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There is a U.S. based corporation with foreign subsidiaries/affiliates in "third world" countries. Let's say that some of these foreign organizations are engaging "locally" in practices that are illegal in the U.S., such as violating (U.S.) child labor laws, or bribing officials and thereby violating the Foreign Corrupt Practices Act.

To what extent is the U.S. corporation responsible for monitoring its subsidiaries or suppliers for such illegal activities. Suppose a "whistle-blower" contacts the U.S. corporation with credible evidence of such activities. What duty (if any) does the U.S. corporation have to 1) follow up on the whistle blower charges and 2) to apply sanctions to or suspend relations with the foreign subsidiary or supplier? And are "subsidiary" and "supplier" two separate cases?

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Subsidiary and supplier are separate cases. For a controlled subsidiary: full duties, full responsibility, you could (and someone has) fill a textbook with the ins and outs but this is the answer.

For a supplier: it is under the law much more complicated, but if a client of mine came to me with this question my answer would be pretty much the same: if the evidence is truly credible you should cut ties and then conduct an FCPA review to determine whether there is any obligation to disclose.

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