Internal corruption within international trade companies can manifest in various forms, often involving manipulation of logistical processes and financial transactions. While detecting such corruption may be challenging, evidence can often be found in vehicle plates, transportation documents, and pricing discrepancies. Here are some common methods through which internal corruption can occur:
1. Manipulation of Multi-Modal Shipments:
Extra logistical costs are incurred by subjecting shipments to multiple rotations within the same origin-destination points. Although understanding this scheme may be complex, it can be evidenced through discrepancies in vehicle plates and transportation documents.
2. Stockpiling in Warehouses:
Excess inventory is held in warehouses, exploiting the tendency of management to accumulate surplus goods to avoid disruptions in the supply chain. This excess inventory is often susceptible to abuse.
3. Misrepresentation of Sales Pricing:
Sales prices are typically quoted on credit terms without being discounted to present value, and profit columns are not separated from interest costs. For instance, if a product is sold at a 5% profit margin over a 6-month credit period, while financing is obtained at a 10% annual interest rate, the apparent profit does not reflect the actual situation.
4. Discriminatory Practices in Credit Sales:
Discriminatory practices may involve transferring capital from one buyer to another through unequal terms in credit purchases. Sales departments are adept at executing such schemes, which can be mitigated by requesting additional collateral or imposing sales volume restrictions.
5. Circulating Funds from Previous Sales:
Funds from previous sales are used to finance new transactions, effectively conducting trade with your own money. This practice can lead to discrepancies in warehouse pricing and marine cargo policies.
Preventive Measures:
Assigning responsibilities to at least two individuals in different departments and holding managers accountable can mitigate corruption risks. Requesting reports to scrutinize past transactions can facilitate the detection of irregularities. If there is reluctance to assist, it may indicate complicity without your knowledge.
Thanks for reading
