Panalpina World Transport (Nigeria) Limited was an agent of the global freight forwarding and logistics services company that operates in more than 160 jurisdictions. Yet, between June 2002 and October 2007, the Nigerian agent paid customs officials to ignore local and legal regulatory requirements for the importing of goods, specifically deep-water oil drilling rigs.
The bribes were allegedly knowingly paid on behalf of Panalpina’s clients (Transocean and Tidewater) and the amounts were subsequently charged to these clients as “load processing fees” or “administration/transport fees” on their invoices.
When Panalpina was finally investigated and charged for this corrupt malpractice by the US Department of Justice (DoJ) in August 2010, the company had to pay $ 70.56 million in criminal fines and $ 11.3 million in civil penalties. Since then, British and European regulators have targeted organizations suspected of engaging in corrupt malpractice in Africa.
At Zero Foundation Africa (Pty) Ltd, we provide comprehensive country risk profiles not only to identify the geopolitical, security and competitive risks you might face, but also to highlight the risk of corruption in that country. Some examples of our findings are indicated below.
In Uganda, the law does not distinguish between “a bribe” and “a facilitation payment”. Corruption risks exist in the police, judiciary and procurement areas where cash payments are the norm. A recent survey conducted by a Kampala-based business NGO (non-governmental organization) reported that one in six companies complain that the legal system is a major obstacle to their ability to conduct business in Uganda owing to political interference.
Botswana is generally perceived to be the least corrupt country on the continent. But, in November 2015, 17 Botswanan police officers at the Kopfontein border post were arrested for bribery when helping a syndicate of counterfeit cigarette smugglers. Also, in August 2018, former President Ian Khama and his Director of Intelligence Services, Isaac Kgosi, were accused of nepotism and patronage with the payment of nearly BWP 30 billion from operational funds to a company styled Power Force (Pty) Ltd. Other companies have since been implicated.
Therefore, mitigating reputational and financial risk in any organization relies on a clear understanding both of the terms used, and the practices involved. Reputational risk is based on the behavior of individuals, whereas financial risk is based on operational decisions.
When you are considering the implementation of an effective risk management programme to protect your reputational and financial assets, learn from our experience.