Regulatory: 7 points to consider in regard to FCPA due diligence

Focus on the acts of joint venture partners and agents

The risks associated with Foreign Corrupt Practices Act (FCPA) liability for the actions of joint venture partners and agents have never been higher, with companies operating outside the U.S. facing significant pressure to conduct adequate due diligence to protect themselves from liability for the conduct and acts of their joint venture partners and foreign agents.

A March 30 order requiring Jeffrey Tesler, a former agent of Kellogg Brown & Root (KBR), to report to federal prison on April 17 to begin serving his 21-month sentence based on his guilty plea to violating the FCPA, is a stark reminder of the risks associated with failing to conduct adequate due diligence of joint venture partners and agents. Tesler’s guilty plea, and subsequent sentence, is a reminder that companies operating outside the U.S. must carefully weigh the costs and benefits of conducting due diligence of their joint venture partners and foreign agents.

In order to minimize the risk of liability, companies should consider, among other things, conducting due diligence to determine:

  • Ownership and management to determine, in part, whether there is any direct or indirect government ownership, interest or influence of the partner entity
  • Whether any of the partner entity’s officers or owners have ever been suspended or barred from doing business with a government entity
  • The partner entity’s reputation

Once the appropriate level of due diligence is completed, at the contracting stage companies should consider, among other things:

Contributing Author

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Jaime Guerrero

Jaime B. Guerrero is a partner and member of the Government Enforcement, Compliance & White Collar Defense and FCPA & Anti-Corruption Practices at Foley &...

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