Tackling corruption in the maritime world
In its latest sustainability report, Maersk hit out at the ongoing corruption in the maritime sector. Eva Grey asks, what forms doe s corruption take at sea and how is the industry fighting it?
, the shipping industry has long struggled with corruption on a wide scale. The main reason for this is the very nature of the job: frequent port calls in numerous countries around the world (each with its own set of laws and legislation), as well as multiple ship inspections and heavy bureaucracy, often leave the crew exposed to abuse of power and demands for illicit payments. Refusing to give in to demands can add huge delays and costs to the business, or worse, it can put the captain and crew at risk of harm.
Globally, corruption is a common malady that transcends all industries and walks of life. Each year, Transparency International ranks 180 countries and territories by their perceived levels of public sector corruption as part of its Corruption Perceptions Index. Its latest index found that more than two-thirds of the countries score below 50, with an average score of 43 – a poor performance that is “nothing new”, according to the organisation. The United Nations (UN) estimates that corruption can add 10% or more to the cost of doing business internationally.
Although it can take on many faces, the most common forms of corruption at sea are bribes and facilitation payments.
“A facilitation payment is a low level payment made to a low-level official to perform a routine task, and it's always for something you are entitled to receive,” says Cecilia Müller Torbrand, program director at the Maritime Anti-Corruption Network (MACN).
Established in 2011, and formalised in 2012, MACN began as a small group of shipping companies coming together to discuss ways in which this issue could be dealt with. Since then, MACN has grown to include more than 90 members globally and, thanks to unprecedented government access, it has become a successful example of collective power in fighting corruption efficiently.
The faces of fraud: how does corruption happen at sea?
Understanding how corruption works on board means getting to grips with the challenges that captains face during routine port calls.
“When ships go into port, there are numerous government interactions,” Torbrand explains. “During a port call, the captain is faced with not one but several such interactions, such as immigration, customs, and environmental inspections. And in some countries there is a strong, traditional culture for a token of appreciation.
Maersk, one of the founding members of MACN, is very vocal about its zero-tolerance stance against corruption. In its latest sustainability report, the company points out that its vessels can make upwards of 30,000 port calls annually, and in each port, as well as other points along the logistics chain, papers and documentation are subject to inspection by various authorities. This creates an environment where abuse of power is rife, and can often go unchallenged.
Facilitation payments have over 200 names across the globe – from 'tea money' in China, or 'make-me-laugh' in Brazil – but they all amount to petty corruption, and cracking down on these practices can be challenging.
Each company is bound by law to have an anti-corruption policy in place, modelled on robust international legislation, such as the UK Bribery Act 2010, the OECD Anti-Bribery Convention, or the United Nations Convention against Corruption.
Each company is bound by law to have an anti-corruption policy in place
However, one of the biggest challenges is that although the laws are in place, they are often open to interpretation, with no detailed enforcement plan.
“Exactly what are government officials' visits supposed to look at?” Torbrand asks. “Are they allowed to come on board an unlimited number of times, and an unlimited number of officials? Can there be 30 people who come on board? What can they actually look at? Imagine, on a tanker or container vessel, if they spend a long enough time on the ship, and search every nut and bold, they will find some element that would justify them to issue a fine.
“You can have an advanced anti-corruption system but as long as you don't work with the industry and with government, these challenges will never be fully eliminated,” she says.
Maersk operates a whistle-blower hotline, which has been active for seven years and is available in 75 languages, where any concerned party can call in to report suspicious behaviour or practices. In 2017, the company received a total of 406 reports, of which 132 were within the system’s scope and purpose. This, coupled with training, as well as collective action taken as part of the MACN family, meant that last year the company reduced facilitation payments by 96% on its own vessels, compared to 2016.
“We're not saying that it's justified to break those laws, most definitely not. But as a shipping company, and as a captain, you should be able to be in that situation where you have prepared enough to say ‘yes, we will be compliant during this port call, because we know of the protocol that the country will require of us’. In reality, the reason why this is so difficult is due to corruption. It's a sensitive topic to talk about, but we've started to do it,” Torbrand says.
Challenging the status quo: MACN backs captains to ‘Say No’
The many different forms corruption can take, depending on region, culture and circumstance, is best illustrated by MACN’s campaigns to date.
In 2012, the association identified Nigeria as one of the most challenging countries to do business in, with cases of extortion, harassment and threats of violence. MACN joined forces with the United Nations Development Programme to undertake a risk assessment study in the Nigerian port sector, covering six main Nigerian ports, including Apapa and Tin Can in Lagos, Port Harcourt, Onne, Calabar, and Warri. The investigation found broad discretionary powers and limited accountability in an environment where “corruption is expected and widely rationalised as a part of the system”.
“They had the law, but not any procedures to implement it, so it was difficult for shipping companies to challenge anything,” Torbrand says. “Today, we have harmonised procedures, which means that all of the different agencies that come on board have harmonised among themselves their procedures for port call.”
In Argentina, MACN took a completely different approach. Thanks to repeated incidents flagged up through the organisation’s anonymous incident reporting mechanism, members found that one of the biggest issues facing ships stopping at Argentinian ports revolved around inspections of their grain tanks. Here, inspectors took advantage of ambiguous scrutiny criteria to demand payments, threatening to fail ships that would not comply. At the time, the costs accrued from failing an inspection could amount to $50,000 per day.
The costs accrued from failing an inspection could amount to $50,000 per day
To tackle this, MACN partnered with local integrity champion Governance Latam and together changed the legislative framework in Argentina and moved to a system of inspections primarily conducted by private surveyors, while government bodies that supervise these inspections are used as an escalations channel.
A simpler but equally effective campaign took place in the Suez Canal, also dubbed the ‘Marlboro Canal’ because of corrupt demands during the ships’ passage. The ‘Say No’ campaign, launched in 2015, provided captains with an English and Arabic toolkit, complete with instructions and placards opposing facilitation payments, that has aided many ships in transit.
“One of the most common questions I get is 'how aren't you thrown out of government meetings, how can you successfully talk about something that is so sensitive?' says Torbrand. “In all the countries that we engaged with and have in the pipeline now, that has never been an issue. If you come with data and a diplomatic approach and good grounds on why you want to work on this, they understand that trade is a major part of any agenda.
“So I want to have a can-do attitude: if we join forces and escalate challenges in a good way, if companies start reporting and pushing for transparency, we can get a really long way. It's always better to do something than not do anything.”