The Red Flag Group Publishes Third Party Compliance White Paper

An authoritative guide designed to help companies set up comprehensive compliance programmes to mitigate corruption and bribery risks with third parties

Jun 14, 2010, 09:00 ET from The Red Flag Group

SAN FRANCISCO, June 14 /PRNewswire-Asia/ -- The Red Flag Group, a world-leading compliance advisory, due diligence and technology firm, announces today the publication of an authoritative guide aimed at helping organisations deal with compliance risks associated with third parties -- from suppliers and service providers, through to agents, intermediaries, resellers, and distributors.

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Entitled "Building Effective Compliance Programmes for Third Parties", the white paper details the steps that companies must take in building a comprehensive third party compliance programme, from gaining corporate-wide commitment, through to implementation, monitoring and measurement, and making continued adjustments based on periodic reviews. It also highlights the most common mistakes made by organisations in putting together third party compliance programmes, and includes charts, graphs, examples, tips and checklists to illustrate the elements that every organisation needs to consider.

"Most companies don't have a third party compliance programme, and they don't recognise the need for one. In a world where governments around the world are increasingly cracking down on corruption, companies think that as long as they get their internal codes of conduct and other internal compliance requirements right, then they will be in the clear as far as regulators are concerned," said Scott Lane, principle and chief executive of The Flag Group, and author of the white paper.

"That cannot be further from the truth. Increasingly, anti-corruption agencies are prosecuting organisations who ought to know when corruption is taking place at third parties acting on its behalf and are turning a blind eye to it," he added, noting that third party compliance risk has cost many companies -- such as UK-based defence firm BAE and US-based airport security devices maker InVision Technologies -- up to hundreds of millions of dollars in fines when they are prosecuted for illegal acts committed by third parties.

Even when companies do recognise there is a need, many do not understand what steps they need to take in order to build a programme. "The temptation is to just jump right into implementing controls. Many people think that compliance is all about putting in place policies and procedures, and setting up workflows. Some take it a step further and put in place training and communications. This is not what compliance is about," Mr Lane said. He added that third party compliance programmes should take a more holistic view. This includes making sure that the different stakeholders in the programme -- senior management, compliance, line management, and staff -- understand the responsibilities that are assigned to them.

Companies then need to identify the competencies associated with effective compliance at third parties, and tailor training accordingly. Before implementing policies and procedures, they need to understand how to effect behavioural change at the target organisations through a combination of leading by example, understanding drivers and motivators, providing mentoring and coaching, and create appropriate reward and disciplinary mechanisms. Mr Lane also said that many companies tend to overlook or undervalue the post-implementation stage of third party compliance programmes, such as monitoring and measuring results, reporting, documentation, and making improvements to the programme based on the measurements.

"With our extensive experience advising multinational companies around the world in dealing with the US Foreign Corrupt Practices Act and the UK Bribery Act introduced earlier this year, The Red Flag Group is fully equipped to help organisations address compliance risks from third parties. We hope that this white paper will serve as a helpful reference guide to companies seeking to build third party compliance programmes," Mr Lane said.

The full white paper can be downloaded at .

Notes for editors:

About The Red Flag Group The Red Flag Group is one of the world's leading independent corporate governance and compliance firms providing thought leadership around compliance to Fortune 1000 companies. Their main goals include helping companies develop and maintain efficient and effective governance and compliance programs in emerging markets. Their technology solutions are leading edge -- providing practical web based solutions to manage compliance risks globally. For more information, go to

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SOURCE The Red Flag Group