
Due Diligence Software: Creating the Perfect Request for Proposal
A guide for compliance professionals who want to identify the right due diligence solution for their organization. Here are the questions you should be asking.
Anti-corruption legislation prohibits business entities from engaging in misconduct such as paying bribes to foreign officials, but what happens when an organization attempts to circumvent these laws by enlisting the help of a third party?
In fact, data on enforcement actions related to the United States Foreign Corrupt Practices Act (FCPA) indicates that the majority of bribery schemes that take place each year are facilitated through a third-party intermediary—usually a consultant, a contractor, or an agent.
An agent can be defined as any third-party individual or organization (the “agent”) who has been legally authorized to represent a company (the “principal”) and enter into legal agreements on its behalf. In the United States, agency law regulates the legal relationship between a company and the agents it authorizes to act on its behalf, and establishes liability for acts performed by the agency.
The way we conduct business would look very different without the legal framework that allows agents to represent businesses. Corporations are themselves legal entities and have no inherent capacity to represent themselves—thus, every person who acts as an employee of a business to complete a negotiation or settle a transaction is acting as an agent.
In general, the relationship between the agent and the principal has three essential characteristics:
Agents may be legally classified in different ways depending on the scope of their authority to act on behalf of the principal. Consider the following five classifications of agents:
Under the FCPA, organizations may be held liable for the corrupt conduct of their agents in two cases:
In general, the principal will only be held liable for the corrupt actions of the agent if they had knowledge or directly authorized the corrupt behavior.
Congress has also made it clear that willful or deliberate ignorance is not an acceptable means of avoiding responsibility for corruption. Organizations must do their due diligence to ensure that agents act with integrity when representing them in their affairs.
A guide for compliance professionals who want to identify the right due diligence solution for their organization. Here are the questions you should be asking.