Businesses in dilemma over corruption in African ports

Implications

Designing a clear compliance strategy has become an issue of great importance for businesses transporting maritime cargo in Africa. This enables them to protect themselves against prosecution under anti-bribery legislation and defend their reputation for ethical conduct.

The legal and regulatory regime varies across different ports in the region, so it is vital to have a good understanding of the environment through which goods are being transported. Given the frequent complexity of customs and port-level bureaucracies, insight from those with practical experience on the ground is vital to understand how business is conducted and how relationships within the port are established and maintained.

To assist this process, many companies rely on the services of third-party logistics providers, which operate at the port and have a greater understanding of the local procedures of how business is conducted and where the potential for delays and demands for corrupt payments may arise.

However, using third-party agents presents its own risks. Under existing anti-bribery legislation, companies are potentially responsible for the actions of agents acting on their behalf. If a customs clearing agent makes a payment to improperly move its client’s shipments to the head of a customs processing line, the client would be responsible for the actions of the customs broker. It is vital that companies put adequate controls into place to ensure, as far as possible, that third-party agents avoid  paying bribes within the port, even if this results in increased demurrage costs.

As companies are frequently able to exercise only limited day-to-day control over external agents, it is important as a first stage that potential agents are assessed through a rigorous pre-engagement screening exercise. Where a company’s goods are transported via a port in which customs services are categorised by a high level of corruption, the company should apply greater scrutiny in selecting its local agent.

Public record information is often difficult to obtain in jurisdictions characterised by widespread corruption, so it is important to assess the reputation and probity of an agent using intelligence from knowledgeable individuals on the ground. Following the vetting process, companies will want to seek a written agreement with any agent stating that the latter will act in compliance with relevant anti-bribery legislation.

However, adequate procedures must extend beyond the engagement process and the signing of a written agreement. As far as possible, continuing dialogue must be maintained. This should extend to training, in native languages if possible. Such an agreement should stress that anti-bribery compliance overrides obligations to get shipments through ports and customs as fast as possible.

A robust anti-corruption policy may at times lead to longer waiting times and fines when shipments pass through different procedures.

Adopting such a policy will involve upfront costs, but will go a long way to minimising exposure to damaging prosecutions in the long term.