Popular Payoffs.

If Uncle Sam does it too, are kickbacks still wrong?

SHIPPING COMPANIES CALL IT GOOD BUSINESS. GOVERNment watchdogs have another name: kickbacks.

Latin America is the perfect place to play "you scratch my back and I'll scratch yours." Bartering is common--goods, information and yes, of course, services, including cargo transportation. And the transportation service industry is a perfect business for, to put it gently bartering. Especially when it comes to moving international goods.

Companies try to handle a client's cargo along every link of the supply chain, since cargo carriers often give discounts or other incentives during one part of the move to make up for the higher costs in the other.

Sometimes, the "discounts" are a little more flagrant--the carriers offer rebates, free warehousing or other deals. As far as the transportation companies are concerned, the rebates and such are the same types of incentives you might get from a car dealer to take last year's model off the lot.

The U.S. government disagrees. To Uncle Sam, these are nothing more then kickbacks. They've got a nicer way of putting it in Washington. Officially, these deals are violations of the U.S. shipping act "by obtaining transportation of property for less than applicable rates and charges by receiving rebates, by using service contracts ... and other rate concessions." Leave it to the Beltway Bunch to choke the world's logistical arteries with verbalese to say something short and sweet.

But, whether you hide behind verbiage or spell it out, the suggestion that payoffs are immoral leave a sour taste in the mouths of those in the shipping business.

"Everyone does this all around the world and there are no problems," says the executive of one leading global shipping line. "Why should the United States decide to make it illegal here?"

Other shippers feel the same way. They want to know why the U.S. government wants to enforce its standards around the world.

It's not surprising these executives would rather keep their names confidential. Most of them are going the rebate route in one way or another; getting caught or tipping off the watchdog agencies could be costly.

Just ask the 10 companies that paid out a total of US$732,000 a few months ago to the U.S. Federal Maritime Commission. The commission oversees the hundreds of contracts and thousands of transactions taking place annually in the trade lanes between the United States and the rest of the world. All 10 branded by the commission were doing business in Latin America.

It is important to remember that the money these companies forked over was not to cover fines but for what government likes to call "compromise agreements." In these deals, the company pays the commission to go away--without any real chance to defend themselves based on evidence--because it's simpler and cheaper than getting into a fight with the government. Kickbacks, anyone?

Those bucks add up in a hurry. Here's a few of the bigger payouts:

* Caribbean General Maritime Ltd, agreed to pay $80,000. The company allegedly made less than its tariff and contract rates through rebates and provided service to an untariffed and unbonded entity in the Caribbean.

* Compania Chilena de Navegacion Interoceanica agreed to pay $150,000. The commission says it took less than its tariffs and contracts in the South American trades.

* Empresa de Navegacao Alianca of Rio de Janeiro agreed to pay $290,000 for similar reasons, as well as additional allegations that the company moved goods that were not covered by a contract.

* Speed Cargo Service of Miami agreed to pay $30,000 on commission allegations that it paid less money for cargo transportation by misidentifying the cargo contents.

* Total Marine System of Miami agreed to pay $20,000 after facing allegations that it paid less money for cargo transportation by "engaging in service contract misuses" and other allegations that it provided transportation of cargo for less money than in its tariffs.

According to those in the industry, such laws utterly fail to recognize international business realities. Meanwhile, the feds make money simply by threatening to enforce those same laws. How much you want to bet Washington is listening? I thought so.