EXCLUSIVE 2 PART SERIES: WINNING THE WAR AGAINST MARITIME CORRUPTION
Lee Kok Leong, our special correspondent, talks to Mark Pyman, an experienced global anti-corruption professional who has operated at the highest level of government. In this second part of a two-part series (you can read the first part here), Mark gives his opinion on what works and backs it up with real life examples.
Mark has experience working in two of the toughest environments for corruption: as the Programme Director for Transparency International in tackling corruption in the military and defence ministries worldwide; and for the Afghanistan government as an International Anti-Corruption Commissioner.
He is now the founder of CurbingCorruption.com, which provides practical help for public officials and politicians planning anti-corruption reforms.
Corporate Fair Trade Community (CFTC): What are some of the key steps that companies can take?
Curbing Corruption (CC): There are many ways that companies can take the lead in reducing corruption.
They can ‘put their own house in order’ by setting up ethics and compliance programmes in their organisations.
They can take an industry-leading role by bringing industry and government together to solve specific problems, such as customs clearance in a particular port.
They can work at the international level by ensuring that corruption-reducing efforts are integrated into industry-wide challenges, such as ensuring that the new technologies also work to reduce corruption in the industry as well as raise efficiency.
Here is an example from Maersk, which has been most active on anti-corruption.
They have a strong published stance against bribery. Maersk have invested heavily in stopping facilitation payments, starting with an effective system whereby ship captains log all small facilitation requests.
The trend of the number of these requests worldwide from Jan 2015 to May 2017 shows the success of their initiative.
CFTC: On the other hand, what measures can port and customs take to reduce corruption?
CC: Port and customs can play a big part too by working together with the shipping industry. Below are some examples where all parties working together have brought about a positive impact.
Shipping reform in Tanjunk Priok port, Indonesia. The risk of corruption in Indonesian port is high, and illicit facilitation payments are common, mainly in the form of in-kinds demands such as cigarettes and beverages.
Companies that refuse to pay are often penalised with delays or with fines for alleged non-compliance.
In addition, laws and procedures are ambiguous and opaque, making it hard for stakeholders to report and seek solutions to alleged non-compliance.
Working with the authority, the Maritime Anti-Corruption Network (MACN) launched a collective action aimed at improving container tracking IT systems; promoting an e-governance system for cashless export licences; integrating whistleblowing into existing procedures; establishing a stakeholder forum for discussion; and raising awareness about laws and regulations in the maritime sector.
This project resulted in improving transparency of the regulation for importing goods through Tanjunk Priok and has also improved the accountability of key government stakeholders towards the private sector.
Port reform in Argentina. The shipping industry operating in Argentina is facing specific challenges regarding the inspections of holds and tanks, custom declarations, and on board-practices.
Data from shipping companies highlighted a systemic issue with demands for payment for unclean gran holds, including cases of extortion.
New regulations were drafted to improve specific areas: approval of a vessel’s holds or tanks for the loading of agricultural products, development of new IT system for processing and registering holds/tanks inspections.
More specifically, the new regulations
- limit the inspector’s discretion by having more precise definitions and objective criteria for holds or tanks rejection
- introduce inspectors’ rotation in ports and terminals to hinder collusion and development of proper arrangements in certain ports and client interactions
- increase the timeframe allowed for remedying hold’s deficiencies
- strengthen control mechanism by creating a new Technical Appeals Tribunal
- develops a risk matrix on the basis of which inspections will be supervised
- establishes a trustworthy whistleblowing hotline
European port reforms. Captains report that occasionally, European port do require payments, e.g. in Spain. However, some port have taken initiatives to reduce the risk of bribery.
In 2012, the Port of Rotterdam signed a Letter of Commitment to the UN Global Compact, one of the principles covering anti-bribery.
The Hamburg Port Authority has formed an anti-corruption committee to combat bribery.
Also, Ukraine introduced an electronic cargo clearance system to reduce bribes.
Port reform in Nigeria. Nigeria is considered one of the most challenging countries to do business due to systemic corruption.
MACN supported a pilot project implemented together with local authorities and the United Nations Development Programme.
The aim was to identify and address vulnerable elements in vessel port call processes where corruption is prone to take place. Measures taken included
- improving and harmonizing public officials’ port clearance procedures
- establishing a new complaint mechanism that enabled companies to file a complaint when faced with improper demands from government officials
- conducting anti-corruption training of selected officials
- developing anti-corruption policies for all relevant agencies
CFTC: In your opinion, what are the major critical success factors that both governments and shipping companies must have in place to successfully fight corruption?
CC: I could give you a long list of critical success factors to fight corruption, but I won’t do that. Because in an industry where only a limited amount of attention has been paid so far to corruption, what is needed are catalysts, rather than a list of all the factors.
The most dramatic type of catalyst is a crisis. Like the banking one, involving Danske Bank in Estonia at the moment.
Corruption, in some environment, needs something appalling to happen to trigger corrective action.
For example, the sinking of the Sewol ferry, en route from Incheon towards Jeju in South Korea in April 2014, with the loss of 304 lives.
Corruption, on both the government and company sides, was a significant part of the reasons for the disaster.
But there are other, more positive, catalysts of change.
One is the presence of forward-thinking individuals at the international regulatory level, such as at the International Maritime Organisation.
There are many examples where just a few such people at the right level have helped to change the norms of the industry. The way that the global mining industry became much more attentive to corruption in mining is one such example.
A second possible catalyst is that a few companies in the sector collaborate in leading change. You already have one such company, Maersk, with a strong stand on tackling corruption.
With just a few more, they can lead the changing of norms in the industry.
A third catalyst is technology.
So long as you pay attention to the anti-corruption opportunities — and risks — in the new technologies, you can have a huge impact.
E-procurement has been one such technology that is dramatically reducing corruption in numerous ‘tough’ environments, such as in Ukraine (the e-procurement rollout of ‘Pro-Zorro’).
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