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(i.e., because it involves more potential interaction with public officials) the due diligence performed by multinational corporations will be deeper and be repeated more frequently.
A Guide for Mid-Sized Companies in Emerging MarketsCenter for International Private Enterprise19Similarly, multinational corporations can be expected to apply the most comprehensive levels of due diligence on potential joint venture partners, takeover targets, and partners in long-term or high-value contracts. In such cases, they can also reasonably be expected to include contractual protections in clauses covering anti-corruption provisions, representations, and warranties.The due diligence is likely to include requests for information about your compliance program. Contractually, multinational corporations are likely to demand rights to audit your program.Regardless of their risk profile, companies that are transparent and proactive in instituting a robust compliance program, and educating their own suppliers and business partners on anti-corruption compliance, have a much better chance of forming lasting, trusted business partnerships with multinational corporations. Multinationals are paying attention to potential red flags that may arise when they are considering establishing a relationship with a third party business that seems overly risky. A company may exhibit such warning signs – and potentially lose a valuable business relationship – if it (among others): • Is not transparent about ownership• Has public officials in its ownership or management• Was aggressively recommended by a government official • Does not publish accounts according to generally recognizedaccounting standards• Does not keep its public filings up to date• Is registered in an offshore jurisdiction with weak regulation(i.e. tax havens)A meaningful compliance program is about more than box checking. Your compliance program should help a corporation you work with – or aspire to work with – reach the following conclusion: “I am confident that this agent/reseller/supplier/partner does not make corrupt payments and our business relationship is a legitimate one. I can demonstrate to others why my confidence is justified.”
Anti-Corruption ComplianceCenter for International Private Enterprise20• Has previously engaged in illegal or suspicious activities• Has little relevant experience, or is not known to peoplewithin the industry• Seeks unusual payment arrangements, such as abnormallyhigh commissions or success fees • Runs a charity (even bona fide) affiliated with a foreigngovernment officialWhere to start? Risk assessment and managementIn order to develop a strong compliance program, a company must first understand the risks associated with its operations and surrounding environment. A corruption risk can be defined as any process or scenario where the opportunity for corruption may arise. Many companies already perform some type of