A strategic challenge for business development

Conformite et compliance sur partenaire, tiers, distributeur au regard loi sapin2 pour les ouvreurs de porte - notion extraterritorialite pour Business Development

By Cécile Nzengu | Director of Operations Skan1

As an unprecedented crisis is taking hold in a deteriorated global geopolitical environment, international competition between economic players is intensifying. In this context, the recruitment of a “well connected” local partner can clearly help.

We have noticed a significant increase in the number of missions aiming at auditing the consistency and efficiency of the networks of our (future) clients’ partners: here for a potential intermediary, there for the recruitment of a board’s member or even on the occasion of the creation of a JV or the implemantation of a marketing contract…
Although the issue from a business point of view is not an issue in this difficult time, it is much less obvious from a compliance perspective. And unfortunately, too few companies fully appreciate the risks associated with this type of profile.

So, how should we view these “door openers”, those people who are so well locally positionned that they are likely to unblock difficult situations or whose presence would give a significant competitive benefit ?

In a context where the FCPA is going from record to record a top year in terms of sanctions(1) , where the Sapin 2 law is escalating momentum and where China is scrambling the separation between the public and private sectors(2) , the subject of assessing the integrity of these third parties becomes strategic.

Indeed, this type of profile is doubtless a lead role of growth for companies abroad, but their “recruitment” is no less risky.

While the issue of the relevance of networks is crucial from an operational point of view, the issue of their compliance is not only mandatory for actors subject to the Sapin 2 law(3), but just as crucial for others, particularly if one considers the underlying reputational and financial risks(4).

It has to be reminded that in this case, it is absolutely necessary to question at least the following points:
Is this person identified as a politically exposed person?
Is the person on an international sanctions list?
Is the person associated with corruption or reputational litigation?

More generally, it will obviously be appropriate to check for the absence of potential conflicts of interest.

Of course, these checks can be conducted internally. However, it seems essential not to rely on “fit”, a favorable impression or on random fishing for information during negotiations. From this point of view, the use of a trusted third party specialized in integrity due diligence is the safest way.

Firstly, because our experience shows that players often have neither the time nor the human and technical resources to carry out proper evaluations: this is a skill in itself.

Secondly, because at some point, it must be recognized that one cannot be both judge and jury. This is particularly true in complex and often sensitive cases where business interests are in direct competition with less tangible compliance interests.

Cécile Nzengu: Skan1 Director of Operations since 2018, Cécile has developed over the last 20 years a strong expertise in the fields of M&A and Business Development (integrity due diligence) as well as in (pre-)litigation support. Cécile holds a Master’s degree in business law (Paris 1 Panthéon Sorbonne), an LLM Magister Legum (Universität zu Köln) and has completed the Master in European Business of EAP/ESCP.