Why diligence still matters
Even with the Justice Department's narrower FCPA focus, the law remains on the books, the time to bring charges can outlast a policy change, and foreign authorities apply their own anti-bribery rules. An acquiring company can inherit liability for a target's past conduct, and improper payments that continue after closing create fresh exposure. Justice Department policy has offered credit to acquirers that uncover and disclose misconduct at an acquired company within a set period, though the details of those policies change. Third-party intermediaries, including sales agents and customs brokers, remain a frequent source of bribery risk. Good diligence shows that you asked the right questions and acted on the answers.
What a review usually examines
Diligence on a third party typically looks at who owns and controls it, whether any owners or principals are connected to government officials, and whether its compensation makes sense for the services. Requests to pay through offshore accounts, in cash, or to someone other than the contracting party deserve close attention. In an acquisition, reviewers often look at how the target obtains government business, its use of intermediaries, and its books and records. Interviews with local management and a review of higher-risk payments can reveal more than questionnaires alone. Keep a record of what was found and how concerns were resolved.
Scoping the work
We help companies decide how deep a review needs to go based on the country, industry, and level of government interaction involved. Not every vendor needs the same scrutiny, and a risk-based approach is both practical and defensible. A first conversation usually covers the transaction or relationship, the timeline, and what information is available. If red flags have already appeared, we discuss how to investigate them, how to address them in contract terms, and whether the deal structure should change. After closing, we can help bring the acquired business into your compliance program.
