Turkey Sees Surge in Adoption of Due Diligence Procedures Amid Growing Anticorruption Efforts
Istanbul - As Turkey’s government continues to crack down on corruption, businesses are taking proactive measures to ensure compliance with antitrust and anticorruption regulations. A growing number of companies are investing in third-party due diligence systems to mitigate risk exposure and maintain a positive corporate reputation.
Factors Driving the Adoption of Due Diligence Procedures
According to experts, the increasing adoption of due diligence procedures is driven by several factors:
- Cost Savings: Robust compliance programs have been shown to reduce direct costs and increase efficiency and transparency, making them an attractive investment for businesses.
- Cultural Fit: Turkey’s cultural landscape, characterized by centralized power distribution and collectivism, lends itself well to flexible leadership and a strong adherence to compliance programs.
The Importance of Transparency and Escalation
However, Turkey’s low rankings on the Corruption Perception Index and Human Development Index also highlight the importance of deploying a culture of transparency and escalation within companies. This is particularly crucial in identifying and addressing compliance issues that may arise from third-party relationships.
Key Components of a Successful Due Diligence Program
A successful due diligence program typically begins with assessing the potential scope and risks relevant to the third party, taking into account factors such as:
- The entity’s area of work
- Known compliance risks in the country
- Previous reputation
- Present compliance issues
- Existing code of business conduct
- Previous certificates
Identifying Key Risk Indicators
The process involves identifying key risk indicators, including corruption risk, which can be determined by considering factors such as:
- The third-party’s geographic location
- Business partners
- Relationships with government officials
Once these factors are reviewed, the third party’s risk is assessed as high, medium or low, and the level of due diligence required is defined.
The Due Diligence Process
The due diligence process typically involves:
- Collecting data from the third party
- Verifying and validating the information
- Evaluating findings
- Identifying red flags
Companies can take measures to address any identified risks, including contract clauses that grant the principal company the right to audit or commitments executed by the third party to comply with anti-corruption regulations.
Regular Interval Reviews
Regular interval reviews of due diligence procedures are also crucial in monitoring a company’s compliance health and ensuring that resources spent on compliance programs and due diligence studies yield returns in reduced costs, increased efficiency, and reputation.