How to do FCPA due diligence on third party intermediaries

Dawn Zhang and Philip Ruan

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An effective due diligence programme on third party intermediaries (TPIs) is vital to the success of a compliance plan under the US Foreign Corrupt Practice Act (FCPA). For those multinational companies subject to the FCPA and doing business in China, there are compelling reasons to create and maintain a vigorous TPI programme: first, the FCPA holds a company responsible for acts of a third party engaged by the company if the company authorises this act, or has actual knowledge of this act, or deliberately ignores the existence of this act; second, almost all FCPA prosecutions involving China relates to use of third party agents, and this comes as no surprise in a market like China where relationship-building is a recognised route to success.