Aug 012011

Is new bribery law a threat to seafarers?

One month ago the UK Bribery Act 2010 came into force. There’s no denying that backhander do grease the wheels of maritime commerce, from a bottle of scotch here to a few thousand dollars there, so what threat does it present? Legal firm Ince & Co cover the issue in a new Shipping E-Brief.

Says the firm: “The UK Government has demonstrated a proactive stance to eradicating corrupt practices, particularly within commercial organisations.

“The Act is wide-reaching and extra-territorial in effect in that it extends to (i) companies that have links to the UK, even though they may not carry on business in the UK; (ii) offences committed both within and outside the UK by those companies and; (iii) offences committed by persons “associated with” an organisation who enter into corrupt practices on their behalf. An associated person is someone who, in whatever capacity, performs services for and on behalf of the commercial entity, for example agents.

“The shipping industry is regarded as being at high risk of having to deal with corruption because of its operation in high risk jurisdictions (countries with known corruption risks), its interaction with foreign public officials who may require incentives to perform what is in fact their job and its use of foreign subsidiaries to act as intermediaries.

“Of particular concern to the shipping industry is the issue of facilitation payments, often known as “grease” payments made to public officials to secure or expedite performance of their duties. Whilst these were already illegal under English law prior to the Act, the extra-territorial reach of the Act makes facilitation payments a significant concern for shipping companies operating in countries where a ship’s master or agent will routinely be expected to make minor donations or gifts to port officials e.g. during customs or cargo clearance or to obtain necessary permits. Shipowners have expressed concern that a failure to co-operate locally could have a serious impact on them: manufactured deficiencies and expensive delays caused by those expecting a “bonus” for doing their job efficiently. At a recent meeting between members of the shipping industry and UK government officials, a known “tariff” of facilitation payments in various ports around the world was quoted as evidence of the inevitability of such payments being requested.

“Nonetheless, the Act makes it clear that all facilitation payments, no matter how minor, are prohibited unless such payments are permitted under the local written law. There is no de minimis exception and whilst it may be unlikely that the odd “gift” will be investigated under the Act or that it will lead to anything more than a nominal fine, the reality is that a number of small payments over a period of time by a large shipping entity could add up such that the company may be investigated by the authorities and the matter could result in prosecution”.


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