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Does the deal make sense?

Todd Taylor | March 22, 2018

At the recently concluded Compliance Week 3rd Annual Third-Party Risk Management Conference, Kara Brockmeyer, former head of the Securities and Exchange Commission FCPA unit and now partner at Debevoise & Plimpton, said that if there is no business reason to contract with a third party, this is more than indicia of a red flag from a compliance perspective—it is also bad business. She added that if there is no commercial reason to structure a transaction in a certain manner or the deal does not make sense from a business perspective, it is also problematic.

But isn’t it common sense that you should have a business justification to hire or use a third party? If that third party is in the sales chain of your international business, it is important to understand why you need to have a particular third party represent your company. This concept is enshrined in the FCPA guidance, which says: “companies should have an understanding of the business rationale for including the...

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