Bribery and corruption effect all industries, in every location around the world. Perhaps few industries, however, have such a long history of endemic corruption as the shipping/maritime sector. Modern day shipping involves travel and transactions in various jurisdictions, each with various (and contrasting) laws, layers of bureaucracy, cultural norms, business practices and so on. Companies can face anything from costly delays to outright extortion when it comes to moving their freight in and out of ports-of-call.
The United Nations (UN) estimates that corruption can add 10% or more to the cost of doing business internationally. In the maritime industry, with the advent of globalization, there has been a surge in global trade. It is estimated that merchandise exports of 160 World Trade Organization members in 2013 was USD 17.8tn2 . The logistics of maritime import and export of
merchandise invariably involve considerable interactions with government officers of that country e.g., customs officials, import/ export licensing officials, product safety certification and standards officials etc.
The most common forms of corruption at sea are bribes and facilitation payments (Ship Technology, 2018). Some of these payments are so common and widespread that they are seen by companies as a “cost of doing business” in various locations.
A stop in port involves many different interactions, including those with officials from different agencies, such as customs, immigration, environmental controls and others. For many of these officials, bribes are viewed as gifts, simple “gratuities” that help supplement their income and keep business moving smoothly.
The reality, however, is that such widespread corruption is dangerous to the economy, and to organisations on all sides – especially when it rises to a higher level.
RECENT SHIPPING CORRUPTION CASES
In 2017 in Ethiopia, at least 129 individuals, including five executives of the Ethiopian Shipping & Logistics Services Enterprise (ESLSE), were arrested in a wide-ranging corruption probe (All Africa, 2017). In fact, the action marked the country’s largest ever corruption sweep, netting executives, managers, government officials, brokers and lower-level employees.
Overall, prosecutors alleged a total loss of 774 million dollars and 656 tons of sugar lost to the scandal. The wide-ranging case included procurement fraud, bribery, illegal awarding of contracts, and other charges in a laundry list of alleged illegal acts.
Corruption in shipping often overlaps with the oil and gas industry, due to the essential role of maritime transport for this commodity. The Petrobras scandal, of the largest fraud cases in recent memory, snared several shipping companies in its expansive fallout. For example, Ocean Connect Marine, a UK subsidiary of Glencore, allegedly made at least 121 payments worth $2.1 million to Seaview Shipping. “Seaview is owned by Konstantinos Kotronakis and his son Georgios, a UK resident with an apartment in in one of London’s most glamorous developments.
Konstantinos Kotronakis has been under investigation since 2017 for allegedly running a bribery scheme involving the passing of inside information obtained from Petrobras executives to five shipping companies, helping them win contracts worth a combined $900m”. (The Guardian, 2018).
Even Maersk, the world’s largest container shipping company, found itself mentioned in the Petrobras scandal (Shipping Watch, 2015) – though Maersk was not officially found to be at fault, it put them in the headlines for many months. This was notable because Maersk is very visible in its zero-tolerance stance against corruption.
In fact, it is one of the founding members of the Maritime Anti-Corruption Network (MACN) and has vocally criticised “an environment where facilitation and extortion are common occurrences.” Maersk has attempted to position itself on the crest of a sea change to bring maritime shipping out of the dark ages of corruption, piracy and other illegality on the high seas.
ISO 37001:2016 Anti-Bribery Management System is designed to prevent corruption and promote compliance in shipping companies, both worldwide and regionally-based, need a strategy to prevent bribery and corruption because the effects can be damaging both financially and legally, and cause irreversible harm to reputation. One solution is to implement the ISO 37001:2016 Anti-Bribery Management System standard. ISO 37001:2016 is designed to help global organisations implement an anti-bribery management system.
The standard specifies a series of measures required by the organisation to prevent, detect and address bribery, and provides guidance relative to that implementation. For companies involved in maritime transport, this is a critical layer of protection that provides both anti-bribery controls and a system for compliance with various anticorruption legislation, such as the FCPA and UK Bribery Act.
ABAC Certification Services is fully accredited to offer independent ISO 37001:2016 Anti- Bribery Management System certification to ensure that an organisation is in compliance with the standard, which is recognised and practiced in more than 160 countries worldwide. ABAC Certification’s auditors and analysts work with shipping providers to develop measures that integrate with existing management processes and controls, and include:
- Adopting an anti-bribery policy
- Establishing buy-in and leadership from management
- Training personnel in charge of overseeing compliance
- Communicating the policy and program to all personnel and business associates
- Providing bribery and corruption risk assessments
- Conducting due diligence on projects, business associates and other third-party affiliations
- Implementing financial and commercial controls
- Developing reporting and investigation procedures
The benefits of ISO 37001:2016 ABMS certification are far-reaching, impacting not just the primary organisation but also influencing contractors, clients, and raising the profile of the company as an ethical entity that is a good trading partner. By achieving ISO 37001:2016 ABMS certification, a shipping company will:
- Ensure that the organisation is implementing a viable anti-bribery management system utilising widely accepted controls and systems.
- Provide assurance to management, investors, business associates, personnel and other stakeholders that the organisation is actively pursuing internationally recognised and accepted processes to prevent bribery and corruption.
- If needed, provide acceptable evidence to prosecutors or courts that the organisation has taken reasonable steps to prevent bribery and corruption.
Shipping/Maritime transport is a high-risk industry that often operates in heavily corrupt jurisdictions. In today’s business climate, taking every step possible to prevent and detect bribery and corruption is more than just good business sense: it is essential to ensure a successful future. Implementing a worldwide recognised standard like ISO 37001:2016 Anti-Bribery Management System is a critical step forward for any organisation in the shipping industry. Like trouble on the high seas, waiting until a crisis strikes is often too late.
ISO 37001 ABMS is voluntary – but regulatory compliance is mandatory
Discover how to demonstrate resilient and defensible Adequate Procedures with Accredited ISO 37001 Anti-Bribery Management System Certification.