Theft, Organized Crime and Corruption in the Supply Chain

Corruption in the supply chain

There seems to be corruption in the supply chain these days. This is demonstrated in the stories that are shared here in this article.

Courts petitioned

The courts have been petitioned again by a subsidiary of a Covenant Transportation Group. It desires to be discharged from a claim in the amount of $6 million dollars.

The original charge was for supposedly having been involved in the theft of pharmaceuticals. They were stolen from a delivery load as part of a supply chain. This is evidence of supply chain corruption.

A federal judge was petitioned to give Covenant’s Sothern Refrigerated Transport Inc. a determination. The determination is concerning a claim in 2008 in relation to some cargo. However, the court has indicated that there needs to be a provision of further evidence before a conclusion can be made about the amount of damages that were sustained because of the supply chain corruption.

Motion for reconsideration

Southern Refrigerated Transport Inc. was granted until the date of May 18, according to the Columbus, Ohio Federal District Court, to be able to file a motion. The motion would be regarding the reconsideration of the limit amount in relation to the problem caused by supply chain management corruption.

The broker in this case is identified as Excel Inc. Excel was granted a time limit until the date of May 30 to comply in responding.

Truck stolen

Sandoz Inc .is a German drug making company. It shipped a load of its pharmaceuticals. The company states that the SRT truck was stolen.

And it indicates that the value on the market concerning the pharmaceuticals is established at $8.6 million. It is to be noted that Sandoz is not directly involved in the lawsuit concerning this supply chain management corruption.

This is because the company has decided to assign the legal claim to the same broker of the shipment. That company is Excel.

Ruling by federal court

Excel then delivered the claim to SRT. In the year of 2014, there was a ruling by a federal court that was in favor of the Excel broker.

It was determined that SRT, which is located in the Texarkana region, was to repay Sandoz $6 million. That was for the damages that were sustained due to corruption in supply chain management.

Disagreement with ruling

However, SRT boldly disagrees with the ruling. It states that in reality it is only obligated to pay Sandoz just under $60,000.

SRT explains that the contract supplied by the broker states that it granted limited liability. SRT also presents the case that the federal Carmack Amendment provides protection.

Attribution of liability

Apparently, the law does attribute liability to motor carriers for any loss or injuries that are sustained. However, it is to be noted that carriers are granted the right to set rates that limit liability providing certain requirements have been fulfilled.

The fact here is that the liability of SRT had been capped at $100,000. And those involved in shipping goods were not provided with options to be able to pay for an increase in the liability limit or less for a decrease in the liability limit.

Covenant not satisfied

In a statement, Covenant responded with the fact that the company was not satisfied with some parts of the ruling of the district court. However, it did go on to say that it yet maintained its confidence regarding the company’s stance concerning this case. And it will yet be confident in the justice system to do its job.

Result yet to be seen

Regrading the shipment, Excel desired to obtain the full market value. On the other hand, the carrier desired only to have to be responsible for the cost of replacing the shipment.

However, which result will be final is yet to be seen. It will be based on whether there was a loss of sales sustained by Sandoz. According to Senior Judge James Graham, he believes that there was a failure by both sides to provide supporting evidence about this issue.

In direct competition or not

The broker also suggested that stolen cargo is in direct competition in relation to the manufacturing company when they get resold. The broker believes this makes the replacement to be truly an impossible task.

Yet, the fact remains that Excel did not provide substantial evidence that the stolen pharmaceuticals even competed within the same market segment as the Sandoz company. According to the court, there is a real possibility that the pharmaceuticals could undergo being sold for intents other then as directed by the instructions associated with the medications.

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