Bribery Act is “minefield for the shipping industry”

Legal, Regulatory, Shipmanagement — By on August 1, 2011 at 7:46 PM

According to London Matters fortnight report to which we agree, some shipping companies attempting to comply with the requirements of the UK Bribery Act 2010, which came into force on 1 July, could actually be building a case for their own prosecution.

The warning comes in an analysis by Ince & Co partner Kevin Cooper posted on the law firm’s website.

He notes: “It has been reported that some shipping companies are keeping a record of any gifts or small payments that their employees or agents are obliged to make in order to ‘get things done’ locally. The idea is that if they are open about their procedures, those procedures will be deemed adequate. In truth, they run a risk that those records may well form part of the evidence against them in any subsequent investigation and prosecution.”

Mr Cooper’s analysis makes clear that he believes the Act puts the shipping industry in a particularly difficult position. He says that shipping is regarded as being at high risk of having to deal with corruption because of its operation in 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.

He says that the issue of facilitation payments to public officials to secure or expedite performance of their duties are of particular concern to the shipping industry. Such payments were already illegal under English law but the wide-reaching and extra-territorial nature of the new Act radically changes the situation. In many countries a ship’s master or agent will routinely be expected to make minor donations or gifts to port officials, for example during customs or cargo clearance or to obtain necessary permits. Shipowners fear failing to make these payments could have serious consequences such as manufactured deficiencies and expensive delays caused by officials expecting a “bonus” for doing their job efficiently.

Talks have been taking place members of the shipping industry and UK government officials and, Mr Cooper says, known ‘tariff’ of facilitation payments in various ports around the world was quoted at a recent meeting as evidence of the inevitability of such payments being requested.

Mr Cooper’s analysis goes in to considerable detail, painting a picture that is likely to concern most companies involved in global shipping operations.  He notes that discussions continue with the UK government to establish “whether any comfort can be provided during the ‘transitional period’ following 1 July.”  But he concludes: “Until such comfort is provided, shipowners will continue to face difficulty in deciding how best to implement the requirements of the Act.”

In a separate move Ince & Co announced today the opening of a new office in Monaco. The leading maritime law firm has been granted a licence to practice English law as Ince & Co Monaco SARL in matters relating to shipping and energy in the Principality

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