EXCLUSIVE: Business case for fighting corruption in shipping industry

Lee Kok Leong, our special correspondent, talks to Cecilia Müller Torbrand, Maritime Anti-Corruption Network Program Director, about corruption in the shipping industry.

Lee Kok Leong, our special correspondent, talks to Cecilia Müller Torbrand, Maritime Anti-Corruption Network Program Director, about corruption in the shipping industry.

In this first part of a two-part series, Cecilia expounds on the importance of fighting corruption, not just from the ethical standpoint but also from the business perspective.  She explains that companies that say no will have operational efficiency.

Looking at it from the macro level, with anti-corruption efforts, both the industry and countries will enjoy a better and cleaner reputation, which will then play a significant role in attracting vital investment.

Cecilia is an experienced anti-corruption specialist. Previously, she has worked for more than eight years as senior compliance officer in the Maersk Group where she was responsible for anti-corruption efforts globally.

She trained management and staff worldwide; implemented whistle blowing systems; rolled out country-specific anti-corruption campaigns; and conducted risk assessments, audits, and misconduct investigations.  In 2015, she was awarded Compliance Officer of the Year by the C5 Women in Compliance Awards.

The Maritime Anti-Corruption Network (MACN) is dedicated to promoting compliance with anti-corruption laws and committed to the elimination of corrupt practices.

Corporate Fair Trade Community (CFTC):  Why is it important for the maritime industry to fight corruption?
MACN: Shipping companies that fight corrupt demands have less compliance issues and greater predictability in their operations.  As well as being legally compliant, companies also have a responsibility to keep their people safe, and the threats that come with corrupt demands put crew and vessels at risk.

We know that companies that say no to corrupt demands have effective compliant structure and anti-corruption policies that resulted in a safer environment for employees.  The private sector has a critical role to play in eliminating corruption. The question is, how do you do this?  The journey to get to “no” requires true commitment.  For many companies, saying no can’t be done alone.

While companies recognize that there is a pressing need to take a firm stance against corruption, it is becoming increasingly clear that only by working collectively will the private sector be able to tackle the systemic changes in the operating environment that are required to eliminate corruption.

This is particularly true in the global maritime industry, where corruption occurs as a result of the interplay of a multitude of public and private sector stakeholders.

CFTCWhat are the impacts of corruption on the industry as a whole, shipping companies and their customers?
MACN:  At a macro level, corruption in the maritime sector constitutes a non-tariff trade barrier that is driving up trade costs and impeding economic and social development, particularly in developing countries where trade costs are the highest.

Expanding trade opportunities for low and middle-income countries by reducing corruption in the maritime supply chain is an essential part of integrating these communities into global value chains and attracting much-needed capital, technology, and know-how.

At a micro level, for shipping companies, corrupt demands lead to delays, missed contracts, or other commercial consequences. Corruption hinders trade, increases costs and, above all, has a profound and negative impact on ships’ captains and crew who come under pressure when rejecting demands.  For crew, the fight against corruption has nothing to do with legal compliance—it is a threat to a safe working environment.

CFTCPlease give examples of common corrupt practices.
MACN:  In the past, some port officials were paid by the ships.  It was a gift, a need to “grease the wheel”.  Today, we call it petty corruption.  The tradition of providing some forms of compensation is still strong in many countries.

Seafarers and those working in maritime business operations continue to face demands for payments, goods, or favors to carry out business-as-usual operations.  These demands have many names: chai (which means “tea” in Hindi), shai bil yasmeen (Arabic for “jasmine tea”), a refresco (Spanish for “soda”), or even for an extra schmear (Yiddish for “spread”)—but the effect is the same.

However, the issue of corruption and size of demands vary from a packet of cigarettes or bottle of alcohol, through to thousands of dollars in cash.  These demands are unethical and illegal.

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