Maritime anti-corruption initiatives have emerged in the last decades as a response to the growing threat of transnational corruption in the maritime domain, specifically in the shipping industry which is responsible for around 90% of world trade.Pyman, M., & de la Blache, E. V. (2021) Curbing corruption in Shipping: Sector reform experience & strategies. Available at: https://curbingcorruption.com/sector/shipping/ In the past, paying bribes at ports to pass through customs was perceived as normal behavior, but such activities resulting in higher operational costs lead to increasingly stricter national and international anti-corruption regulations being put in place.
Initially, international conferences addressing the safety of life and prevention of collisions were the basis for anti-corruption regulation. In the second half of the 20th century, many organizations were formed, such as the International Association of Ports and Harbors, the Baltic and International Maritime Council (BIMCO), and the International Maritime Organization (IMO) - originally named Inter-Governmental Maritime Consultative Organization (IMCO) – which are still relevant actors in maritime industry governance today.
Regulatory improvements in the industry included e.g., the Port State Control system, established in the early 1980s. The purpose of the system was to enforce regulation on ship operators who bypassed previous rules by “flagging out” to commercial registries. The Port State Control officers check vessels for compliance with international standards (ratified by the home state of the vessel). Serious transgressions can lead to fees, detainment of ships and in the worst case, the loss of the entire business. In time, the level of authority granted to Port State Control officers led to corruption spreading among them, officers frequently demanding bribe in exchange for a positive report.
Two decades after the launch of the Port State Control System, in 2002, the IMO extended the ‘Safety of Life at Sea Convention of 1974 (SOLAS) with Chapter XI.2 (Special measures to enhance maritime security). Thus, the organization approved the ‘International Ship and Port Facility Security (ISPS) Code’, which increasingly helped to differentiate between maritime safety and security.Sergi, A. (2020). The Port-Crime Interface A Report on Organised Crime and Corruption in Seaports. Essex: University of Essex. The ISPS code also clearly outlines port security-related requirements and a list of recommendations to meet these for all shipping companies, port authorities and contracting governments.
Beyond the IMO regulations, states also declared mandatory national initiatives in parallel, which bind vessels and cargos to further regulation when sailing through certain waters. The increasingly international nature of shipping and its regulations have led to private and public actors engaging in collective initiatives from the 2010s onwards, typically manifested through the Maritime Anti-Corruption Network.
Forms of Maritime Corruption Corruption can be defined in various ways. For example, according to the Oxford Dictionary, corruption is “dishonest or illegal behavior, especially of people in authority”.Oxford Learner's Dictionaries (2023) Corruption, definition, Oxford Learner's Dictionaries, oxfordlearnersdictionaries.com - https://www.oxfordlearnersdictionaries.com/definition/english/corruption Huntington (1989) defined it somewhat differently, by describing corruption as “the behavior, exhibited by public officials which deviates from accepted norms in order to serve private aims”.Huntington S, 1989. Modernization and Corruption. In Political Corruption. A Handbook. Heidenheimer A, Levine V., Eds., New Brunswick: Transaction Publishers, pp.377-388. These definitions are also correct for maritime corruption specifically, however, in this field corruption can be categorized in different ways – especially at ports.
Sequeira and Djankov (2014) distinguish between two types of corruption at ports: collusive and coercive corruption. Under collusive corruption, public officials and private agents share illicit transaction-generated rents, while under coercive corruption, public bureaucrats force private agents to pay additional fees to be able to gain access to public services and goods.
Maritime corruption can also be grouped according to its different forms. DiDomenico (2020) categorizes bribes and facilitation payments as the most common forms of maritime corruption, and lists other forms such as gifts, compensation, contract awards and promises to influence decision, vote or outcome.DiDomenico, V. C. (2020). Finding True North: Reducing Maritime Corruption at Sea and Ashore through Legal and Operational Mechanisms. Tul. Mar. LJ, 45, 139.
Lastly, maritime corruption may be categorized according to various fraud scenarios,Deloitte (2015) Fighting corruption in the maritime industry, What you need to do to navigate in transparent waters, deloitte.com - https://www2.deloitte.com/content/dam/Deloitte/in/Documents/finance/in-fa-fighting-corruption-in-maritime-industry-noexp.pdf such as:
under-invoicing, where the merchandise in question is declared of lower value than the actual sale price in the invoice, bribes paid to gain contracts, where large shipping and commercial vessel companies bid for long-term contracts from large exporters, illicit payments to marine surveyors, so that the surveyor is paid illegally in order to give a better review of the inspected vessel, facilitation payments to customs officers, where bribes are paid to officers to ensure smooth customs procedures and to turn a blind eye to certain procedural requirements, and illegal purchase of letters of credit, where payment is promised for certain documents which validate that goods have been delivered as required.
Maritime corruption as a cross-cutting, facilitating crime Crucially, scholars have also been pointing out how corruption is a facilitating crime to other illegal activities in the maritime domain. DiDomenico herself mentions corruption as a crime that cultivates a “toxic environment” for e.g., fraud or tax evasion, which can deter foreign investment and can halt economic growth in the given country. Individual corruption of port employees, police, custom or border agents is also seen as a key enabler to illicit trade and trafficking, as getting across border security, checks, taxes and other forms of certifications require inside (specialist) knowledge. Finally, Krause Hansen (2018) connects maritime grand corruption to a much wider scale, by suggesting that it may be entangled with illegal financing of political parties and extractive operating in areas of limited statehood.
Corruption in the shipping industry Elements of the maritime industry such as seaports and terminals have always been important areas of social and economic opportunities. Ports are key strategic sectors, playing key economic, internal and international security roles for both developed and developing countries.Operations at Nigerian Sea Ports & Terminals (Report). Convention on Business Integrity. 2018. The strategic importance of ports and other maritime resources have led to the industry being criticized by Maersk, a major shipping company, as "an environment where facilitation payments and extortion are common occurrences". In the EU specifically, coastal regions and major sea ports have shown to present the highest risks of corruption. Europe's coastal borders have increasingly been subject to corruption pressure by smugglers in the past few years. In addition, border guards and local government officials are often involved in corruption schemes related to cross-border trade. Typically, in European small coastal towns, the corruption of border guards is often related to corruption in local authorities.Anti-Corruption Measures in EU Border Control. Center for the Study of Democracy. 2012 Several ports in Europe have been identified by the Center for the Study of Democracy as having extreme vulnerability to corruption pressures:
Greece: Patra Port Igoumenititsa Port Pireaeus Port Spain: Port of Meililla Ceuta Port Blue borders near Galicia France: Marseille-Porto Vecchio Sea Port
There are several possible causes of this dangerous environment, and many point to the very nature of the shipping industry. Frequent port calls all over the world, each country with different laws and regulations, mixed with heavy bureaucracy leaves the crews of these ships exposed to abuses of power and demands for illicit payments by the port authorities and government officials. The Conference of Business Integrity listed several factors that contribute to the shipping industry's struggle with corruption:
The presence or lack of clear procedures in any areas of port operation; Exercise of discretionary powers by customs officers and other port agencies; Existence or absence of a system of bottlenecks made possible due to wide discretionary powers of port officials (and the likelihood of these being used to create extortion opportunities); Payments for services not rendered by port agencies; Availability or absence of complaints/feedback desks/redress mechanisms and the effectiveness of such where available Due to these challenges, corruption in the maritime domain lives and breathes, which cause several risks and costs to the industry as well. Vanessa C. DiDomenico (2020) summarized these risks and costs as follows:
First and foremost, if compliance with local requirements is not fulfilled, the very safety of the ship's officers and crew is in jeopardy. Corruption can also be very costly for business – according to Andy Knight and his colleagues, it may put an extra 10% financial burden on the costs of doing business at various ports of the world Corruption can also create inequalities in the free market by slowing down processes for businesses seeking to remain honest. Additionally, the differing anti-corruption laws of individual countries can also cause concerns about companies’ competitiveness under stricter and less-stringent legislation
There are also social costs to corruption such as:
Corruption leads to further inequalities, extremism and conflict within society, as it targets the vulnerable and poor segments disproportionately – especially in developing countries where cargo must travel from the ports through inland communities. Due to corruption, public resources originally set aside for services, such as infrastructure projects, healthcare or education, may be redirected to tackle corruption.