Tuesday, April 5, 2016

Freight Forwarding Outfit Braid Logistics Turns Itself In for Bribery

(Which Results in a Two Million plus Pounds Penalty)
Shipping News Feature
UK – Glasgow-based Braid Logistics, has agreed to hand over £2.2 million penalty to the Civil Recovery Unit after self-reporting that it had obtained business through unlawful conduct. The recovered funds will be used for community projects across Scotland. Braid, which specialises in tank freight and project cargoes, became aware of potentially dishonest activities associated with two of its freight forwarding contracts in 2012, which led the company to initiate an investigation, revealing breaches of the Bribery Act 2010.

The first contract related to an agreement between a Braid UK employee and the employee of a customer. An account was used as a means for unauthorised expenses to be incurred by the customer’s employee and was funded by the dishonest inflation of invoices provided to the customer. The expenses included personal travel, holidays, gifts, hotels, car hire and cash.

During the investigation into this first contract, separate bribery offences in relation to a second customer were discovered. A profit sharing arrangement with a Director of the customer company had been operated, where the profit achieved on services provided to the customer was split, in return for orders continuing to be placed with Braid UK.

As a consequence of the investigation, Braid voluntarily made a self-report to the Crown Office and accepted that they failed in their responsibility to prevent this happening, similarly accepting responsibility for a contravention of Sections 1 and 7 of the Bribery Act 2010. The Civil Recovery Unit is a small multi-disciplinary unit of the Crown Office which acts on behalf of the Scottish Ministers as the enforcement authority for Scotland under both Proceeds of Crime and Bribery Acts and has as its head, Linda Hamilton, who commented:

“It is vital to the health of the Scottish economy that any form of bribery or corruption is identified and stopped as soon as possible. Only in this way, can businesses who play by the rules flourish, without competing with those who obtain commercial advantage through unlawful means. Braid is to be commended for self-reporting the unlawful conduct to Crown Office. The money recovered under the self-reporting initiative will be used in community projects across Scotland."

Under the self-reporting initiative, the Crown Office found that the case was deemed suitable for civil recovery settlement based on the gross profit made in relation to the relevant contracts. Although these two cases were confined to its UK subsidiary, Braid says it has taken steps to implement new policies and training throughout all of its subsidiaries to ensure that no unlawful conduct can take place in the future and that the matter was now closed. Alasdair Davidson, group financial director at Braid Logistics commented:

"The activities uncovered in this case were the unauthorised actions of a small number of individuals who are no longer employed by the company. Braid UK's rapid and thorough response to these pursuits and the wholesale changes we have now made in our company's systems led to our case being conducted on civil grounds.

"During this process we have worked closely with the Crown Office Civil Recovery Unit which has commended Braid UK for its cooperation in self-reporting. The payment of this fine now draws a line under the civil case [and] I would like to assure our customers that we now have emerged stronger from this incident with more robust processes and procedures in place throughout the group. We are now on a solid financial footing and in a strong position to meet our worldwide growth plans going forward."

Braid Logistics, founded in 1955 and formerly known as John S Braid & Co, recorded an ‘exceptional cost’ in its 2013 accounts leading to a £950,000 loss. This came about after consultation with both solicitors and the parent company Braid Group (Holdings) Ltd and referred to an investigation into certain internal procedures which the company apparently adopted at that time. Following this the company changed auditors and there was a strengthening of accounting practices and additions were made to the Board of Directors.