Half of Multinationals Failing to Prevent Third Party Bribery and Corruption

Nearly half (49%) of multinationals are failing to carry out basic bribery and corruption checks on third party contractors before starting to work with them, according to a new report from global law firm Hogan Lovells.

Crispin Rapinet Hogan Lovells

Crispin Rapinet
Hogan Lovells

The report found that 47% of respondents are failing to carry out desktop due diligence, 44% don’t ask third parties to complete a questionnaire, and the same proportion fail to conduct face to face interviews with third parties.

Steering the Course: Navigating third party bribery and corruption risk identifies the use of third parties as the second biggest bribery and corruption risk after government officials, and found their use is on the rise, with 82% of survey respondents noting an increase in the past three years and 78% anticipating an increase in the coming year.

The results follow interviews with 604 chief compliance officers, heads of legal, and equivalent, based in the UK, U.S., Asia, France and Germany, at many of the world’s largest multinational companies in four sectors – energy, minerals and resources, life sciences and healthcare, transport (including automotive and aviation), and technology, media and telecommunications.

“As companies expand overseas, there are good reasons to engage third parties – local know-how, connections to potential customers, and familiarity with the bureaucratic hurdles,” said Crispin Rapinet, Global Head of Investigations, White Collar and Fraud at Hogan Lovells. “But it’s a fine line to balance the commercial advantages against the risk that third parties pose to your organization, when they are acting in your name.”

“If you don’t have the right checks in place your company can be held liable if your third party bribes for your benefit. Regulators and enforcement agencies are sharpening their focus and corporates are increasingly facing enforcement actions such as criminal exposure for individuals and the company, and reputational damage.”

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