Another political campaign season has come and gone. This one was particularly scummy. I can’t get over the feeling that a contagion of corruption has ravaged our political system. I’m sure that feeling has more to do with this year’s flood of negative political ads than with political reality. But the only thing worse than being exposed to a lot of sludge you know isn’t true is knowing that some of it is.
My fellow Northeast Ohioans have been reading about scandal after scandal tied to Cuyahoga County government leaders. Several officials are at the center of a web of bribery and greed that is just now being exposed. But is this politics or just an example of the corruptibility of humans entrusted with power?
I’m afraid it’s the latter. Just as politicians can get caught in webs of scandal, business people are connected by chains. Supply chains. And managers of those chains have been linked to scandal too. The Wall Street Journal recently reported that Panalpina, the Swiss shipping and logistics company, has been the focus of a probe of payoffs to officials in many of the 80 countries in which it has a presence. The payoffs were made by some of the company’s agents to expedite the customs clearance process.
“The case could set new standards of vigilance for global companies that rely on contractors to operate in parts of the world where resources are plentiful but the rule of law is shaky,” the article stated.
By the nature of their title, supply chain managers have to do business with many people outside their own company. Sometimes the interests of all these people conflict and a price must be paid to bring unity back to the supply chain.
“Bribe? That’s such an ugly term. Let’s call it the cost of doing business.” Although that line of dialog isn’t heard in the great movie “Casablanca,” it captures the sentiment of the corrupt police official played by Claude Rains whose character actually did say he was “shocked, shocked” about the illegal activities going on under his nose. But ignorance—even feigned ignorance like his—is no defense when a supply chain partner does something shady for the sake of a mutually beneficial project.
Even when working with outsiders on projects inside one’s four walls, it might be tempting to let a contractor cut some corners to help a project get done faster or cheaper. Fortunately the best system integrators have years of experience meeting tight timelines while maintaining a code of ethics. Just make sure you screen out any that have a history of pulling strings to make contractors and local officials cut corners to get a project done. Just as it's your responsibility to be an active participant in any system integration project (see related story System Integration: Be The Link), it’s up to you to make sure those strings don’t tie your company to practices that contrast with your own code of ethics.
Many clients of logistics service providers like Panalpina are finding out that ignorance is no defense. In fact six freight forwarders pled guilty to price fixing recently.
I interviewed Alexandra Wrage about these scandals for this commentary. She’s president and founder of TRACE, a non-profit association that pools resources to provide anti-bribery compliance solutions for multinational companies and their commercial intermediaries. She said the new business standard for judging culpability when a scandal involving a business partner is exposed is: “You either knew or you should have known about that company’s questionable background.” When I told her I was going to write about this she offered some practical advice:
“You can lose your audience when you limit this to the context of ethics, although it’s very important,” she said. “Tell them to imagine what happens if this company they’re dealing with goes bankrupt and they’re holding all your goods, or they do pay a bribe and you’re caught up in a scandal that can last three years or longer with depositions and document reviews. There’s a good business reason to avoid unethical players, and that gets lost in the mix.”
Maybe Gordon Gekko was right about greed being good. Sad to say.
Ed. Note: Alexandra Wrage wrote a commentary on supply chain bribery exclusively for MH&L. You can read it at www.mhlnews.com/bribery.