Let's talk about contract provisions. Preventative measures should also be included in the actual agreement executed with a third party, and it should always be written in the agreement or a specific third party certification. Third parties should agree to and acknowledge compliance with particular laws, rules and regulations especially those related to anti-corruption. For example, you may include a provision that requires a third party to, quote, conduct business in accordance with all applicable anti-corruption and bribery laws, rules and regulations in the jurisdictions in which the parties are conducting business. Alternatively, you could be more specific and include language that requires a third party to comply with the provisions of the US Foreign Corrupt Practices Act, as amended, the UK Bribery Act, as well as all local and applicable anti-corruption and bribery laws, rules and regulations in the jurisdictions in which the parties are conducting business. You can even outline the actual jurisdictions where the business is taking place. But regardless of how general or specific you draft the agreement, it’s also important for the third party to acknowledge that they’re aware and familiar with the applicable anti-corruption laws. You might want to also include a provision in the agreement that it could be terminated if the third party engages in misconduct. Let me read you some language that you might want to consider. In the event the company forms a reasonable, good faith belief that the third party or one of its directors, officers, employees, or agents has engaged in conduct in violation of applicable anti-corruption laws in connection with any services or transactions under this agreement, the company reserves the right to terminate this agreement immediately. And upon termination for such reason, no further compensation or expenses shall be owed by the company to the third party for or in connection with any past, pending, or future transaction, or or any other reason under this agreement. And that all required expenses must be supported by valid documentation and only paid from certain designated accounts. Now that's a long paragraph, but it's worth putting in as a preventative measure. And along these lines, it's often good practice to place certain restrictions on expenses like requiring any expense over a certain amount, say $5,000, to be pre-approved. Restrictions on expenses allow them to better tracked and ensure that they're legitimate. Also, it's a good practice to prohibit any hiring by the third party of additional resources without prior written authorization. Now this can be a very important contractual provision. As I've seen many instances where a third party engages additional people or tries to engage additional people, in order to hire an individual or an entity that has, let's say special access to a government agency or a government official because of a family relationship to that government official. Then there are other contractual provisions that should be considered such as a books and records requirement. For example, there should be requirement in the agreement that the third party maintain accurate books and records supporting the performance of the services that they've agreed to provide, including all cost and expenses and furtherance of that activity. Such records should be available for inspection by the company and should be maintained for a minimum period of three years from the termination or expiration of the agreement. But you have to be careful with this. because if you include this type of provision in an agreement, you risk being criticized by prosecutors or regulatory agencies if the third party engages in misconduct and you actually didn't exercise that right, you never inspected the books and records. So if you're going to include this in any agreement, plan on exercising it. You can also consider whether it's useful to have a third party sign an annual certification. Such as certification can state something along the following lines. I represent to the company that I am familiar with the provisions of applicable law and that I am specifically familiar with the provisions of all applicable anti-corruption laws. Including but not limited to the US Foreign Corrupt Practices Act which prohibit me or anyone associated with me from making directly or indirectly any payment, loan or gift or any offer or promise or anything of value to any government official for the purpose of inducing that official to do any act. Or to make any decision in their official capacity or use their influence with a government or instrumentality thereof in order to affect any act or decision of such government or instrumentality, or to assist the either party in obtaining or retaining any business. In addition, you might want to add that they certify that they are not a government official themselves, and that no compensation paid to them has been or will be used to directly or indirectly make a payment to any government official in order to influence their action. Well, the certification alone will not always absolve your company liability for a third party's misconduct. It does provide an additional layer of protection for your company. Further, the certification may serve as a reminder to a third party that even though it is an independent contractor, it still must refrain from engaging an illegal activity.
