Third-Party Bribery Risk Management Still Lacking

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By Michael Greene

Sept. 9 — Some U.S.-listed companies must do more to manage their third-party bribery and corruption risks, a Sept. 8 KPMG survey suggests.

“Auditing third parties for compliance” ranked as a top anti-bribery and corruption challenge, according to the survey conducted by KPMG International together with Singapore Management University.

Despite that, only 68 percent of U.S.-listed respondents said their companies have a formal process to identify high-risk third parties in the anticorruption and bribery context, the survey found.

Surprising Results

Rocco deGrasse, a principal in KPMG LLP’s Forensic Advisory Services, told Bloomberg BNA that the percentage of U.S.-listed companies that said they had a formal process to identify high-risk third parties appeared low, despite this percentage being higher than the global pool of survey respondents claiming to have a formal process (53 percent).

U.S.-listed companies operate in a “very rigorous regulatory regime,” he said, adding that “everyone recognizes that third-party risks are very high.”

“Greater regulatory scrutiny provides a greater incentive for companies in jurisdictions such as the U.S. and the U.K. to formalize and enhance existing anticorruption programs—so one expects these entities to be further along in overall compliance program development,” deGrasse said.

M&A Risks

The survey also found that despite 73 percent of U.S.-listed companies indicating that mergers and acquisitions are part of their growth strategy, only slightly more than half of the respondents said their companies include anti-bribery considerations as part of the pre-acquisition due diligence process.

DeGrasse noted that anti-bribery and corruption risks associated with M&A deals have been out there for a few years and he expected more companies to include it in their due diligence.

It is a big risk to take on certain targets, he said. “Certainly I would have thought the numbers would have been a little higher.”

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com

KPMG's press release is available at http://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Press-Releases/Pages/Failure-To-Monitor-Third-Parties-Heightens-Bribery-And-Corruption-Risks-KPMG-Survey.aspx.

The full survey is available at https://assets.kpmg.com/content/dam/kpmg/pdf/2015/09/anti-bribery-corruption-2015.pdf.