Experience shows that many companies do not include their business partners in their compliance programme. This is a failure that carries significant risks.
Statutory provisions, such as the German Commercial Code or company law, stipulate that companies – as well as individual governing bodies and employees – may be held liable for the unlawful conduct of business or contractual partners.
A practical example illustrates the fundamental issue: a company uses external sales partners who are paid on a commission basis. Their earnings therefore depend on the turnover they generate. If a sales partner then engages in fraudulent acts to successfully secure deals – such as bribing a potential client – the business partner’s conduct reflects badly on the company, even if the company itself has not acted unlawfully. The company faces financial and criminal consequences, as well as a significant loss of reputation.
Business partners are often not involved
Many companies are ill-prepared for this risk. The study „Compliance Management – the business challenge“ by AGAMON Consulting GmbH (www.agamon-consulting.de) highlights the shortcomings of small and medium-sized enterprises in this regard. For the majority of the companies surveyed, their compliance programmes are directed 100% towards both managers and staff. Suppliers and subcontractors are included in around 75 per cent of cases, whilst business partners are only taken into account in around 25 per cent of cases. It is well known, however, that external parties are at least involved in around half of all economic offences.
An often underestimated risk
„The risks that may arise from business partners such as intermediaries, negotiators and consultants should not be underestimated. Their breaches of compliance can lead to fines and claims for damages. Further consequences can range from exclusion from public contracts to criminal prosecution. Companies jeopardise their image and reputation if they do not select their partners carefully.”.
Every company’s compliance programme should therefore, as part of a holistic approach, definitely include business partner compliance management.
Eckart Achauer
Studied law and business administration, followed by a postgraduate Master of Business Administration (MBA) programme. Undertook further professional development alongside work to qualify as a European Quality Manager (DGQ), a mediator specialising in commercial mediation, and a Certified Compliance Manager (TÜV).
Eckart Achauer spent around 10 years in the international insurance industry, holding various management positions within a Swiss insurance group (claims department, sales, assistance), before moving into management and business consultancy in 1997.
As a consultant and managing director of various consultancy firms, Mr Achauer has specialised in organisational and process optimisation, as well as in the development and implementation of management systems – quality management, risk management and compliance management.
At HR Consult Group, Mr Achauer is responsible for the Compliance Management division. As part of compliance audits, he analyses organisations„ “compliance fitness’, raises awareness and provides training for management, executives and staff, and supports companies in developing and implementing bespoke compliance management systems. In doing so, he always takes into account the specific risk profile of each company. Thanks to his many years’ experience as a manager and consultant, he is thoroughly familiar with the practical challenges faced by businesses.
About the author
Eckart Achauer studied law and business administration, followed by postgraduate studies leading to a Master of Business Administration (MBA). He undertook further professional development alongside his work to qualify as a European Quality Manager (DGQ), a mediator specialising in commercial mediation, and a Certified Compliance Manager (TÜV).
He spent around 10 years in the international insurance industry, holding various management positions within a Swiss insurance group (claims department, sales, assistance), before moving into management and business consultancy in 1997.
As a consultant and managing director of various consultancy firms, Mr Achauer has specialised in organisational and process optimisation, as well as in the development and implementation of management systems – quality management, risk management and compliance management.
At Senator Executive Search Partners, Mr Achauer is responsible for the Compliance Management division. As part of compliance audits, he analyses organisations„ “compliance fitness’, raises awareness and provides training for management, executives and staff, and supports companies in developing and implementing bespoke compliance management systems. In doing so, he always takes into account the specific risk profile of each company. Thanks to his many years’ experience as a manager and consultant, he is thoroughly familiar with the practical challenges faced by businesses.
