This article was republished with permission from FCPAméricas Blog, for which Matteson Ellis is founder, editor and regular contributor.
A client shipping company recently experienced a bribe demand during a port call in a high corruption risk jurisdiction. For some time in the shipping industry, there had been discussions as to whether it was best to leave these types of issues to experienced ship captains to handle, or if it was more effective to escalate them as a way to get corrupt officials to back down from their demands. In this case, escalation proved successful. Consider the following sequence of events:
- The ship was making a port call in a country known for corruption risk.
- During a routine inspection, local customs officials boarded the vessel. The officials reviewed documentation such as passports, seaman’s books and vaccination records.
- After reviewing the documents, the local officials asserted various violations. They claimed that three crew members had invalid professional ranks of “trainee” listed on their employment contracts. They claimed that 12 crew members had invalid yellow fever vaccination records.
- The customs officials requested US$2,000 for each fine, claiming a total fine of US$8,000. Then they offered to settle the violations on the spot for a reduced fine of US$2,500 total.
- The customs officials said they would take the crew member documents with them back to the customs agency if the ship captain refused to pay the fine.
The shipping company had an anti-corruption policy in place, and it also had a copy of the policy of the company that was chartering the ship. The ship captain and operations personnel had been trained on how to respond to situations like these. The training addressed how to distinguish between situations of financial pressure and situations that implicated personal safety and duress. Based on compliance protocol, the ship captain immediately took the following steps.
- The ship captain informed the customs officials that the shipping company had a strict zero-tolerance anti-corruption policy. He said that he was not authorized to let them take the crew documentation off the ship, per company policy. He said that the fees associated with the port call had already been paid in full by the shipping company and that he was not authorized to make any cash disbursements to officials while at port. He also said that he was not authorized to give out any goods from the ship’s bonded store.
- The ship captain immediately escalated the issue to the shipping company’s Technical Manager. The Technical Manager then immediately sent an email to the head of the local customs agency, copying numerous managers and directors from the shipping company, representatives from the company chartering the ship and the local port agent that the shipping company had retained. Over 20 people were copied on the email.
- The email recounted details about the demands, reviewed the same company policies that had been voiced by the ship captain and provided substantive responses to the violation claims of the customs officials. For example, the email explained that all crew members were in full compliance with acceptable title descriptions under the ship’s Flag Country rules. The emails stated that all medical records were kept in strict compliance with the Flag Country’s regulatory requirements.
- In his email, the Technical Manager stated that neither his company nor the charterer would be held responsible for any delays caused by the “fraudulent violation claims.” He threatened to notify the company’s Protection and Indemnity Insurance Club about the situation.
- Less than an hour later, the customs officials left the ship, allowed the charterer to commence loading operations and rescinded their improper demands.
Companies can take the following lessons from episodes like these: make sure a relevant compliance policy is in place, everyone is trained on policy, operations are in full compliance with relevant rules and rapid response strategies are in place to deal with improper requests when they occur. This episode shows how escalation can often be a successful remedy to challenging corruption encounters.
The opinions expressed in this post are those of the author in his or her individual capacity and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author`s employers, other contributors, FCPAméricas or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.
Matteson Ellis serves as Special Counsel to the FCPA and International Anti-Corruption practice group of Miller & Chevalier in Washington, DC. He is also founder and principal of Matteson Ellis Law PLLC, a law firm focusing on FCPA compliance and enforcement. He has extensive experience in a broad range of international anti-corruption areas. Previously, he worked with the anti-corruption and anti-fraud investigations and sanctions proceedings unit at The World Bank.
Mr. Ellis has helped build compliance programs associated with some of the largest FCPA settlements to date; performed internal investigations in more than 20 countries throughout the Americas, Asia, Europe and Africa considered “high corruption risk” by international monitoring organizations; investigated fraud and corruption and supported administrative sanctions and debarment proceedings for The World Bank and The Inter-American Development Bank; and is fluent in Spanish and Portuguese.
Mr. Ellis focuses particularly on the Americas, having spent several years in the region working for a Fortune 50 multinational corporation and a government ethics watchdog group. He regularly speaks on corruption matters throughout the region and is editor of the FCPAméricas Blog.
He has worked with every facet of FCPA enforcement and compliance, including legal analysis, internal investigations, third party due diligence, transactional due diligence, anti-corruption policy drafting, compliance training, compliance audits, corruption risk assessments, voluntary disclosures to the U.S. government and resolutions with the U.S. government. He has conducted anti-corruption enforcement and compliance work in the following sectors: agriculture, construction, defense, energy/oil and gas, engineering, financial services, medical devices, mining, pharmaceuticals, gaming, roads/infrastructure and technology.
Mr. Ellis received his law degree, cum laude, from Georgetown University Law Center, his masters in foreign affairs from Georgetown’s School of Foreign Service, and his B.A. from Dartmouth College. He co-founded and serves as chairman of the board of 
