Facilitation Payments: Stand your Ground

Sometimes captains face demands for bribes or facilitation payments at a port before shore passes are granted. Sometimes they are fined for fabricated issues relating to their crew’s nationality, their documentation or the inspection of their vessel. 

And sometimes these requests come with the threat of violence or physical detainment.

The rationale of the people requesting money: 
Everyone does it. 
It’s not bribery; it’s courtesy.
If I don’t bring something back I will lose face.
I need it; they can afford it.

According to the United Nations, corruption adds 10 percent or more to the cost of doing business in many parts of the world. Corruption can interrupt investment, restrict trade, reduce economic growth, and distort the facts and figures associated with government expenditures. Moreover, corruption in certain countries contributes to poverty and income inequality.

According to Transparency International, in very corrupt states, the most corrupt sectors are very often the police, the bottom rung of the legal system, and the political parties, the very top of the political structure. 

“This is not something you can tackle on your own as one company or as one shipping nation. It requires collective action by the industry and also close cooperation with inter-governmental organizations,” says Maria Bruun Skipper, senior adviser for the Danish Shipowners’ Association

The association is one of 43 members of the Maritime Anti-Corruption Network (MACN), a global business network working toward its vision of a maritime industry free of corruption. Established in 2011 and formalized in 2012, MACN consists of vessel owners, cargo owners and service providers. 

MACN and its members promote good corporate practice in the maritime industry for tackling bribes, facilitation payments, and other forms of corruption. MACN also collaborates with governments and international organizations to identify and mitigate the root causes of corruption in the maritime industry and to develop sustainable solutions.

Last month the Danish Shipowners’ Association hosted a conference as part of Danish Maritime Week that saw shipowners speak openly about the challenges they face. For example, a leading bulk shipping company that runs a tramp service spoke of the difficulties for trampers to make arrangements in advance. This can make them easy targets. The crews may not be familiar with local cultures and routine practices. Therefore they might see it as easier to pay a bribe than argue with officials. 

Negotiating power can depend on time pressures, negotiating skills, threats of violence and threats to the business. “Within MACN we have developed an online training toolbox for captains to demonstrate best practice when they are met with a demand for a facilitation payment. It is for the captain and also the operator on shore because the captain needs shore support,” says Skipper. “It is important that the captain is prepared. He should know what he can do, the relevant regulations, and he should also be aware that there might be some ways of handling the situation at a personal level that can help. This might be how he addresses the port official. Be assertive, polite and confident. Try to explain that the decision is not up to him by saying things such as: I trust you are aware that you are asking me to break my company’s rules.”

As well as the toolbox, MACN has been initiating action on shore. The group chose Nigeria for a series of consultations and surveys to identify specific challenges. The local authorities were willing to be involved. A sector reform in Nigeria in 2004 has been followed up more recently by a national development strategy focused on improving competitiveness.

The findings of the study demonstrated a number of organizational problems, including the amount of red tape involved. For example, 142 signatures can be required to process a cargo in Lagos. The officials have broad discretionary powers and limited accountability. Integrity is not emphasized, and corruption is widely accepted and rationalized. Pressure from higher ranks to comply with established corrupt practices is also frequent. 

As a result of the collaborative project, MACN is encouraging the development of an anti-corruption policy, improved controls and training. The organization will continue to work with authorities in Nigeria to help them change the current situation.

MACN is considering taking the issue of bribes to IMO. “The IMO has not really been active on this, but at MACN we are talking about how we can bring the issue into the political arena,” says Skipper. The benefits for the shipping industry are significant: increased efficiency, reduced cost and reduced risk of fraud, blackmail and other security threats. 

MACN is continuously seeking commitment from United Nations agencies and other international organizations on how they can endorse and officially support initiatives going forward.

The Seven Principles upheld by MACN members:

Compliance Program Requirements

Members should create and maintain an anti-corruption compliance program that reflects and is designed to address the risks pertinent to the company’s business. Senior management and/or the board of each member should give explicit and visible support to the anti-corruption compliance program. Members should confer responsibility for the anti-corruption compliance program on trustworthy officers who are sufficiently independent and empowered to fully implement the program.

Proportionate Procedures

Members should have clearly articulated policies and procedures that comply in full with the laws which apply to them and, as a minimum, prohibit all forms of corruption and give specific guidance on facilitation payments with the ultimate aim of their elimination. The policies and procedures should be proportionate to the risks faced by the various parts of each member, as well as the nature, scale and complexity of the organization's activities, and should apply to all employees as well as third parties that act on behalf of the member.

Risk Assessment

Members should assess external and internal corruption risks on a regular basis and document their findings.

Training and Communications

Awareness of policies and procedures should be reinforced through communications and training to employees and, where appropriate, third parties. A record should be kept of all training provided.

Monitoring and Internal Controls

The anti-corruption compliance program should include features designed to prevent and detect incidents of bribery, facilitation payments and other forms of corruption through appropriate monitoring and auditing protocols. Internal controls should be implemented to protect the integrity of financial and accounting procedures such that the company keeps fair and accurate books, records and accounts. The program itself should be audited regularly and improved or updated as necessary.

Reporting, Discipline and Incentives

Members should provide employees with access to methods for asking questions and/or reporting concerns. Those asking questions or reporting concerns in good faith should be able to do so without fear of retribution. Members should investigate credible reports of improper behavior and should implement appropriate corrective actions when necessary. Compliance with the anti-corruption compliance program should be encouraged through incentives for proper behavior and, where necessary and appropriate, enforced through discipline for improper behavior.

Due Diligence

Members should conduct risk-based due diligence on counterparties as well as in respect of the hiring and oversight of third parties and business partners. The due diligence should include an anti-bribery commitment from third parties.