The Advisory Body – Legal Matters (ABLM) of FIATA has recently published a set of guidelines on the prevention of fraud and bribery in freight forwarding.
According to the World Banks Logistics Performance Index (LPI), freight forwarding suffers from a lack of transparency; solicitation of informal payments is common in less developed countries; and the improvement in the incidence of corruption is lagging other industry sectors, such as customs brokerage. Bribery and corruption increase the costs of doing business, hamper development, and tilt the playing field unfairly and inefficiently.
In order to combat bribery and corruption, FIATA recommends that all freight forwarders adopt and implement an anti-bribery policy.
Create a policy:
- Clearly define bribery behaviors: employees and managers must know it when they see it.
- Adopt a zero-tolerance approach: ambiguity creates the space for illicit activities.
- Ensure top leadership support: senior management buy-in and support will be key to an effective policy.
- Establish rules for gifts: Gift giving, meals, and entertainment are common and legitimate expenses but create space for bribery or corruption. Amounts should be limited and expenses should be clearly documented.
- Clarify rules on “facilitation payments” or grease money: these constitute bribery in most but not all jurisdictions.
- Clarify rules on “duress payments”: these are demands for money made when the health or security of an employee is at risk, and are generally not considered bribery but must be reported.
Implement the Policy:
- Train employees regularly: employees should be familiarized with local laws, the company policy, procedures for compliance and reporting, and potential consequences of breach.
- Conduct Due Diligence on Agents: Collect information about potential agents from the prospective agent as well as from public external sources. Have the information reviewed by an independent manager (e.g., not from the department seeking to retain the agent).
- Strengthen payment review and audit functions.
- Incorporate compliance with anti-bribery measures into your contracts and service agreements.
- Provide protection for whistleblowers, and an independent channel for whistleblower complaints.
- Watch out for red flags, including requests for cash payment or trading on connections.
Responding to requests for Bribery:
Clearly, requests to pay bribes should in the first place be refused. The demand should be reported immediately to management in accordance with the reporting process set out in the policy. Where the person soliciting the bribe is not a senior officer or manager, report the behavior to the senior management of their organization. You can continue to do business with someone who has sought a bribe – if they are prepared to do business in the absence of the informal payment – but repeated requests or insistence should act as a red flag and lead to termination of the relationship.