Facilitation Payments in Customs & Ports – Part 2

Facilitation Payments in Customs & Ports – Part 2

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February 02, 2016

In Part 1, we discussed using the “three R’s approach” to eliminate small bribes in customs and ports. This week, we’ll look at how companies can successfully use the Baltic and International Maritime Council (BIMCO) Anti-Corruption Clause for Charter Parties, and collective action, to resist bribe demands.

The most recent attempt to tackle unlawful demands for illegal payments in customs and ports has been the creation of the voluntary BIMCO anti-corruption clause. Serving 2,200 members in the shipping industry globally, BIMCO has recognized the need for a standardized solution to a longstanding problem of extortionate demands for bribes in ports. Specifically designed for charterers and owners in the shipping industry, the BIMCO clause lays out a mechanism for contracting parties to resist such demands and protects ship owners in case they face retaliation from customs and/or port officials, such as delays.

BIMCO’s approach consists of five main steps. The first step is to ensure that both parties are aware of their responsibility to comply with all applicable anti-corruption legislation by having the necessary procedures in place and keeping accurate books and records of all transactions.

The second step calls for a cooperative response from both parties. Thus, if one party receives a request for an illegal payment, it should notify the other party, and together they should take “reasonable steps to resist the demand.”

If those first two “reasonable steps” did not result in the unwarranted demands being withdrawn, parties proceed with a third step, called a “letter of protest,” which is a form of complaint. The letter can be viewed as evidence that the demand has been made, but not paid and, therefore, the consequences, such as delays in providing services, additional demands, etc., may be a result of the resistance to such demand. The party responsible for nominating or selecting the service provider that initiated the bribe demand (for example, a particular port or customs agent) should, according to the clause, bear the cost of any delay attributable to resistance to a demand.

The fourth and fifth steps relate to the BIMCO clause’s mutual indemnities provision (requiring a party in breach of anti-corruption laws to defend and indemnify the other party) and termination provision (allowing termination without liability if the other party is in breach).

The BIMCO approach underlines the importance of thorough due diligence on the part of either party when choosing local partners or agents – TRACEcertification, for example, would be of particular value to any party in complying with this requirement – and illustrates how collective action can be used to fight against corruption.

For more on this topic, please see the following resources:

Facilitation Payments in Customs & Ports – Part I
Tipping Risks in Shipping
Watchkeeper for Maritime Corruption
BIMCO Anti-Corruption Clause for Charter Parties
Ethical Dilemmas of Bribery in Shipping

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Paving the Way to EU Membership: Combatting Corruption
Compendium Roundup: January 2016
Justina Song Facilitation Payments in Customs & Ports – Part 2

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