Cecilia Müller Torbrand, executive director of the Maritime anti-corruption network

The vast experience of MACN makes it possible to address the challenges and key factors associated with maritime corruption in ports and terminals.

During the six months of MACN’s work in Ukraine, did you manage to involve new participants in anti-corruption activities and jointly find the necessary ways to solve the current situation in the ports? Learn more in an exclusive interview with Cecilia Müller Torbrand.

The Maritime Anti-Corruption Network (MACN) provides a unique forum for businesses to contribute to the elimination of corruption in the maritime industry. MACN is composed of vessel-owning companies and others in the maritime industry, including cargo owners and service providers.

MACN was established in 2011 as an industry-led collective action initiative. With a membership of over 140 companies representing about 50% of the world tonnage, MACN has a strong industry voice, and has become one of the preeminent examples of an industry-led collective action network taking tangible steps to eliminate corruption. By working in partnership with the industry, governments, and civil society, MACN has successfully addressed corruption risks through country-specific actions in locations such as Nigeria, Indonesia, Egypt, India, and Argentina. MACN’s initiatives have been welcomed by stakeholders and have resulted in tangible outcomes such as the removal of trade barriers, strengthened governance frameworks, and substantially reduced levels of corruption in maritime trade.

What caused the opening of the HelpDesk in Ukraine? What were the prerequisites for this and how often do people turn to you for help in Ukraine? Which companies suffer the most harm from corruption in ports?

Corruption in ports and the maritime sector is driving up trade costs, particularly in developing countries, where trade costs are already the highest. In Ukraine, corruption is prevalent within many different industries within the country. In the Transparency International’s 2019 Corruption Perception Index 2019, Ukraine scored 30 out of 100 and has been ranked as 126th out of 180 countries globally. Survey results from MACN members (some of the world’s largest companies in the maritime industry) show that Ukraine is perceived as the most challenging country to call within the Black Sea region.

Following member feedback, Ukraine has been identified as one of the priority countries for MACN to engage in Collective Action to lower and potentially eliminate the bribery risks in ports

The shipping industry operating in Ukraine, in particular the dry bulk sector, faces frequent challenges in connection to documentation and on-board practices (e.g. waste disposal, ballast water discharge). The majority of corrupt demands are for large cash payments. Rejecting such demands leads to heavy delays of the vessels and the threat of fines for alleged non-compliance. In recent years, Ukraine has made great efforts to tackle corruption on the regulatory side. However, the existing regulatory framework in the maritime sector is not sufficiently enforced and, as a result, companies continue to face illicit demands. Following member feedback, Ukraine has been identified as one of the priority countries for MACN to engage in Collective Action to lower and potentially eliminate the bribery risks in ports.

As part of the Ukraine Collective Action initiative a local HelpDesk has been set up by MACN through its local partnership with ANK law firm. ANK supports MACN member companies and stakeholders prior to and during port and terminal calls. They will provide initial operational advice to the immediate situation and will liaise with and escalate cases to the local public authorities if required. Additionally, in liaison with the MACN secretariat ANK will support local communication efforts and raise awareness about MACN’s collective action initiative, carrying out an integrity risk assessment of port-related challenges. and assist in developing relevant Integrity Tools.

Any MACN member can make use of this local HelpDesk when calling Ukrainian ports and terminals. Since its inception in September 2020, we have seen increasing usage of the HelpDesk by MACN members.

Incidents happen mainly during vessel clearance processes upon arrival at ports or terminals and primarily demands are made by port authorities such as customs officers, harbor masters, environmental inspectors (ballast water) and port state control officers. There are also cases where the vessel agents have been reported to have made demands

According to the MACN members’ observations, in what areas of activity are there the highest risks of corruption in Ukrainian ports (registration of ships’ arrival/departure, PSC control, internal port operations, customs control, communication with the USPA)?

One of MACN’s many key tools for its members is the Anonymous Incident Reporting System (the system is open to non-members as well). MACN’s anonymous incident reporting system enables maritime stakeholders to submit incident reports when a vessel is faced with corrupt demands during port operation. The results of the anonymous incident reporting allow MACN members to learn from each other to potentially avoid similar incidents in their own operations. MACN has collected over 41,000 incident reports of corrupt demands globally. MACN uses this data to analyze trends in frequency of incidents, allowing MACN to target Collective Action efforts and engage with governments. It has been a successful method to facilitate a constructive dialogue in meetings with governments and other stakeholders. It is important to note that reporting is anonymous and non-attributable, and therefore it is not possible for anyone to identify who has submitted a report, and the report does not include details that would identify ships or individuals.

MACN data received for Ukraine shows that incidents happen mainly during vessel clearance processes upon arrival at ports or terminals and primarily demands are made by port authorities such as customs officers, harbor masters, environmental inspectors (ballast water) and port state control officers. There are also cases where the vessel agents have been reported to have made demands.

What are the priority steps for the Ukrainian authorities to take to fight corruption in the maritime sector?

It is MACN’s view that such reported challenges during inspections and the subsequent fines imposed, do not reflect the safety or environmental regulations currently in force internationally as developed and adopted by the International Maritime Organization (IMO), of which Ukraine is an important Member State. We also believe that adoption and enforcement of enhanced legislation will increase Ukraine’s reputation for ease of doing business and ensure the integrity of the administration through sustained political commitment to the eradication of corruption. MACN stands ready to work with the Ukrainian authorities to resolve these challenges through dialogue, collaboration, and Collective Action.

What are the interim findings (results) of the MACN’s work in Ukraine for the first six months?

The immediate actions taken in setting up the HelpDesk and forming our partnership with ANK have been very successful. MACN memebrs are very keen to make use of the local support provided by ANK. In addition, we also see a growing interest for collaboration with key local private sector and NGO actors, which is encouraging for our Collective Action initiative. We continue with our efforts to reach the local public sector agencies to engage in a dialogue to resolve the challenges faced by the industry.

How did the COVID-19 pandemic affect the work of the MACN and shipowners?

The pandemic has affected everyone globally and this has impacted MACN’s work primarily through a reduction in visits to key stakeholders and local partners across the globe. Nevertheless, we have seen an even stronger appetite from MACN members for change, and we have continued to grow despite the pandemic.

The MACN team have maintained momentum by remaining in close contact with our local partners and continuing to engage all key local stakeholders in respective countries using the same technology as everyone else – Zoom and Teams! The same format was used for our annual members meeting which usually is conducted in person. This year we managed to gather more member representatives to our meetings, across all time zones of the globe.

What are the priority prospects for MACN’s work in the near future?

Continued use of the local HelpDesk and Best Practice Sharing Forum

MACN continues to provide a safe forum for engagement through which the industry can share challenges and best practices, collectively assessing challenges they face during port calls in Ukraine. We will be using MACN’s incident reporting system and member meetings to actively monitor port calls in Ukraine, and to allow the industry to share their challenges with peers.

Our local partner in Ukraine will continue to provide companies facing demands with both operational and legal advice, and will also support companies who would like to report the demands to the Ukrainian authorities via the government’s official reporting mechanisms. MACN will investigate the possibility of making an official complaint to the Business Ombudsman Council to formally escalate integrity issues to the Government.

The key to improving the situation is sharing best practice from successful port calls and lessons learned from unsuccessful port calls.

Engaging with Local Stakeholders and conducting an initial risk assessment of port-related challenges is paramount. In the long term, MACN would like to establish an integrity alliance between relevant government authorities in Ukraine and the maritime industry. Dialogue with government stakeholders is an important element in MACN’s collective action initiatives as we seek to address both the supply and the demand side of corruption.

We look forward to conducting awareness raising events in Ukraine to engage local stakeholders and improve the understanding about maritime corruption and how it can be successfully addressed.

[Interviewed by Alexander Glushchenko]

 

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