Kroll FCPA Study: Third-Party Screening Falls Short

June 11, 2012
Categories: FCPA

Kroll Advisory Solutions has released their 2012 FCPA (Foreign Corrupt Practices Act) Benchmarking Study. Kroll surveyed companies in the financial, energy, information technology/telecommunications and pharmaceutical industries.

A few highlights from the study:

  • The threat remains. Kroll reported that “while many multinationals have seen this trend evolving and have started to implement anti-bribery and anti-corruption compliance programs, corporate compliance offers are still not convinced that their companies are sufficiently protected from the threat of FCPA violations.”
  • Third-party screening is inadequate: Many corporate compliance officers remain concerned about their bribery risk and “are falling short on best practices with respect to third party screening.” 
    “While 99 percent of respondents said they had anti-bribery provisions for employees in their companies’ code of conduct, that number fell to 73 percent when compliance officers were asked about provisions for third parties.” While many companies  “require third parties to disclose any affiliation with foreign officials…[and]…verify that third parties adhere to the company’s code of ethics…twelve percent of respondents said their companies  conduct no due diligence on third parties.”
  • Systems are not in place.  Although companies recognize the risks of doing business with third parties, many do not have adequate systems in place to assess third party compliance. Of the 71 percent of companies surveyed who do send compliance questionnaires to third parties, 60 percent use paper-based systems which makes standardization difficult and “makes it easier for red flags to go undetected.”

Ultimately, “despite compliance executives’ widespread confidence in preparation,” the Kroll report found “exposures in third party screening, facilitating payments and political donations.”

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