3rd Party Pitfalls and Learning From Them. When You Grow You Must Consider Your Risk
Many companies are continuing to expand and grow as their organizations find new markets to do business in. What this means is, companies are seeing the benefits of reaching out into new markets and seeing the potential for growth and opportunity. What many companies, especially small to mid-sized organizations, seem to neglect are the rules and regulations surrounding corruption and bribery. As companies look into these new markets, many times they are required to work with 3rd parties that are established within the region. These 3rd parties typically are sales agents, providing a sales entity for the company within the given country or distributer that allows for import and export of the companies products. In order to create business and make sure success is the only option, many of these 3rd parties will result to un-ethical business practices, which then expose the primary company to corruption and bribery issues.
In an article released by Fox News and published by the Associated Press, only 4 out of 41 countries are actively fighting bribery and corruption. What this means for companies doing business in these countries and that are also doing business in the U.S., is that it increase the risk tremendously. Since the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) are increasing enforcement, increasing global commerce for any company needs to be taken with an increased level of attention, ensuring they are not involved in corruption or bribery related incidences.
“Transparency International, which annually assesses compliance with the OECD anti-bribery convention, said Thursday that Germany, Switzerland, the United Kingdom and the United States are the only countries considered to be actively enforcing the agreement. The organization says six countries are classified as having moderate enforcement, nine have limited enforcement, and the remaining 20 "are doing little or nothing." Two could not be measured. The worst category includes six of the Group of 20 global economic powers: Argentina, Japan, Russia, Mexico, Brazil, and Turkey.”
Learning how to deal with 3rd parties and coming to a general consensus on how these 3rd party business partners operate is key when trying to reduce your risk and avoid fines set by the SEC and DOJ. Understanding the pitfalls that may be associated with working with 3rd parties in different parts of the world in order to expand business operations is also a good way to avoid risk. Click here to learn more about 3rd party pitfalls and insights.
