Following last week’s news that new investigations into possible violations of the US Foreign Corrupt Practices Act are being carried out by the US Department of Justice (DoJ), international forensic accountants Forensic Risk Alliance have today warned logistics providers that they should take heed of the prosecution of the Panalpina Group, which led to the latest investigations.
“The US Department of Justice is now dramatically expanding its investigation into the logistics industry both in the US and worldwide, looking for bribery and corruption practices, under the US Foreign Corrupt Practices Act – an Act that is the model for the UK’s new Bribery Act which will become legislation in the UK this year,” said Toby Duthie, founding partner at Forensic Risk Alliance. “Panalpina jumped through many painful and expensive hoops to ensure compliance – the rest of the sector is at risk if it doesn’t catch up.”
In November last year Panalpina paid nearly $82m in fines as part of a Deferred Prosecution Agreement with the DoJ under which the DoJ agreed to defer any criminal prosecution of Panalpina World Transport for three years in exchange for its freight forwarding subsidiary Panalpina’s guilty plea to charges related to the violation of the accounting provisions of the US Foreign Corrupt Practices Act.
Panalpina had to consent to a final civil action judgment brought by the SEC alleging violations of the FCPA’s anti-bribery and accounting requirements. The company handed over $11.3m in profits.
That investigation led to further evidence being uncovered involving some of the industry’s leading freight forwarding and logistics providers.
While assertions last week by the US legal news and analysis website Just Anti-Corruption named European providers DB Schenker and Kuehne + Nagel in the latest investigations – something strongly refuted by DB Schenker –the warning from Forensic Risk Alliance focuses attention on UK operators.
“The UK now has a Bribery Act that is arguably the toughest anti-corruption law in the world,” added Duthie. “This Act will be taken seriously and heavy fines and prosecution of managers in business will ensue. We expect that prosecutions will follow in the US within the logistics industry and, in due course, this will also become a target industry in the UK. Companies should be proactively pre-empting the possible risks to their businesses.”
Backed by the Serious Fraud Office, the UK Bribery Act targets staff or the agents or suppliers of any company with a UK office partaking in bribery or corruption anywhere in the world.