Forecasters estimate the U.S. inflation rate may increase above the Federal Reserve Board’s preferred target of 2% per year. As reported by Business Insider, inflation surged by 5.4% between the end of July 2020 and July 2021.
With increasing costs of supplies, energy and shipping, both U.S. manufacturers and their employees may face serious issues. Prices may, for example, fluctuate rapidly in the case of selling and manufacturing high-ticket medical equipment, particularly with shipments moving between countries and paid for with volatile currencies. Suspicious or somewhat overzealous officials may consider allegations of bribery or violations of the Foreign Corrupt Practices Act.
Uncontrollable fluctuations may appear suspicious
As noted by U.S. News and World Report, unreasonable pricing may appear to reflect signs of bribery involving foreign officials and individuals along the supply chain. It may cause law enforcement to consider the possibility of FCPA violations
Although it may reflect uncontrollable increases in global shipping expenses combined with a decrease in manufacturers’ supply lines, when prices balloon significantly above fair market value, investigators may become suspicious. It may appear as though the high cost includes bid-rigging or invoice padding.
A defense may require detailed documents
Manufacturing companies’ employees may have sole authorization to create bidding documents. They may list accurate prices with expectations of a reseller or agent using them. Alterations or forging documents made by a distributor, reseller or sales agent, however, may lead to trouble. The manufacturer or its employees might face allegations of bribery. Ultimately, the manufacturer has liability for pricing issues under the U.S. Foreign Corrupt Practices Act.
Higher payments made for equipment and long-distance shipments during extreme shortages may increase the chances of supply chain and pricing issues. Manufacturers and third parties may require a proactive defense strategy based on well-maintained and accurate documentation in the event of an FCPA investigation.