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TRACE: ‘Shipping exposed to more corruption than any other industry’

TRACE: ‘Shipping exposed to more corruption than any other industry’

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Annapolis: Shipping is hit by more cases of corruption than just about any other industry, Alexandra Wrage, the president and founder of anti-bribery compliance expert TRACE, says in today’s Maritime CEO interview.

“In many ways, the shipping industry is exposed to more levels of corruption than any other industry,” Wrage says, “as it is a global industry that does not have a mature anti-corruption compliance culture.

“This industry,” she continues, “is traditionally very opaque, and has only made a slow shift to greater transparency. Fraud, bribery, and other illegalities are endemic to some parts of the industry, and the world.”

Wrage, a Canadian national now living the US, is the author of Bribery and Extortion: Undermining Business, Governments and Security.

Progress is being made to tackle the scourge however, something that was recognized at the end of March when TRACE named the Maritime Anti-Corruption Network (MACN) the winner of its Innovation in Anti-Bribery Compliance Award for their success in building an industry-wide compliance culture and model that can be replicated by other industries and joint initiatives.

MACN was the first organisation to establish compliance standards for the maritime industry for tackling bribes, facilitation payments and other forms of corruption by developing and sharing best practices and collaborating with key stakeholders to develop sustainable solutions and collective actions programs.

Wrage has plenty of recommendations for how shipping firms should tackle corruption.

“Compliance must be embedded in the commercial activities that drive the shipping industry,” she concludes.

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12 Comments

  1. George
    April 21, 2015 at 10:33 am

    Thank you for the amazing article.

    I have experienced first hand what the corruption can do to a small business providing service in the marine industry.
    Nearly two years ago I have committed “business suicide” when I have reported to the police a corrupt executive in a shipping company that I was doing business with. The corrupt executive was stealing new parts from the ship’s technical stores and was expecting my company to help him resale them on the market, in exchange for giving us service business.
    Needless to say, the company he was working for did not press any charges, although he was busted with a truck load of stolen Caterpillar parts. And in the aftermath of the incident, my company lost the service contract.
    And you would think this is a story from the developing world, but it happened in Canada.
    I hope something can be done to fight against corruption in our industry.
    Thanks again

    1. Robert
      April 29, 2015 at 10:12 pm

      George, your story sounds like a sad one. I would be interested in knowing more, if you can share. My email is robert9621075@gmail.com. It would be kept confidential and could remain anonymous, if you prefer.

    2. Josephine
      May 8, 2015 at 2:06 am

      Would love to get together with those who are willing and write a book from 30 or so years…

  2. Fred
    April 22, 2015 at 9:26 pm

    Good article: Shipping is a common link in many corruption chains.
    George’s experience sounds more like an isolated instance of an amateur corrupt executive … trying to dispose of first-hand stolen merchandise through a first time contractor !
    But to get busted with a TL of stolen CAT parts requires a supply chain and a distribution chain, so he/she must have been moving up in the world. How much time lapsed between these two events?

  3. Anonymous
    April 23, 2015 at 1:45 am

    Nothing new about this…many good people have lost their jobs thanks to a defunct ‘Compliance and Anti-corruption Program” which is erroneous and detrimental to the shipping industry….the practice continues with no end in sight.

  4. Andrew Craig-Bennett
    April 23, 2015 at 8:13 pm

    Most people in shipping assume that corruption is present in many transactions. We make appropriate allowances, and pay careful attention to reputations – of people, of companies and of institutions – which is why “shipping clusters” are important – we all rely on word of mouth to tell us who is to be trusted and who is not.

    It would be a very brave man or woman who “blew the whistle” on a corrupt practice in our industry.

    A ship’s officer might be bribed with a “brown envelope” whilst his bosses might get that shipping industry classic – a very nice mechanical wristwatch, which can be worn on the wrist through Customs with never a second glance, and exchanged for cash, no questions asked, in any of the cities which proclaim themselves as “shipping centres”. I owe this observation to the retired Chief Executive of a very large shipbroker…

    There are occasional successes – the Suez Canal, for example, is a much “cleaner” place than it used to be. A major Class Society has “cleaned its act up” . But really cleaning up this industry will remain a distant dream, simply because corruption in shipping is not a major issue for any of the players. We are aware of corruption but whilst corruption may hinder indvidual transactions and individual businesses, it is powerless against the open market, and ultimately the open market always wins.

  5. david price
    April 25, 2015 at 7:47 am

    It is even worse in the Offshore Oil+Gas Rigs and Ships sector! I lost USD 500,000min
    traceable on a deal which is with the Police for corruption involving a State Oil Co. Wish you well with your activities as the world would be a better place without the corruption

    David

  6. Franck
    April 30, 2015 at 9:44 pm

    Well, its quite a cheap statement made by Mrs. Wrage, who by the way is making her income by selling solutions to avoid the very same acts that she accuses a whole industry for committing.
    To take her media stunt seriously it would of course be interesting if she to the efforts to substantiate her sales talk

  7. Josephine
    May 8, 2015 at 2:03 am

    The chain of Shipping and Logistics have been enablers for fraud and corruption for some Truckers, Packers, Forwarders, Ocean/Air Carriers, etc.. Claims of inhouse ethics standards are followed by few good companies, but not followed by some…

  8. rab
    May 13, 2015 at 11:34 pm

    you are right , flags of convenience , think they are outside the law , many like bankers rotten too the core

  9. Nilesh J Sompura
    July 23, 2015 at 7:12 pm

    My 20 Yrs of Port and Shipping Experience and observations from rest of the Industries, says that problem of Corruption is not Bigger than its Solution.!
    Simple way — Treat Your Profession -Respect Just like “GOD”, Highly Focussed and Prioritized.

    1. mamud Ba
      August 23, 2015 at 5:18 pm

      The only regret i have is not knowing about this forum earlier.
      it is anu exiciting subject I always dreamt discussing about.

      As Manager at MARINE INTERNATIONAL SENEGAL a ship supply company in west Africa I have spent all my life fiercely fighting against Corruption and armed our company with the main credo of a permanent war on any form of corruption more specially in maritime business .

      Unfortunatly the sad conclusion I came to is we are fighting in a losing battle.

      The issue now is not every type of cure is being initiated to topple this cancer but how and why the so-called most civilized country are in a way partipating to maintain and develop it in west Africa.

      Shipping companies procurement or technical managers in North Europ ,North America or elsewhere are indirectly maybe unknowingly taking part of it.

      The main exemple is when they instruct their shiping agent to nominate a shipchandler for them in Africa , the latter is being bestowed the biggest and unexpected occasion to grasp a 20% commission .

      I can admit some do not feel it as a variety of corruption but when it comes to be a mechanism of backmailing suppliers consiting in ” I GIVE THIS ORDER AND YOU GIVE ME COMMISION ” or ” I GIVE THIS SHIP OWNER CONTACT YOU GIVE MONEY . TAKE IT OR LEAVE IT ” then corruption attempt is established.

      Therefor Company like ours will never get orders from them because we refuse to be part of their system.

      Some agents happen to ask money or any other favor even if there is no order or vessel avaible. Corrupted suppliers have to accept for fear they will get orders anymore.

      For sure Shipping companies are not to blame but they need to be focused on this bad system they are participating unknwowly .

      We ate MARINE INTERNATIONAL SNEGAL will always welcome any party to can join us fight against tis desease in shipping industry in West africa.

      thanks to the all participants of the this forum

      Best regards

      Mamud Ba

      MARINE INTERNATIONAL SENEGAL
      SHIP SUPPLIES