OECD foreign bribery report highlights issues in transport and storage industries
AirCargo archive stories issue 234
Thursday, 29 January 2015
IN the previous edition of AirCargo Asia-Pacific my commentary focused on the effect of world–wide sanctions regimes on the transport and cargo sectors, writes Andrew Hudson
However, corruption and anti–bribery issues also impact the supply chain. Breaches can occur in relation to conduct in Australia or overseas and expose affected parties not only to domestic charges, but also to international penalties and prosecution. There is also the very real risk of imprisonment following prosecution.
Governments here and overseas continue to emphasise the importance of a comprehensive compliance program to avoid the possibility of any breach, seeking advice on proposed conduct before it is undertaken, regular audits and reporting of compliance within companies together with early disclosure of potential breaches to minimise adverse impacts.
The threats of prosecution are not illusory. Prosecutions are being brought in Australia, often facilitated by “whistleblowers” who seek protection from liability by being the first to disclose the offending conduct. There are regular prosecutions in the US with financial penalties in the millions and jail terms for those involved in the offences.
The need to take positive steps to address liability has been emphasised again with the release of the OECD’s 2014 Foreign Bribery Report. The Report was based on an analysis of bribery offences concluded between the commencement of the OECD Anti–Bribery Convention on 15 February 1999 and June 1 2014. The provenance of the Report is enough to suggest that it warrants close attention.
Of particular interest to industry is that 15 per cent of all foreign bribery cases were in the transport and storage sector which includes much of the shipping and logistics industry. According to the Report, customs officials were said to be the second–most likely employees to be offered, promised, or to take a bribe with 11 per cent of all bribes made or given to Customs officials over the survey period. The Report also suggests that the purpose of such bribes were to effect the Customs clearance of goods.
While many may suggest (with reason) that such actions are unlikely to arise in Australia, there is no doubt that many in industry are faced with the scenario overseas: Goods not cleared and the request for a “special fee” to ensure clearance; or a request for an additional fee to be paid to a government official to ensure that there is a guarantee of capacity at a busy time of the year; or the request for a “normal” payment to help secure a contract.
And even though the payment is made overseas, the party making the payment is at risk of contravening Australian law, especially where the limited “trade facilitation” defence is not available.
So, what can be done? 1. Be aware that it is a real issue and a real problem.
2. Ensure that a company (however small) has a policy to deal with bribery issues, much in the same way that a company has policies to deal with compliance with the requirements of various government agencies for other aspects of the business such as Customs, workplace safety and competition law. The policy should provide examples of what is and is not permitted and have reference to the government agency responsible for the area – together with a “hot line” number where an employee can seek help even outside the business.
3. Ensure that clients, contractors and service providers are aware that the business will not engage in behaviours which may be seen as bribery – and that the business will report and dubious practices immediately.
4. Make sure that the policy is observed and reiterated regularly as compliance fatigue can reduce the effectiveness of any program.
5. Ensure that business owners are engaged with the issues and appreciate the risks.
6. Regularly review the risks and report problems.
7. Ensure that any due diligence on any new business, business partner, business area, employee, contractor or acquisition includes coverage on bribery and corruption – as with tax and corporate issues.
I appreciate that many would see this as an expense and complication without corporate benefit. However, you will find that many customers and government agencies will expect evidence of recognition of issues and compliance with their obligations. It would be bad business not to comply, let alone the costs and business interruption associated with breaches of the provisions and prosecution by government agencies whether here or overseas. Sounds boring, but I would much prefer to keep you out of trouble as opposed to spending your time and money managing liability and prosecutions, let alone extradition!
OECD foreign bribery report highlights issues in transport and storage industries
AirCargo archive stories issue 234
Thursday, 29 January 2015
IN the previous edition of AirCargo Asia-Pacific my commentary focused on the effect of world–wide sanctions regimes on the transport and cargo sectors, writes Andrew Hudson
However, corruption and anti–bribery issues also impact the supply chain. Breaches can occur in relation to conduct in Australia or overseas and expose affected parties not only to domestic charges, but also to international penalties and prosecution. There is also the very real risk of imprisonment following prosecution.
Governments here and overseas continue to emphasise the importance of a comprehensive compliance program to avoid the possibility of any breach, seeking advice on proposed conduct before it is undertaken, regular audits and reporting of compliance within companies together with early disclosure of potential breaches to minimise adverse impacts.
The threats of prosecution are not illusory. Prosecutions are being brought in Australia, often facilitated by “whistleblowers” who seek protection from liability by being the first to disclose the offending conduct. There are regular prosecutions in the US with financial penalties in the millions and jail terms for those involved in the offences.
The need to take positive steps to address liability has been emphasised again with the release of the OECD’s 2014 Foreign Bribery Report. The Report was based on an analysis of bribery offences concluded between the commencement of the OECD Anti–Bribery Convention on 15 February 1999 and June 1 2014. The provenance of the Report is enough to suggest that it warrants close attention.
Of particular interest to industry is that 15 per cent of all foreign bribery cases were in the transport and storage sector which includes much of the shipping and logistics industry. According to the Report, customs officials were said to be the second–most likely employees to be offered, promised, or to take a bribe with 11 per cent of all bribes made or given to Customs officials over the survey period. The Report also suggests that the purpose of such bribes were to effect the Customs clearance of goods.
While many may suggest (with reason) that such actions are unlikely to arise in Australia, there is no doubt that many in industry are faced with the scenario overseas: Goods not cleared and the request for a “special fee” to ensure clearance; or a request for an additional fee to be paid to a government official to ensure that there is a guarantee of capacity at a busy time of the year; or the request for a “normal” payment to help secure a contract.
And even though the payment is made overseas, the party making the payment is at risk of contravening Australian law, especially where the limited “trade facilitation” defence is not available.
So, what can be done? 1. Be aware that it is a real issue and a real problem.
2. Ensure that a company (however small) has a policy to deal with bribery issues, much in the same way that a company has policies to deal with compliance with the requirements of various government agencies for other aspects of the business such as Customs, workplace safety and competition law. The policy should provide examples of what is and is not permitted and have reference to the government agency responsible for the area – together with a “hot line” number where an employee can seek help even outside the business.
3. Ensure that clients, contractors and service providers are aware that the business will not engage in behaviours which may be seen as bribery – and that the business will report and dubious practices immediately.
4. Make sure that the policy is observed and reiterated regularly as compliance fatigue can reduce the effectiveness of any program.
5. Ensure that business owners are engaged with the issues and appreciate the risks.
6. Regularly review the risks and report problems.
7. Ensure that any due diligence on any new business, business partner, business area, employee, contractor or acquisition includes coverage on bribery and corruption – as with tax and corporate issues.
I appreciate that many would see this as an expense and complication without corporate benefit. However, you will find that many customers and government agencies will expect evidence of recognition of issues and compliance with their obligations. It would be bad business not to comply, let alone the costs and business interruption associated with breaches of the provisions and prosecution by government agencies whether here or overseas. Sounds boring, but I would much prefer to keep you out of trouble as opposed to spending your time and money managing liability and prosecutions, let alone extradition!
Governments here and overseas continue to emphasise the importance of a comprehensive compliance program to avoid the possibility of any breach, seeking advice on proposed conduct before it is undertaken, regular audits and reporting of compliance within companies together with early disclosure of potential breaches to minimise adverse impacts.
