May 17, 2020

Only 50% of UK businesses vet suppliers for Bribery Act compliance

UK
Bribery
Compaliance
auditing
Freddie Pierce
2 min
Only six percent would re-tender if suppliers don't comply
Only half of British businesses vet their suppliers for UK Bribery Act Compliance, according to a survey by Ernst & Young. 48 percent of British fi...

Only half of British businesses vet their suppliers for UK Bribery Act Compliance, according to a survey by Ernst & Young.

48 percent of British firms are failing to vet their supplier, with only six percent adding that they would re-tender if they discovered their suppliers were not compliant.

The study polled procurement managers and directors from a range of firms across the UK. The study found that while midmarket firms are often less likely to have robust processes and systems in place to counter bribery risk, companies at both ends of the spectrum appeared complacent when it came to vetting their suppliers for compliance with the Act.

Ernst & Young’s study found that although 60 percent of firms with a turnover of £5m to £50m currently vet their suppliers to assess whether their business practices comply with UK Bribery Act, 16 percent of these midmarket firms would ‘do nothing’ if their suppliers fail to comply. Moreover, 60 percent of firms that do not currently vet their suppliers reported that they are not planning to implement any anti-bribery programmes in the future.

Only 40% of larger firms (with a turnover of more than £50 million) would remove suppliers from their supply chain if they fail to comply with the Act.

John Smart, Partner at Ernst & Young said:

“Following recent concerns over food contamination, there has been much focus on supply chains and how much companies know about suppliers and agents acting on their behalf. In cases where bribery and corruption are discovered, the consequences for companies under the law may be serious. It’s worrying to see that businesses are failing to make sure that their suppliers are complying with the UK Bribery Act, especially as the Act came into effect over a year and a half ago.

“Many directors are still unaware that they can be held personally accountable for any failings in this area. This means that senior managers and directors risk significant prison terms and large fines for non-compliance in which they are personally involved, even if the breach is caused by the actions of a third-party supplier.”  

Additional findings from the research include:

  • Almost a quarter (24 percent) of firms believe that taking on a new supplier will incur the most risk to supply chains;
  • Only 48 percent of firms carry out third- party due diligence in their supply chain;
  • 12 percent of firms would ‘do nothing’ if they found out that their suppliers failed to comply with the Act;
  • Less than half (44 percent) of firms with a turnover from £5m to £50m carry out third party due diligence

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Jun 16, 2021

EU and US agree end to Airbus-Boeing supply chain tariffs

supplychain
Boeing
Airbus
tariffs
3 min
Supply chains embroiled in Airbus-Boeing dispute will no longer be impacted by $11.5bn tariffs imposed on food and beverage, aircraft and tobacco

The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic. 

Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years. 

It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC. 

The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn. 

In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products. 

Boeing-Airbus dispute by the numbers  

  • The dispute began in 2004
  • Tariffs suspended for 5 years 
  • $11.5bn worth of goods affected by tariffs
  • $3.3bn in duties paid by businesses to date 
  • 15% levy on aircraft and 25% on non-aircraft goods suspended

Both sides welcome end to tariffs 

European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.

“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.

Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”. 

The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."

This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.

Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”

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