Risk-based due diligence of third-party intermediaries: a scorecard approach

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By Roy K McDonald and Vishali Singal

Companies operating internationally often engage numerous — sometimes even thousands — of third parties around the world to help facilitate their business. Alongside the growth of such relationships, the risks posed by them have taken on new significance with the rising tide of anti-corruption and anti-bribery enforcement actions throughout the world.

As a direct consequence, the importance of third-party due diligence cannot be understated. Indeed, the level and thoroughness of third-party due diligence that a corporation undertakes is a factor that the US Department of Justice and the Securities and Exchange Commission expressly consider when they are deciding whether to prosecute and enforce alleged violations of the Foreign Corrupt Practices Act.

Therefore, ensuring that you complete proper due diligence can make the difference between a third-party relationship that truly adds value to a company and having to tackle expensive, time-consuming and, in the worst case, disastrous problems that may arise in the wake of actions a third party may take on behalf of your company….

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