With strong internal controls, risk management and internal audit driven by a management exemplifying the right behaviours, there is a good chance that unwanted behaviours can be caught…
This year’s edition took place in the very traditional Library Room of the Royal Horseguards hotel, London, a stone’s throw from the Nigeria High Commission. The flavour of the meeting was about embedding ethics in the DNA of global shipping companies to ensure anti-corruption compliance happens more as part of culture than through policing by compliance officers. The event was attended by senior representatives of over 100 companies in the maritime sector.
Interesting issues were considered in the various working groups: agent working group; cargo owners; container working group; dry bulk & tanker group. An interesting topic that generated very a lot of debate was whether or not going cashless would help ship masters resist corruption better or whether or not inclusion of closed circuit television will deter port officials from their attempts to induce bribes out of the vessel. Sitting in the room and hearing from the tanker group for instance, their challenge is typically one of lifting oil from very challenging locations like Cameroon for discharge in kinder locations like Europe.
How does one get a straight link between the desire to do right, be right with catching any errant behavior before it shows up as odd payments in your books? How do you ensure the whole corporate culture traps and flushes out corrupt behaviours? A fascinating session on this involved representative of Nigeria’s Convention on Business Integrity.
The first step in getting the ethical compass of your company is regulatory compliance. This is foundational for everything else you do to underscore an ethical culture in your organisation. It is also a first reflection of the “tone at the top” within the company. Unpacking it further, tone at the top would refer to ethics and integrity demonstrated and demanded by the top people in the company; the board and functioning of its audit committee; the commitment of top management to excellence; the clarity around authority and responsibilities in the company; HR policies and procedures; organisation structure and management’s philosophy and operating style. All these factors create an environment that predisposes members of the organisation to doing the right things and doing things the right way.
Management has then to ensure that it has adequate risk management procedures in place. What are the chances that staff would like to cut corners by paying bribes? In what ways, where, under what circumstances, why? This risk identification and analysis needs to apply to the whole company and to specific vulnerable processes of the company with change plans being driven to mitigate the identified risks. The way of working which minimizes risks and mitigates them should end up in clear policies and procedures employees are required to follow.
The set up and control of technology platforms used for recording and analyzing transactions needs senior management attention to ensure it is structured to support the values and principles articulated for managing the company. Management should also worry about disaster recovery, backups and business continuity strategies to ensure they are continually assured of proper, accurate and timely records of business transactions with the right personnel in place for real-time exception reporting.
The whole company must regularly receive relevant guidance through communication between board, management and the rest of the company. The same thing needs to be done with external audiences as well. Adequate procedures need to be in place to ensure the overall functioning of this system is monitored and evaluated to be sure it functions as designed. With strong internal controls, risk management and internal audit driven by a management exemplifying the right behaviors, there is a good chance unwanted behaviors can be caught in exceptions reports and corrupt payments identified and dealt with. Companies are finding that it is better to identify, trap and deal with such exceptions thrown up by a culture of integrity than for such to be identified by auditors and shown to a blindsided leadership because “your company’s ethical DNA is in your books.”
The inevitable breakout session on Nigeria and West Africa took place with Bonny Terminal dominating the discussions once again. It is interesting how many reports there were of Nigerian officials attempting to squeeze out a bribe from vessel captains and the order of magnitude seemed to be about $20,000 per visit made up of concocted “fines.” A recent survey of ship captains of vessels calling Nigerian sea ports and terminals was presented by the Convention on Business Integrity at the meeting. Confusion around treatment of seaman’s books was a scheme identified as often exploited by Nigerian officials. Ship captains report that despite Nigeria claiming officials boarding vessels should not spend more than 90mins, 100% of vessel captains surveyed claimed officials spent more than 90mins always. 90% of respondents also affirmed that Nigerian officials “always/usually” ask for cash or other items from the galley when they board sea vessels for inspection.
The Convention on Business Integrity has since 2016 represented the maritime anti-corruption network in Nigeria. The Nigerian Shippers Council has been a major actor managing the grievance mechanism available to shippers who wish to report breaches of the standard operating procedures. The Port Service Reforms committee chaired by the ICPC and including TUGAR and leadership of all agencies in the ports has been involved in pushing the reforms. The current survey forms a baseline for Cbi’s engagement activities on behalf of the network. In the baseline, using a 5 star system, all Nigerian sea ports came up red along with Bonny terminal. All other terminals are amber with exception of Ikorodu Light Terminal, Sapele Terminal and Kirikiri Light Terminal 1 which were green. Is this the sort of information to which the Presidential Enabling Business Environment Council should pay particular attention? What has your experience of Nigerian sea ports and terminals been?