Why some parts of your air cargo supply chain are probably corrupt
REMOVING corrupt practices from hundreds of Customs administrations around the world will never happen whilst the air cargo supply chain community, amongst others, continues to publicly ignore them.
Businesses and individuals cough up an estimated colossal US$1.5 trillion in bribes each year, according to World Bank research.
Yet companies operating in the airfreight and logistics industries are continuously and obdurately refraining from exposing the extra costs and challenges they face in moving goods across national borders, say experts.
This is despite ‘collective action’, where government agencies, NGOs, private firms and civil societal organisations are forming alliances to fight fraud in a bid to guarantee greater transparency.
When bribery is criminalised in every country, why is the air cargo community still so reluctant to openly discuss the burning issue of Customs corruption?
Alexandra Wrage (below, right), president of Annapolis, USA-based anti-corruption business association TRACE International, suggests the subject matter is simply too delicate for some to debate — other than behind closed doors.
Public silence over corruption in the air cargo supply chain
“Asking companies to have a meaningful discussion about their experience of local crime is of course going to be sensitive,” she says.
“We find, however, that companies will talk about this in groups when they’re assured their comments are without attribution.”
Wrage points to revelatory discussions about corruption at a TRACE event for business development professionals, held in Vancouver.
“Participants were very generous with their time and had incredible insight and practical suggestions, but it wouldn’t have worked if they’d thought their comments were [made] public,” she notes.
Corruption is a global problem that requires global solutions.
“Increasingly, addressing corruption will require the concerted attention of governments and businesses and the use of advanced technology to capture, analyse and share information in order to prevent and detect corrupt behaviour,” asserts the World Bank.
Much of the world’s highest value corruption could not happen without the complicit involvement of big institutions in wealthy nations: those private sector firms that give large bribes, the global financial body adds.
Pleading ignorance about ongoing Customs corruption is not an option for air cargo and logistics operators either. “We had no idea that ‘Customs Administration X was corrupt’ is not a defence, especially as the problem is so widely known in many jurisdictions,” warns Wrage.
Well-governed, compliant air cargo supply chain companies ultimately have to work on a parallel track from these challenging Customs administrations. They implement their own controls and enforce and audit their processes regardless of any involvement from the local authorities.
The anti-corruption business association routinely compiles a list of the most corrupt nations to do business with, based on four main assessments, including business interactions with government, anti-bribery laws and enforcement, government and civil service transparency, and freedom of the press.
In its global business bribery risk index TRACE Matrix 2016, Sweden, New Zealand, Estonia, Hong Kong, Norway, Ireland, the Netherlands, Singapore, Finland and Denmark are the least corrupt nations, whilst Nigeria, Angola, Yemen, Guinea, Cambodia, Myanmar, South Sudan, Syria, Chad and Liberia produce the highest corruption scores.
Wrage is sanguine about the degree of impact that can be made in tackling corruption when businesses increasingly show a united front. “I don’t think we’re ever going to stamp out corruption, just as we’re never going to stamp out all fraud or other forms of crime. The key is to reduce the opportunity and increase the risk,” she explains.
If, because of automation, a government official has fewer opportunities to put out his hand and at the same time the penalties are substantial and enforced, “then we’ll begin to see a real change,” she adds.
“In too many countries, the government officials ask [for a bribe] — because there’s no down side.”
In many situations, it’s a business risk for one air cargo supply chain company to decline to pay, knowing that the Customs official will respond punitively.
“But if a majority of companies refuse, then the demands will slow dramatically. In the end, it’s embarrassing to put your hand out for a little baksheesh and have to pull it back empty,” Wrage concludes.
Originally published at aircargoeye.com on August 14, 2017