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The ‘how’ question in due diligence

Tom Fox | July 19, 2018

What is satisfactory due diligence under the Foreign Corrupt Practices Act (FCPA)? That question seems to be even more important after the corruption scandal involving Unaoil and the subsequent release of the Panama Papers. Both of these events, however, largely focused on the “who” part of due diligence and the need to know with whom you are doing business going forward. Another important question that doesn't often come up during due diligence is the “how?”

For instance, how does a particular third party perform its services with or for your company? If it is on the sales side, how can a third party help you make sales? If a third party comes through the supply chain, how does its products or services meet the needs of your company?

If the third party has a close business relationship, such as a joint venture, teaming agreement, or other similar arrangement, a company should have a deeper understanding of how the third party does business, because it could find...

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