An in-depth review of the above process demonstrates to a person having access to the files what methods of self-policing are in use. What investigative techniques and procedures were used, and how effective they were, can also be observed. How the investigation was conducted and directed is an indicator of the competency of the investigators. The rationale and fairness of the adjudication process are evident from a review of the files.

Only by reading the entire file can a reviewer know whether the fining process is effective or just a token compliance with self-policing. What else can be discerned is what control, if any, the conferences have over the way the investigations are conducted. Where there are private corporations performing responsibilities normally those of a federal agency, the oversight of the private corporations' activities must be effective. Recent revelations about the private grain inspectors are witness to the necessity for oversight where illegal payments are prevalent.

It is essential, then, that investigations and fining activity be reviewed to make an evaluation of the self-policing. These are the end products which bring about a clean trade and the deterring of malpractices. A preponderance of activity on inspections brings about additional revenues to the carriers which does not necessarily deter malpractices. Investigations of malpractices and subsequent heavy fining activity represent the activity which does deter malpractices. All sorts of self-serving statements and rhetoric cannot conceal a neutral body's inadequacies and deficiencies because they are self-evident in the end product.

After the Commission, or the party doing the evaluating, reviews the neutral body's budget, its methods and procedures, its production figures, and the investigative and adjudication materials, a judgment is made. If it is that the neutral body is a competent organization, and independent intelligence sources testify that the trade is clean, minimal fining activity would be an accurate barometer of the conditions of the trade. There would be a sufficient basis to state that the self-policing is adequate.

Conversely, if the same judgment is made of the competency of the neutral body but the intelligence sources state there are serious malpractices being committed, then heavy fining activity is a barometer that the trade is dirty. Notwithstanding the affirmative appraisal of the neutral body,

the conference does not have adequate self-policing.
Given these circumstances, the recommendation would be
that the neutral body be given additional resources and/or
the Commission's Bureau of Enforcement direct its efforts
towards attempting to clean up the trade.

Who should make the evaluation and how it should be made were discussed with many officials during this study. On-site reviews and interviews usually were agreed upon as necessary. There was discussion on the alternatives of the Commission's Bureau of Enforcement or an independent party doing the tasks. Most officials preferred that the former should remain aloof from the self-policing bodies. Fear was expressed that Commission review of neutral bodies' files would have a harmful effect on the confidentiality status of the reports. Also, the Bureau of Enforcement should consider whether, as a policy matter, it would want to be in the position of reviewing information upon which it independently should act.

A serious problem is the Commission's ability to maintain any pledge it would give to respect the confidentiality of the documents received. Information taken from neutral body files and disseminated to the Commission's files could possibly be protected by the Commission under either the investigatory or business confidential exemption of the Freedom of Information Act. Also, the neutral bodies could file suit to prevent disclosures. Experience with the Courts, and Congressional Committees seeking such information, indicates the Commission's ability to protect confidential materials would be tenuous.

The line and conference officials interviewed expressed a preference for some sort of informal review. Under such a condition, an independent party could present an evaluation to the Commission without resorting to disclosures of confidential materials which had been made available during the inspection. If the Commission were satisfied that the evaluation was based upon on-site reviews and interviews of sufficient depth so that a meaningful evaluation could be made, this, in addition to the reports now required of the neutral bodies, would be a firm basis for the Commission concluding that there is adequate policing. Such a procedure could be used for evaluating both conference chairman and neutral body systems.

Adequacy is the Commission's statutory criterion. The Commission must know the answers to the above questions in order to know whether the self-policing body has met the criterion. Inasmuch as over a million dollars in expenditures

by both ANAFC and FCS are at stake, and more importantly,
owners have made commitments to conduct multi-million
dollar businesses without resorting to malpractices, line
and conference officials should require as a matter of
self-interest the same answers to know if the self-policing
is efficient and effective.

What should be made abundantly clear is that the inspection procedure would not give the Commission access to the information in the neutral bodies' confidential files. The lines will not be exposed to double penalties. But, both the Commission and the lines will have an assurance of the effectiveness of the self-policing, this being the only information the Commission seeks.

To be resolved in the second part of the study is whether the above inspection procedure is possible and how it could be implemented. Additionally, what procedure the Commission will use when the reports indicate self-policing is inadequate is important because, in such a circumstance, the Commission's reaction should be prompt and effective. For the Commission to allow a conference to have a meaningless form of self-policing causes the entire program to be weakened. There is one conference which was mentioned in the legislative hearings as being plagued with malpractices. According to witnesses, that situation has prevailed through the years and, even today, negative reports of self-policing are submitted. The Commission must use its procedures in these cases to bring about effective self-policing.

C. INDEPENDENTS

Representatives of the larger Independents have not been interviewed, although there has been received some input from smaller Independents and lines operating as Independents in certain portions of their trades. However, shipping officials have offered much testimony about Independents and their practices.

Conference officials complain about the malpractices committed by the Independents and the lack of policing of them. It should be noted that the conferences seldom have been specific on the Independents' malpractices, nor have they a system for collecting complaints and referring them to the Commission.

It is in this area that liaison has been encouraged between the neutral bodies and the Commission's Bureau of Enforcement. If, in fact, the Independents are committing malpractices, the Bureau of Enforcement could compile the record upon which further action could be taken by the Commission. To be noted is that the Commission has shown good faith in attacking this problem, if it exists, by requesting an increase in personnel for its Bureau of Enforcement. This step is an absolute necessity.

One other avenue to pursue now is that of cargo inspection for the Independents. Provided that all the conferences have cargo inspection, the Commission could possibly compel the Independents to submit to it. Officials of neutral bodies have stated that their cargo inspection services for conferences have uncovered numerous gross misdeclarations by shippers. If this practice is condoned by Independents, or if there is collusion on the part of Independents, then the Commission could show the Independents causing harm to the conference pricing structure. The Commission could then compel imposition of the proven way to stop misdeclarations, i.e., cargo inspection. Of course,

to create the requisite record, there would be required the cooperation of the neutral bodies in making available to the Commission their records of shipper abuses.

As time and opportunity permit, there should be pursued the issue of policing of the Independents. If, in fact, they are committing malpractices, this would be an integral part of the self-policing issue. Conferences are loathe to expel the conference lines which are indulging in malpractices because, once they are Independents, there is no control over them. It is alleged also that malpractices committed by Independents have deleterious effects on conference agreements. Given the premise that the above has a harmful effect on conferences in the foreign commerce of the United States, consideration should be given to an action by the Commission seeking a remedy pursuant to Section 19 of the Merchant Marine Act of 1920. The relief sought would be the imposition of those provisions set forth in Part II, Recommendations; specifically, each Independent line should be required to submit to the policing of a neutral body on a retainer basis. Policing in this case would entail cargo inspection of 10 percent of the total shipments (as now done for conference lines), one audit each year, and the authority for a neutral body to initiate an investigation on its own or on the basis of a complaint from

another line. These requirements are similar to those levied upon conference lines and, thus, should not be considered discriminatory.

The complaints mentioned above would be screened by the neutral body and it would use the same procedures as though the Independent were a member of the conference from which the complaint came, i.e., evaluate the complaint, if viable, investigate the accused, the accuser and some of the remaining conference members. The costs for the complaint investigation would be borne by the conference from which the complaint arose unless a malpractice were proven. In that case, the Independent's fine would include the cost of the investigation.