violation has or will occur</li></li></ul><li>Guidelines for Due Diligence Checklist <br />Do not over-standardize form<br />Need to tailor to individual circumstances in each country based on risk<br />Before the checklist is completed, need to conduct background check to determine (5-10 year history)<br />Existence of ties to foreign government officials and employees<br />Existence of any pending or prior investigations of bribery or other criminal conduct or civil violations<br />Create written package and record of review and approval process to demonstrate compliance<br />4<br />
  12. 12. Make Sure Checklist Addresses Relationships with State-Owned Enterprises<br />Justice Department interprets “foreign official” definition to include “state-owned enterprises”<br />Justice Department has construed definition to apply to private companies in which government ownership stake is as small as 43 percent<br />Out of abundance of caution, checklist threshold should be set at 20-33 percent<br />5<br />
  13. 13. Ryan MorganFCPA 579-2298 x262<br />