German freight forwarder DB Schenker has strongly denied claims that it is subject to a new investigation into possible violations of the US Foreign Corrupt Practices Act being carried out by the US Department of Justice (DoJ) and Securities and Exchange Commission (SEC).
According to a report published on the US legal news and analysis website Just Anti-Corruption, the latest investigation, which follows on from last year’s price-fixing probe into Swiss carrier, Panalpina, is also targeting rival provider Kuehne+Nagel, as well as one, as yet unnamed, French freight forwarder. But according to DB Schenker the claims are unfounded.
“DB Schenker is not, and has never been, under investigation in connection with a criminal foreign bribery probe of the US Department of Justice or any other authority,” said a spokesperson for DB Schenker Logistics.
The SEC told Automotive Logistics News that it could not confirm or deny the investigation until it brought related legal action.
Kuehne+Nagel would make no comment on the allegations.
The latest move by US authorities is alleged to be part of an industry-wide investigation stemming from evidence uncovered by last year’s Panalpina case and involving some of the industry’s leading freight forwarding and logistics providers.
It is rumoured from other sources that two European post offices that own and operate logistics businesses will be under the spotlight in the near future.
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.
Panalpina also lost business because of the investigation and has started 2011 trying to rebuild its customer relationships. It was described by CEO Monika Ribar as “an extremely burdensome chapter in Panalpina’s history”.
Along with Panalpina, Schenker and Kuehne+Nagel also pleaded guilty to anti-competitive conduct and conspiring to fix air cargo shipment fees in September 2010. All three forwarders paid fines: Panalpina around $12m; Kuehne+Nagel $9.87m; and Schenker $3.54m. Bax Global, a US-based shipper, which was bought by Schenker in 2006, also paid a fine of $19.75m.
US-based freight forwarders EGL, now part of Ceva Logistics, and Geologistics International Management were also fined.
Each company was charged with price fixing in violation of the Sherman Act, which carries a maximum fine of $100m per offense for corporations.
The six alleged conspiracies that were charged included a conspiracy that took place from July 2004 to October 2007, to impose an Air Automated Manifest System (AAMS) fee on shipments from Germany to the United States, in which K+N, Schenker and others participated.
Settlements for those involved are currently pending a decision by the US courts and investigations are ongoing.
“We can confirm [that] BAX Global and Schenker, as well as a number of competitors, have each reached an agreement with the Antitrust Division of the US Department of Justice that, if approved by a federal court in Washington, DC, will resolve the antitrust investigation being conducted for the past three years,” said DB Schenker Logistics’ spokesman. He added that the company had implemented a “comprehensive compliance program”.
Given that DB Schenker, Kuehne + Nagel and the French forwarder are European-based providers, they would typically be outside the jurisdiction of a US-based law enforcement agency. However, according to Just Anti-Corruption, November’s settlement agreement between the SEC and Panalpina established a new basis for liability, namely that Panalpina acted as an agent for US issuers who paid bribes or conspired to pay bribes.