UK: The Bribery Act And The Shipping Industry: Complying With A "Zero Tolerance" Approach To Facilitation Payments In An Imperfect World

Last Updated: 22 May 2012
Article by Kevin Cooper, Lauras Rambinas and Reema Shour

In July 2011, shortly after the Bribery Act (the "Act") came into force, we highlighted in an article that the Act had made facilitation payments a minefield for the shipping industry (see Ince Shipping E-Brief July 2011 at The Act has been described as the most draconian anti-corruption legislation in the world and, unlike the Foreign Corrupt Practices Act ("FCPA") in the US, does not provide any exceptions for facilitation payments, but rather takes a zero tolerance approach.

The difficulty for the shipping industry is that facilitation payments are often a predictable evil in foreign jurisdictions as a means of convincing public officials (e.g. port entry and customs officials) to properly and expeditiously perform the services that they should in any event be doing as part of their job. The incentives demanded are often of low value (typically, cigarettes or some alcohol). A recent report from the British Chamber of Shipping ("BCS"), discussed in more detail below, observes that these payments should be distinguished from the use of financial incentives to secure an (unfair) advantage at a foreign port, for example to jump a queue. This is arguably not proper performance by the relevant official of his role but more an example of "classic bribery", which is also covered by the Act. The BCS recommends rebuffing demands for such payments.

Where facilitation payments are an entrenched feature of a foreign port, a ship-owner (or his representative in the person of the master or local agents) is faced with a dilemma as to how to proceed: to resist attempts by local officials to extort payments and run the risk of delays and lack of co-operation on the ground or, alternatively, to give in to pressure and make a payment in cash or kind that may contravene the Act and potentially lead to prosecution. In view of these very grave concerns, members of the shipping industry entered into discussions with UK government in a bid to obtain guidance for the industry on reconciling its competitive position in the global market with its obligations under the Act.

We summarise below some of the guidance and advice that has since been issued by various bodies, which will be of use to those in the shipping industry.

The Serious Fraud Office

In a bid to address the shipping industry's and similar industries' concerns, the Director of the Serious Fraud Office ("SFO"), the lead UK agency for the Act, recently stated that he had not expected facilitation payments to end the moment the Bribery Act came into force. What was expected was that corporates who did not yet have a zero tolerance approach to such payments should commit themselves to such an approach and to work on how to eliminate them over a period of time. He also invited corporates to approach the SFO to discuss these issues where necessary. From this statement, it would appear that the SFO has decided to take a more nuanced approach to the eradication of facilitation payments and that companies are expected to phase out the making of facilitation payments over a period of time, rather than go "cold turkey". This might give some comfort to those in the shipping industry who had noted the prosecuting authorities' original stance, which required prosecutors to exercise any doubt in favour of prosecution.

Additionally, the SFO has set out some guidelines that may help in avoiding prosecution for those who continue to make small facilitation payments. The SFO will consider:

  1. whether the company has a clear issued policy regarding such payments;
  2. whether written guidance is available to relevant employees as to the procedure they should follow when asked to make such payments;
  3. whether such procedures are being followed by employees;
  4. if there is evidence that all such payments are being recorded by the company;
  5. if there is evidence that proper action (collective or otherwise) is being taken to inform the appropriate authorities in the countries concerned that such payments are being demanded; and
  6. whether the company is taking what practical steps it can to curtail the making of such payments.

Where the SFO answers these questions to its satisfaction and if the SFO believes that the company has a real commitment to phasing out these payments over time and arriving at a zero tolerance position, this can only help to avoid prosecution. The bottom line is that the SFO retains a discretion on how it should proceed in any individual case but transparency appears to be the best means of ensuring it exercises its discretion in a corporate's favour.

It is also worth noting that the SFO has produced a standard form letter designed to be handed out to local officials who persist in their demands for facilitation payments. The letter makes it clear that facilitation payments are prohibited under the Act and that individuals and companies who make them risk criminal prosecution. Presumably the letter is intended to convince those demanding such payments to back off, although it remains to be seen whether it will be sufficiently persuasive.

The British Chamber of Shipping

In March 2012, the British Chamber of Shipping ("BCS") issued its "Guidelines to the Bribery Act 2010", providing additional useful advice for the shipping industry. The BCS highlights the fact that the Foreign and Commonwealth Office ("FCO") has issued advice to overseas diplomatic posts on the purpose and implications of the Act and is encouraging embassies and consulates to engage with local politicians and officials to emphasise the UK's firm stance in relation to the practice of using intimidation tactics to extract payment in cash or kind for fulfilling otherwise routine operations or duties.

Shipping companies with overseas representatives are also urged to assist local consular officials in their discussions and, where possible, provide evidence of corrupt behaviour. Consular officials have also been made aware of the importance of providing concrete diplomatic support and assistance in the event of deliberate delays, harassment of crew, purported irregularities with paperwork or manufactured deficiencies in the ship or equipment. Where individuals or companies prefer, the BCS offers to act as the conduit for reporting demands for facilitation payments or other unacceptable behaviour to the FCO. This may be useful where a company does not wish to be "blacklisted" in some way in a particular port or country for being a whistleblower.

The BCS Guidelines also give some practical advice as to what companies should do in order to comply with the Act. Amongst other things, companies are advised to provide regular training to all employees, agents and subcontractors to explain company anti-bribery policies and how to react to facilitation payment demands. Companies with overseas operations should ensure that their corporate policies are extended to cover the local situation. Where company activities are out-sourced, third party contractors should be required to provide necessary assurances of their own anti-corruption policies and how they are policed and enforced. Of particular interest to ship-owners with established trading patterns, the BCS suggests that there is likely to be more scope for diplomatic intervention at a port that represents an important element in a local economy.

OECD Report

Also in March 2012, the Organisation for Economic Co-operation and Development ("OECD") Working Group issued a report on implementation of its Anti-Bribery Convention in the UK. The Report is lengthy and it is beyond the remit of this article to discuss its findings in detail. In essence, however, the Report acknowledges positive aspects of the UK's fight against bribery such as allocating significant financial resources for foreign bribery investigations. The Report also commends the UK for the significant increase in its foreign bribery enforcement actions, as well as its efforts to increase awareness of the Act and of foreign bribery-related issues.

At the same time, the Report expresses concern that the UK has made slow progress in extending the OECD Anti-Bribery Convention to its overseas territories, some of which are offshore financial centres at risk of being used to facilitate corrupt transactions. The UK is encouraged to adopt a roadmap for remedying this deficiency.

Specifically in relation to facilitation payments, the Report recommends that the UK:

  1. adopts firm criteria for assessing whether companies are indeed moving towards a zero tolerance policy within a reasonable timeframe;
  2. ensures prosecutorial discretion is exercised coherently, specifically that the UK prosecuting agencies, the SFO, the Crown Prosecution Service (CPS) and the Scottish Crown Office and Procurator Fiscal Service co-ordinate their approach on facilitation payments (the SFO has now undertaken to do so); and
  3. use a consistent definition of facilitation payments in published guidance.

The underlying concern of the OECD Working Group about facilitation payments seems to be that the Act imposes a zero tolerance policy, yet the various guidelines issued by the UK authorities suggest a more flexible approach allowing for a transitional phase and adjustment to zero tolerance over a period of time. Whilst the latter approach arguably makes more commercial sense and is more realistic in view of the cultural and practical barriers that need to be overcome, the Working Group seems alive to the risk that potentially conflicting approaches could make affected companies complacent in complying with the Act's clear objective of eradicating the practice of facilitation payments quickly and completely. On the other hand, it was always clear that facilitation payments were not going to disappear overnight and it may well be that a gradual eradication of such payments might be a more achievable goal.


In 2011, an administrative clerk in a magistrates' court became the first person to be prosecuted under the Bribery Act for requesting and receiving a bribe to improperly perform his official functions. He was sentenced to six years' imprisonment last November. This conviction is the only one reported so far but it demonstrates that the courts will take a tough stance over offences under the Act and it is expected that they will do so particularly in the case of corporates, when such cases come before them, so as to provide a strong deterrent to others.

It is not too late for companies who have not yet introduced effective anti-corruption procedures to do so but they should not delay. Indeed, it has very recently been reported in the press that an oil major has put a global chartering manager on leave of absence as it investigates claims that he offered favourable freight rates to a ship-owner in return for cash. There were, at the time of writing, few details available regarding this matter but it appears that the investigation of the individual concerned follows on from claims made by a whistleblower both to the corporate concerned and to the SFO directly. It may be, therefore, that this will lead to the first prosecution relating to the shipping industry.

Another new development is that the SFO has a new director, David Green QC, as of 23 April 2012. Mr Green is a former head of the Revenue and Customs prosecution office and a leading barrister. He replaced Richard Alderman and is reported to be pursuing a more aggressive crime-fighting strategy. In his first interview as SFO director, Mr Green promised to investigate "significant strategic targets" suspected of committing the most complex financial crime and overseas corruption. It is therefore likely to be only a matter of time before we see corporates being prosecuted under the Act.

These developments should act as a wake-up call for companies who do not have adequate anti-corruption procedures in place as yet. Those companies that already have robust anti-corruption procedures may also wish to revisit their existing procedures in the light of the latest guidelines from the SFO and the BCS.

Kevin Cooper regularly writes and speaks on Bribery Act matters and has advised clients on how to minimise their potential exposures in respect of anti-corruption legislation. In the event of any query relating to this article or in respect of compliance with the Bribery Act generally, please contact your usual contact at Ince & Co or Kevin Cooper.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions