Note: This is a guest post by attorney and compliance expert Ramsey Kazem.   In this final part of the five-part series, we take the lessons of Budweiser’s sponsorship of the 2014 World Cup and offer suggestions for mitigating FCPA third-party risk in future transactions.

Looking Forward
 
Even if Budweiser dodges the FCPA bullet, the revelations of bribery and corruption within FIFA coupled with allegations of political corruption in Brazil should have been a major wake-up call for the organization.  While the business case for sponsoring high-profile events is obvious, sponsors like Budweiser must also consider the potential legal exposure and reputational risk from associating with organizations like FIFA.  Budweiser, and organizations like it, should take the lessons of the 2014 World Cup and apply them to future sponsorship negotiations.  The following are some suggested strategies for managing FCPA third-party risk:

While these and similar contract provisions are desirable for the sponsor, the sponsored entity may push back and request mutuality in the obligations, seek to significantly limit the scope of the provisions, or flat-out reject the provisions.However, even if the sponsored entity has greater leverage in the negotiation, proposing the above contract provisions can provide useful insight into whether the business values of the contracting entities are aligned.For example, the refusal of a sponsor’s request for a moral clause is revealing – and should cause the sponsor to pause and reconsider whether to move forward with the agreement.
 

Conclusion
 
Many organizations face significant FCPA risk through their third-party business relationships.  Budweiser’s sponsorship of the 2014 World Cup presents an intere
sting case study of how changing conditions can transform a seemingly low-risk business opportunity into a high-risk venture with significant FCPA exposure.  While Budweiser may successfully sidestep the FCPA landmine in this instance, the story of the 2014 World Cup provides important reminders and lessons.   Namely, an organization confronted with this type of scenario must be vigilant in monitoring its third-party contract performance, identifying and confronting red flags and reassessing its risk as conditions change.  Moreover, as the threat becomes apparent, it must take immediate action to “stop the bleeding”, investigate whether, and to what extent, it violated the law, and take proactive steps to mitigate its FCPA risk in future transactions.   

Ramsey Kazem can be reached by phone at +1-404-872-5615 or by email at info@thethreetwelvegroup.com.