Facilitation Payments in Customs & Ports – Part 2

Facilitation Payments in Customs & Ports – Part 2

Share this post

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If those first two “reasonable steps” did not result in the unwarranted demands being withdrawn, parties proceed with a third step, called a “letter of protest,” which is a form of complaint.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

Gray Mail IconClick here to subscribe to TRACE Trends: A Compliance Conversation and receive email notifications as new posts are published.


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


Leave a Reply

Leave this field empty:

Your email address will not be published. Required fields are marked *

    Good morning, ladies and gentlemen. I am delighted to start the second panel this morning of the Council on Foreign Relations workshop on the intersection of corruption and U.S. national interests. Today I will be leading the second panel, which is going to deal...
    Recent News Feed 4/6/2017 Read More
    Last week, TRACE held its 13th Forum at the St. Regis Hotel in Washington, D.C. Over 100 member companies contributed to a lively and extended exchange of best practices across the two-day event.
    Interestingly, for the first time, men and women were represented in...
    Recent News Feed 4/4/2017 Read More
    After years of struggling with excess capacity and tight profit margins, the breakbulk industry facesa tough competitive climate. In these circumstances, one needs to be careful about any temptation to cut corners. Given the industry’s global characterand high degree...
    Recent News Feed 4/3/2017 Read More
    US government officials have said that when assessing company culture as part of an FCPA investigation, they are looking for much more than just “tone at the top.”
    To read the full article, click here.
    Recent News Feed 3/30/2017 Read More
    A current trend in compliance training is gamification, or adding gaming elements to training modules, to encourage learning and engagement. You don’t have to overhaul your entire training program in order to participate in this trend. Below are three ways to...
    Recent News Feed 3/29/2017 Read More
    On March 7 and 8, General Dynamics, joined by TRACE International and the Romanian Chamber of Commerce and Industry, found 150 participants eager to hear about business ethics in Romania, which has been swept by anti-corruption protests in recent months.
    To read the...
    Recent News Feed 3/28/2017 Read More
    A nova “lista do Janot”, derivada das delações premiadas dos executivos da Odebrecht, além de deixar os políticos com as barbas de molho, também deve reforçar uma recente distinção adquirida pelo Brasil: a...
    Recent News Feed 3/23/2017 Read More
    Foreign companies should always maintain close contacts with their local embassies should they need assistance in avoiding extortionate demands. Trade commissions, chambers of commerce and local business councils also may offer support in this domain.
    To read the full...
    Recent News Feed 3/23/2017 Read More
    It is a formula as old as business itself – the bribe, the backhander that greases the wheels of commerce. Rolls-Royce has recently learned to its great cost, however, that nowadays it is also a ticket to massive fines and reputational damage.
    As Brexit...
    Recent News Feed 3/21/2017 Read More
    Corruption-based allegations can be crippling for any company. Compliance in this area of the law is of particular importance to companies who regularly use international consultants and sales representatives, commonly referred to as “intermediaries,” to develop...
    Recent News Feed 3/15/2017 Read More
    These dinner dates aren’t like handing over briefcases filled with money. But it’s an issue, Wrage says, that keeps executives up at night worrying about the consequences of possible wrongdoing.
    How times have changed since November 2001, when Wrage founded...
    Recent News Feed 3/15/2017 Read More
    Anti-bribery enforcement actions increased dramatically on a global scale over the past year, with the extractive industry facing the brunt of that activity.
    Those are just a couple of findings from the 2016 Global Enforcement Report (GER) conducted by anti-bribery...
    Recent News Feed 3/14/2017 Read More
    Heydar Aliyev Prospekti, a broad avenue in Baku, the capital of Azerbaijan, connects the airport to the city. The road is meant to highlight Baku’s recent modernization, and it is lined with sleek new buildings. The Heydar Aliyev Center, an undulating wave of concrete...
    Recent News Feed 3/13/2017 Read More
    The Foreign Corrupt Practices Act is the jewel in the crown of America’s fight against international business bribes and corporate favors. Intended to promote American business and foreign-policy ideals around the world, and give US companies a tool to battle...
    Recent News Feed 3/13/2017 Read More
    Frauen spielen an der Spitze von Sportorganisationen allenfalls eine kleine Rolle. Dabei würde ihre Präsenz den Verbänden mehr als gut tun, sagt Alexandra Wrage von Trace International. Allerdings aus anderen Gründen als man denkt.
    To read the full...
    Recent News Feed 3/7/2017 Read More
    TRACE International has published its latest review of global anti-corruption enforcement, touting a dramatic increase in enforcement last year, led by U.S. authorities.
    Enforcement activity essentially doubled last year, according to the organization’s annual...
    Recent News Feed 3/3/2017 Read More
    Known as an attractive manufacturing hub for labour-intensive and less capital-intensive industries, Vietnam provides trade and investment opportunities for Canadian companies in several sectors including aerospace, agriculture and agri-food, construction and...
    Recent News Feed 3/2/2017 Read More
    Donald Trump has reiterated his promise to reform banking regulation in a meeting with 50 business leaders in Washington this week.Trump told a room of top execs that he still plans to go ahead with overhauling Dodd-Frank – the act brought into existence during the...
    Recent News Feed 3/2/2017 Read More
    Global enforcement actions from bribery charges increased dramatically last year, according to a report released today by TRACE International, an anti-bribery organization.
    To read the full article, click here.
    Recent News Feed 3/2/2017 Read More
    The U.K.’s Serious Fraud Office is reluctant to provide information to investigators in […]
    To read the full article, click here.
    Recent News Feed 3/2/2017 Read More
    A new report by TRACE International finds that enforcement actions against bribing government officials are rising globally. In its 2016 Global Enforcement Report, the anti-bribery organization observes a doubling in US enforcements last year and non-US actions doubled...
    Recent News Feed 3/2/2017 Read More
    TRACE’s annualGlobal Enforcement Report(GER) provides graphic and textual analyses of all known enforcement events (including investigations as well as enforcement actions*) since the first bribery cases were prosecuted in the United States following the enactment of...
    Recent News Feed 3/2/2017 Read More
    There was a sharp rise in both US and non-US foreign bribery enforcement actions in 2016, according to a newly released report by Trace International.
    To read the full article, click here.
    Recent News Feed 3/2/2017 Read More