UPS: suspicious behavior in Fritz unit stopped after merger
Due diligence internally on the part of UPS led the Atlanta-based parcel carrier and logistics services company to investigate the possibility of corrupt practices within a supply chain unit acquired in 2001 by UPS from Fritz Cos. for $450 million.
UPS voluntarily disclosed the suspected behavior to the U.S. Securities and Exchange Commission in a Form 10-K filing, as well as to the Justice Department.
In its filing, UPS said, 'with the assistance of outside counsel, we have undertaken an internal investigation of certain conduct within our Supply Chain Solutions subsidiary in certain locations outside the United States.
'Our investigation has determined that certain conduct, which commenced prior to our subsidiary's 2001 acquisition of a freight forwarding business that was part of Fritz Cos. Inc., may have violated the United States Foreign Corrupt Practices Act,' UPS said in its SEC filing.
'Our investigation also determined that a small number of former employees directed the conduct in question. The monetary value involved in this conduct appears to be immaterial. We have implemented numerous remediation steps, and our investigation continues,' UPS said to the SEC.
After noting that it had duly informed the SEC and Justice Department of the suspected behavior, UPS said that 'we intend to cooperate fully with any review by the government of these issues.'
Also in its filing, UPS said, 'we do not believe that the results of this investigation, the remediation or related penalties, if any, will have a material adverse effect on our financial condition, liquidity, or results of operations, nor do we believe that these matters will have a material adverse effect on our business and prospects.'
In a seven-paragraph statement given to the media, UPS noted that it 'places a high priority on compliance, integrity and good corporate citizenship. The company takes strong and decisive action when it discovers violations of law or its own code of conduct.'
A source within UPS told Shipper's NewsWire that the conduct under scrutiny had ceased after the merger with Fritz. The source declined to comment further, citing UPS's ongoing investigation.
Under the Foreign Corrupt Practices Act, American companies or corporate individuals who bribe foreign officials are guilty of criminal acts.