How can companies meet the increased requirements for the management of their business partners, especially with regard to anti-corruption measures? What exactly is required? For most organisations, there is still a long way to go to achieve effective business partner compliance that meets the standards, and the uncertainty is understandably high.

FCPA and UKBA as benchmarks

For companies on international terrain, the regulatory expectations are relatively clear. The need and requirements for effective business partner management are comprehensively set out in the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act (UKBA). The bar is set high. Both the FCPA and the UKBA emphasise that companies must have a thorough understanding of their business partners, the details of the business relationship and the associated risks, and respond accordingly. Companies can exonerate themselves by demonstrating that a compliance violation is the exception and that appropriate rules and processes are generally implemented that usually prevent compliance violations - such as bribes paid by a consultant to a government official in order to obtain a permit that is important to the company.

In any case, the practical impact is significant. More than 80% of FCPA cases are due to inadequate business partner management.

Still much uncertainty in German law

German law is less clear in this respect. There is no clear regulation of the necessity and requirements of business partner compliance.

This does not mean, however, that companies are allowed to be inactive. On the contrary, there is a not inconsiderable risk that the company will be held liable under §§ 130, 30 of the German Administrative Offences Act (Ordnungswidrigkeitengesetz), e.g. for bribery by agents, if no effective compliance management, including risk-oriented business partner management, is implemented. There is just no binding force and no clarity; rather, "in case of conflict", a review is then carried out by the criminal courts, with possibly considerable financial consequences for an affected company, not to mention the loss of trust.

Review of business partner compliance absolutely necessary - also in the interest of business

According to all sets of rules, the following basic assumptions apply indisputably:

  • Responsibility cannot simply be outsourced
  • Companies cannot discharge their responsibility by entrusting third parties with the execution of risky activities.
  • Moreover, they are fundamentally responsible for what third parties do on their behalf.

In any case, companies are well advised not to rely on old systems and strategies in view of the increased expectations, but to review their business partner management from the ground up and align it with today's standards. A fundamental discussion on whether these standards should be followed or not is idle and will not take place in the event of a crisis. The requirements must be transferred directly into an effective compliance management, despite one or two uncertainties about the requirements of German law in particular. This must be done in a way that is individually oriented towards the companies. Both under-regulation and over-regulation must be avoided.

The management of a company should have a clear answer to the question: "What does your business partner management actually look like?" in order to be able to meet the expectations set for contemporary, risk-oriented corporate management.

Let's face it, the process of a thorough reappraisal can be very time-consuming. However, the result is a win-win situation. The transparency and evaluation of the business partners that is created in this way is exactly in the interest of the business, namely to know the reason and the framework conditions of a business relationship as well as the business partner exactly. Often this "cleaning up" is long overdue from a business perspective, and will be reflected in a corresponding "return on investment".

Compliance and good business management once again go hand in hand and are mutually dependent.



Dr. Rainer Frank