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BRIBERY & CORRUPTION Third party due diligence


Even in high-pressure crisis situations, vetting third parties - agents, consultants, distributors, customs brokers, freight forwarders - is critical. New business partners should be thoroughly vetted, including any subcontractors they employ. Additional precautions should be put in place for higher-risk relationships, including continued monitoring and spot audits.


When it is necessary to engage partners quickly, looking for pre-vetted third parties - including TRACE Certified entities that have undergone reputational checks, been screened against sanctions lists and completed required anti-bribery training - can help speed up the onboarding process.


Local laws


Cargo-specific risk: Different assets carry varied levels of exposure to bribery risk. For example, transport personnel moving perishable goods are under pressure to deliver to their destination in a timely manner, making them an obvious target for bribe demands at border crossings. A container ship of personal protective equipment or other medical supplies - a valuable commodity in the context of COVID-19 - may be an attractive candidate for in-kind bribe demands by customs officials. Considering the cargo-specific risk in concert with geographic and other risk can also point to vulnerabilities.


Nature of government touchpoints: Anti- corruption efforts cannot be a one-size-fits-all response. Adapting controls and monitoring to different types of government touchpoints can minimize bribery risk. Consider routes to market, sales channels, border crossings, customs checks, licenses and permits to operate, tax-related interactions, and which contractors and subcontractors are conducting interactions on behalf of your company. Assessing which functions might require more scrutiny can help with efficient allocation of available compliance resources. Keep in mind that risks may be situational in nature. For example, China recently introduced extensive new customs regulations around personal protective equipment exports.


MINIMIZING BRIBERY RISK


Bribery risk in transportation supply chains is variable, especially in the context of the COVID-19 pandemic, and anti-bribery compliance programs must follow suit. It is important to keep in mind that bribery can occur at any stage in a supply chain, and companies can be held responsible for violations by third-party service providers and intermediaries, and even subcontractors of those. Compliance programs must extend to all business partners to effectively minimize risk exposure. Companies should take precautions and adjust anti-corruption measures to the risks, but the following measures serve as a good foundation for a compliance program...


‘It is important to keep in mind that bribery can occur at any stage in a supply chain, and companies can be held responsible for violations by third-party service providers and intermediaries, and even subcontractors of those.’


When doing business in foreign markets, it is prudent to engage with local law firms to ensure a full understanding of local anti-corruption laws and other applicable regulations. Understanding the local legal environment can make it more difficult for government officials to find pretexts to extract bribes. But make sure to engage only with reputable firms, rather than lawyers offering to serve as local “fixers.”


Alexandra Wrage, President of TRACE


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