A recent study conducted by international law firm Hogan Lovells has found that 49 per cent of multinational companies are failing to carry out basic bribery and corruption checks on third party contractors. As regulators around the globe sharpen their focus on corporates, many companies remain exposed to a host of risks by third party operators acting in their name in foreign jurisdictions.

A fine balance

Hogan Lovells global head of investigations, white collar and fraud Crispin Rapinet commented: ‘As companies expand overseas, there are good reasons to engage third parties – local know-how, connections to potential customers, and familiarity with the beauraucratic hurdles. But it’s a fine line to balance the commercial advantages against the risk that third parties pose to your organisation, when they are acting in your name.’ The firm’s survey found that 47 per cent of companies don’t carry out basic desktop due diligence on third party contractors, while 46 per cent didn’t include anti-bribery and corruption clauses in their contracts with third parties. Only 58 per cent even kept a list of all third parties connected with their organisation, while only 51 per cent had ever rejected a third party contractor on the basis of AB&C risk.

UK worst of all

Hogan Lovells’ findings are based on a survey of 604 chief compliance officers, heads of legal or their equivalent at companies based in the United Kingdom, United States, Asia, France and Germany. The regional breakdown in its report Steering the course: Navigating third party bribery and corruption risk identifies UK-based companies as the weakest group on assessment of third party AB&C risk, with a full 50 per cent of surveyed companies failing to carry out regular risk assessments for contractors. On the other end of the spectrum, US-based companies scored highly on several A&BC prevention measures – around 61 per cent said they ensured that third parties undertook AB&C training, while 63 per cent said that they conducted face-to-face interviews with third party contractors.

Hogan Lovells full report can be viewed here.