Why third-party due diligence matters
Launch library · evergreen read
Third-party due diligence means checking agents, distributors, consultants and other intermediaries a company relies on before entering into a relationship with them, precisely because these intermediaries can expose a company to bribery or corruption risk it would otherwise never directly encounter through its own staff and operations.
A company can be held responsible for corrupt conduct carried out by a third party acting on its behalf, even where no employee of the company was directly involved in the wrongdoing itself. This legal reality is exactly why due diligence on intermediaries has become such a central part of modern compliance programs.
Effective due diligence looks beyond a simple background check, examining ownership structure, past conduct, and whether the proposed commission or fee for a particular intermediary makes genuine commercial sense given the actual work involved. An unusually generous payment for vaguely described services is one of the more common warning signs investigators look for.