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Food manufacturers risk falling foul of bribery and corruption

May 14th, 2015 - Posted by Debbi Lyle Essey in Procurement And Supply Chain

The threat of bribery in the food production industry is growing, with experts warning that manufacturers must put adequate due diligence procedures in place to protect themselves against corruption. Recent media reports suggests that a large number of companies do not take the threat seriously, with new figures suggesting that a third of food firms have no protection in place against bribery and corruption.

Food and food production scandals in recent years have brought what is a global issue to public consciousness.  The supermarket horsemeat scandal of 2013 saw a long-term change in customer behaviour, with half of consumers saying they were buying less processed meat. There is an increasing awareness of just how widespread Modern Slavery is in global food chains, with a suggested 19% of forced labour victims coming from the food and agriculture industry.

Across the western world, confidence about the food processing industry's standards has been in freefall.  This is particularly pronounced in the US, where a series of scandals have rocked confidence in an industry that was once seen as 'part and parcel' of the American dream. In the UK, the horsemeat and other food scandals have dented consumer confidence and the only way to restore trust with the public is through much greater transparency in to companies' business dealings and an emphasis on sustainable and ethical trading.

Meanwhile, a survey carried out by supply chain firm Achilles found that many food manufacturers admitted that they had awarded large contracts to suppliers without the protection afforded by having anti-bribery and corruption policies in place.  Hilary Ross, Head of Food and Retail at law firm DWF, told foodmanufacture.co.uk that having an anti-bribery clause in a contract was one of the most basic elements expected of a commercial organisation.  She added, "If bribery does occur, it is a defence for a commercial organisation to be able to demonstrate that it had in place adequate procedures designed to prevent it." But is this enough? With regulators increasingly highlighting the importance for firms to have a robust, proactive and constantly monitored supplier screening process in place, food manufacturers are far behind regulatory best practice.

Smaller food production companies have been found to be even more lax when it comes to due diligence controls.  Achilles said that almost two thirds of smaller food manufacturers had no anti-bribery or corruption policies in place, suggesting that it is only a matter of time before another debacle comes to light.

Transparency has to begin within the firm itself, with manufacturers constantly reviewing their supplier and third party contracts to ensure that they are fit for purpose. This basic due diligence should extend beyond a firm's boundaries – currently a very large number of companies are in the dark when it comes to bribery within their supply chains. Achilles found that almost a third of food firms never ask to see information about their supplier's finances and that this figure rises to almost three quarters among smaller companies.

With such mounting evidence, it is more important than ever for food manufacturers to mitigate the regulatory, financial and reputational risk of falling foul of bribery and corruption in the supply chain, by implementing a comprehensive third party screening and ongoing monitoring practice into their business.

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