Due diligence is one of the most well-known phrases in compliance. Most people think that it means you look once at something, some business, or someone, and then you are good to go. However, the United States government reminds everyone that due diligence is not a one-time event but an ongoing process. The FCPA Guidance, which was released jointly by the United States Justice Department (DOJ) and the Securities and Exchange Commission (SEC), states: “Companies should undertake some form of ongoing monitoring of third party relationships. Where appropriate, this may include updating due diligence periodically, exercising audit rights, providing periodic training, and requesting annual compliance certifications by the third party.”
Yet it is not simply third parties that need to be considered for ongoing due diligence but also persons that an entity may want to employ or do business with going forward. I was reminded of this salient fact last week when it was reported that the British House of Commons was going to look into the due diligence that had been performed on the (now) former Manager of the English national football team, Sam Allardyce, prior to his appointment in July.
The Telegraph reported: ‘[MP] Damian Collins, acting chairman of the Culture, Media and Sport committee, said: “There is now the question of what sort of due diligence did the FA do before it gave Sam Allardyce the job.” Collins went on to state: “Given the allegations that had been made in the past, I think that what people would expect is that some sort of due diligence would be done to make sure that this is a sound appointment. The England national coach’s affairs are under a lot more public scrutiny than a normal Premier League manager.”
This parliamentary inquiry highlights the need for robust due diligence when hiring senior officials, promoting junior executives to senior management ranks, or hiring persons who will be the public face of your organisation. Moreover, due diligence is not a one-time investigation leading to one report that is locked away and only used when the regulators come knocking. It is an ongoing process so that your company will know with whom it is conducting business and, in the case of the English Football Association (FA), who will be its very public face.