NFBA SETTING ETHICS CODE AS TRADE PROBE CONTINUES

ELLIOT ZWIEBACH

RESTON, Va. -- The National Food Brokers Association here expects to disseminate a proposed "code of conduct" to its members this week in the wake of an ongoing federal investigation of trade practices in New England.

The probe by the Federal Bureau of Investigation and the U.S. attorney's office in Boston has resulted in the sentencing of two employees from one brokerage, Roberts & Associates, and the terminations of at least four employees from Stop & Shop Cos., Boston.

The investigation is focusing on the handling of incentive funds paid by manufacturers through brokers to retailers for use in coupon offers, in-store displays and other promotional activities.

A number of industry sources have indicated the federal investigation could involve other food brokers, retailers and, possibly, wholesalers and direct-sales manufacturers.

"The problem is not simply a broker issue, but also an industry issue that we all need to guard against," Robert Schwarze,

NFBA's president, told SN.

To help brokers guard against potential legal or ethical violations, NFBA's directors were expected to approve a suggested "code of conduct" for members at a board meeting held last Thursday.

According to Schwarze, "Like spring training in baseball, we need to go back from time to time and reinforce the basics, which is what the code of conduct attempts to do -- to provide guidelines for strengthening even further the things our members are already doing."

The two sentenced employees of Roberts & Associates, Natick, Mass., were found guilty of obstructing the federal investigation. Jack E. Roberts, former chairman, was sentenced to six months in prison and a $20,000 fine. Gerald N. Jackson, an employee, was given eight months in prison for agreeing to withhold information from federal agents.

At Stop & Shop, which was informed of the federal investigation 10 months ago, the four employees were fired for violating the retailer's code of ethics, according to the chain's general counsel, Peter Phillipes. The violations involved alleged acceptance of gifts or misapplication of market-development funds.

A fifth Stop & Shop employee has resigned for personal reasons, said Terry Vandewater, a company spokeswoman. She declined to say whether the resignation was related to the federal investigation.

Schwarze said NFBA's trade relations steering committee developed the code of conduct to provide guidance to members on professional, ethical, legal and socially responsible behavior.

The code covers eight specific areas:

· Professional integrity. "All NFBA members should strive to conduct all business dealings and relationships with integrity, honesty and respect for all parties. Brokers should faithfully and loyally serve their principals and always deal fairly with our customers."

· Use of manufacturers' market development funds. Those funds should be used "solely for the benefit of the manufacturer [and] all disbursements should be lawful and in accordance with" manufacturer instructions.

· Bribery, kickbacks and theft. "NFBA does not condone or permit bribes, kickbacks, diverting or other illegal, secret or improper payments, transfers or receipts. No member should offer, give or transfer any money or anything else of value for the personal benefit of an employee or agent of another business entity."

· Gifts and entertainment. "NFBA members should only give and accept business-related meals, entertainment, gifts or favors when authorized by management and when the value involved is not significant and clearly will not create an obligation to the donor. All payments and transactions should be clearly and accurately recorded in the company's books."

· Conflicts of interest. "No member employee should use his position within the company or information acquired during employment in a manner that may create a conflict or the appearance of a conflict between the employee's personal interests and those of the company."

· Confidentiality. "Members should refrain from discussing . . . proprietary information of the company and information entrusted to the company by its principals and customers."

· Political and charitable contributions. "NFBA members . . . should not contribute their company's or principal's funds or assets to any political candidates, party, charity or similar organizations unless such contribution is expressly permitted by the law and has been preapproved by the appropriate authorized representatives of both the company and the principal."

· Administration of the code. "All member companies should appoint an in-house ethics officer that would be responsible for enforcing a company code of conduct. . . . All allegations of improper and illegal behavior should be investigated promptly and thoroughly."

Schwarze said NFBA has had ongoing discussions with several members in New England over the past year and a half -- since it became aware of the federal investigation -- and has recommended the companies conduct internal audits to determine whether their procedures are in order. Many companies are doing this, Schwarze said.

"I really believe that, with the pace at which the industry is changing and with the desire to build market share, build brands and increase volume, the industry should take time to put proper controls and safety checks in place to prevent offenders from getting away with anything," he said.

Schwarze said he does not expect the current investigation to tar the reputation of the broker segment.

"I'm hoping the food industry is mature enough to recognize that these kinds of things can happen in any retail organization, any sales organization or any broker organization, and that they do happen and can happen again.