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Three steps for managing the FCPA risk of distributor compensation

Tom Fox | August 28, 2018

The issue of discounts to distributors has raised its head again, as Microsoft is reportedly under FCPA investigation for the actions of some of its distributors overseas. Distributors present different compliance risks than sales agents and representatives and should be managed differently as well.  

When companies grant distributors uncommonly steep discounts, it fosters an atmosphere ripe for paying bribes because the distributor is either instructed by the company to use the excess amounts to fund corrupt payments, or pays bribes on its own, without the express direction or implicit suggestion from the company to do so. 

The 2012 FCPA Guidance noted that common red flags associated with third parties include “unreasonably large discounts to third-party distributors.” The distributor enforcement cases offer lessons to combat this scenario, which...

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