The supply chain of the garment industry in Bangladesh, the country's biggest export earner, is plagued by irregularities and corruption for which global apparel buyers are also responsible, according to a report of Transparency International Bangladesh.
The anti-corruption watchdog detected anomalies at 16 stages -- from order placement to shipment -- in the apparel supply chain. According to the TIB, irregularities and corruption at different stages of the chain have become almost a custom in some cases. And various stakeholders, including factory owners, buyers, auditors and inspectors, are involved in it.
The TIB prepared the report based on information gathered from November 2014 to April last year through interviews of stakeholders, including buyers and global brands or their agents, garment factory owners and exporters, workers, compliance auditors, factory inspectors, merchandisers, shipping agents and bankers. The TIB conducted the study jointly with Transparency International, Germany. The TIB said this is a qualitative study through which it could detect the stages of corruption in the supply chain of garment industry. It didn't quantify the amounts of illegal transactions that take place in the supply chain.
The study found that buyers occasionally take various strategies to cancel orders. Those include imposing new compliance conditions on suppliers, manipulating compliance reports, raising false allegations and cancelling orders at will. Though buyers' representatives or agents monitor the entire production process to ensure product quality, a section of buyers, at times, raises false allegations about product quality after shipments reach the destinations, said the TIB. Sometimes, buyers threaten exporters with cancelling the order and sending back the shipment. In these cases, buyers basically blackmail the production units to get discounts on goods, the TIB added.
The TIB found that a section of buyers manipulates compliance reports on supplier factories when they are not interested in taking delivery of goods. They contact auditors or inspection firms, seeking to manipulate reports to show the suppliers haven't met all conditions. This makes it easier for buyers to cancel orders. According to the TIB, there is prevalence of bribes for influencing purchase decisions of buyers or agents.
To address the issue of irregularities in the supply chain of the garment sector, the TIB has suggested a set of recommendations that include sudden inspection of factories, formulation of a "Moral Code of Conduct” for themselves, the government issuing a specific identification number for each factory to check anomalies.
www.ti-bangladesh.org
