Hiperos Blog $492M reasons why sales agents aren't enough

In light of this week's planned activities here at Hiperos, I've been re-reading the press releases published by the SEC regarding the 2014 FCPA enforcement actions against Hewlett-Packard and Alcoa. In both instances, the substance of the cases and the admonitions from SEC has me thinking about the myths and realities of managing "high risk" third parties. For companies with huge supply chains, the fallback position of only managing the risk of bribery and corruption against a subset of third parties has, once again, been challenged - even rejected - by the SEC's enforcement team. Per Kara Brockmeyer, chief of the SEC Enforcement Division's FCPA Unit: "Companies ... should take a hard look at the agents conducting business on their behalf."Not surprising, few cases of FCPA violations have involved a company's known high risk third parties. Most organizations we engage with have great policies and procedures for managing their riskiest third party relationships - often sales agents - in the riskiest parts of the world. The challenge they come to us with is expanding their processes so that (potentially) all third parties are vetted in a consistent, objective and documented manner. Employees and/or third parties intent on using bribery to gain business will rarely do so using the company's highly watched and guarded channels. As we've seen in this year's cases, they'll engage "consultants" or work through sub-contractors. A colleague of mine suggested that approaching third party FCPA risk management in this manner is like burglar-proofing your home by locking the doors, but leaving all of the windows open.If you've been tasked with identifying and implementing technology to help you manage your third parties for anti-bribery and anti-corruption compliance, I encourage you to join us this Thursday at 11am ET for "Managing Third Party Corruption Risk: A View from the OCEG Illustrated Series".