Yesterday I began a three part series on mergers and acquisitions under the Foreign Corrupt Practices Act (FCPA). In Part I, I reviewed what you should accomplish in the pre-acquisition stage. Today I want to look at what you should do with the information that you obtain in your pre-acquisition compliance due diligence.
Jay Martin, Chief Compliance Officer (CCO) at BakerHughes Inc. suggests an approach that reviews key risk factors to move forward. Martin has laid out 15 key risk factors of targets under a FCPA analysis, which he believes should prompt a purchaser to conduct extra careful, heightened due diligence or even reconsider moving forward with an acquisition under extreme circumstances.
- A presence in a BRIC (Brazil, Russia, India and China) country and other countries whose corruption risk is high, for example, a country with a Transparency International CPI rating of 5 or less;
- Participation in an industry that has been the subject of recent anti-bribery or FCPA investigations, for example, in the oil and energy, telecommunications, or pharmaceuticals sectors;
- Significant use of third-party agents, for example, sales representatives, consultants, distributors, subcontractors, or logistics personnel (customs, visas, freight forwarders, etc ...