Logistics companies could fall foul of bribery law requirements due to policy publication failures

Business ethics consultancy GoodCorporation, which provides external reputation accreditation to businesses, told the Financial Times (registration required) that one in three global logistics groups had not yet published an anti-corruption policy and half did not have a statement on facilitation payments. These are unofficial payments, common in some countries, made to foreign officials to speed up or carry out a task they are obliged to perform; for example to speed up the treatment of goods at customs.

"I would be astonished if you found even one of the top 30 energy companies that didn't have a code of ethics," Michael Littlechild, a founder and director of GoodCorporation, told the paper. "Logistics groups are worried about this gumming up their works and so they're resisting putting them into place."

The Bribery Act came into force last year and states that companies with a presence in the UK can face prosecution for bribery regardless of where the alleged activity has taken place, unless that activity is permitted locally. It also created the office of bribing a foreign public official, even if that person has demanded a bribe.

A company can also be responsible for bribery carried out by its employees without its knowledge or consent. The Act creates a new offence of failing to prevent bribery by people working for or on behalf of a business, unless the company can show that it has "adequate procedures" designed to prevent bribery in place.

Fraud and anti-corruption specialist Barry Vitou of Pinsent Masons, the law firm behind Out-Law.com, said that there had been some high-profile cases where logistics companies had fallen foul of bribery laws due to the unique risk profile of the sector. The risk that facilitation payments being demanded by officials were not legitimate "stood out", he said.

"The $236 million in fines and penalties dished out to Swiss logistic firm Panalpina and its customers in 2010 for bribery violations was a wake-up call, while in June this year it was reported that another major logistics outfit is subject to a bribery investigation for suspected violations in Kazakhstan," he said. "The cornerstone of compliance here is understanding what payments are being demanded - are they legitimate or not? For facilitation payments, it is important to comply with [Serious Fraud Office] guidance on them and US laws where applicable."

The Serious Fraud Office (SFO), the independent Government department which investigates and prosecutes serious cases of fraud and corruption, encourages companies to take a "zero tolerance" approach to facilitation payments. All facilitation payments, regardless of their size and how often they are paid, are illegal under UK law, however the SFO has said on its website that it is unlikely to prosecute for small payments providing that these are picked up and remedied by a company's internal processes.

In its guidance, the SFO says that companies must take all practical steps that they can to curtail facilitation payments. They must also have a clear policy on such payments and record any made, and provide employees with access to written guidance on the procedures they should follow if asked to make a facilitation payment.