The COVID-19 emergency has forced companies across the world to make rapid supply chain shifts. While the speed and scope of these shifts is unprecedented, the compliance risks they pose are not. Any shift to a new supplier or intermediary carries with it a host of potential dangers, not the least of which is liability under the Foreign Corrupt Practices Act or the False Claims Act.
My colleagues at Baker & McKenzie offer three useful proactive steps to help insulate companies from liability both in the current crisis and in future emergencies.
Use Other Existing Partners in Your Supply Chain – Consider if there are other manufacturers in your supply chain that can temporarily satisfy production or sourcing needs. [. . .] Properly Vet New Suppliers – [ . . .] . In light of the urgencies, a risk-based approach to vetting is more important than ever – that is, dedicating resources to vetting suppliers based on locale, the type of services provided or product supplied, and other appropriate risk factors is paramount. [. . .] Conduct Restricted Party Screening – Screen new parties against applicable restricted parties lists, and incorporate them into your restricted party screening processes to minimize the risk of engaging in transactions that may be prohibited or restricted under export controls or trade sanctions laws. [ . . .]