THE CARIBBEAN SHIPPING ASSOCIATION – 12TH CARIBBEAN SHIPPING EXECUTIVES CONFERENCE

FREEPORT, BAHAMAS – MAY 13 – 15, 2013

Allow me first of all to express appreciation for the kind invitation to address this 12th Caribbean Shipping Executives Conference.  I would like also to congratulate President, Grantley Stephenson and his organizing committee for the choice of the subject on which you have asked me to speak “International Trade and Corruption”.  

I congratulate you because as you may be aware, the issue of corruption is a major concern of the global community and of our Caribbean people and hence must be of concern to you_ not just as Shipping Executives but as responsible Caribbean and global citizens.  Indeed an international survey commissioned by  the British Broadcasting Corporation World Service and issued on UN Anti-corruption Day 2010 found that  corruption was the most discussed global issue and rated as the most serious global problem, second only to poverty, in the opinion of citizens  in a wide range of countries across the world. Your Association and you Executives are very much in step with the international community in your focus on this matter in this first business session.

Closer to home, in our hemisphere, the Caribbean and Latin American peoples perceive corruption to be at far too high levels in our respective countries.  In fact, the Latin American Public Opinion Project (LAPOP), last year on a scale of 0 to 100 found that in half of the 26 states surveyed, people perceived corruption at 70 or higher.  And amongst those states where the people perceived corruption as extremely high was Jamaica (75), Guyana (79) and Trinidad and Tobago (81) and the last named being second only to Columbia in the citizens’ perception on levels of corruption.  In one survey in 2010 Jamaican people expressed the view that corruption was that which was most wrong with Jamaica.  

Moreover, these perceptions by our own nationals, accords with the international communities view of us.  Transparency International’s Corruption Perception Index ranks only three of ten CARICOM states surveyed, namely Barbados, St. Lucia and the Bahamas in the top quintile of those of the 176 countries ranked as very clean.  In addition, our main partners in the hemisphere, the United States of America agree with our people in our assessment of the corruption problem.  

The International Narcotics Strategy Report 2013 (INCSR) assesses Jamaica in a way not dissimilar from other states in the region “corruption remains entrenched, wide spread and compounded by a judicial system that is poorly equipped to handle complex criminal prosecutions in a timely manner”.

Of course, you would be quick to observe that perception does not always equal reality and in fact there is evidence to suggest that while peoples’ perception of corruption, particularly in the top brackets of our societies, remains high their actual experience of and participation in corrupt acts is relatively low.  

In any event, hard data on the actual crime of corruption is particularly difficult to track_ a corrupt deed more often than not involves a willing corrupter and an equally willing corruptee.  Hence, unlike homicide or other crimes of that nature, there is rarely a victim complainant; put more starkly, acts of corruption in and of themselves leave behind no corpse, fingerprints, DNA evidence  nor scene of crime to cordon off.

But precisely because of its insidious nature, corruption is akin to a relatively invisible global epidemic affecting all states with more or less devastating impact.  This is why the United Nations found it necessary to promulgate the United Nations Convention Against Corruption, now ratified by most Caribbean states in which the global community expressed concern that “the seriousness of the problems and threats posed by corruption” undermine “the stability and security of societies….the institutions and values of democracy, ethical values and justice….sustainable development and rule of law”.  

In effect corruption undermines the very foundation of institutions on which you depend as Shipping Executives and our very way of life as Caribbean citizens. One Measure of the magnitude of this issue is reflected in the estimate of  the World Bank Institute a few years ago that One Trillion United States Dollars were paid in bribes from private sector to public sector officials around the world, seriously damaging the integrity of procurement systems, discriminating against companies, including shipping companies, that refuse to pay bribes and often ensuring that public sector contracts went to less qualified people, thereby compromising the quality of goods and services provided for our people.

For our part, we come from a region in which our people suffer immensely from under development.  Hence your concern in your professional endeavours must ultimately involve helping to come to grips with this reality. I was therefore very pleased to learn that, most appropriately  the stated mission of the Caribbean Shipping Association is “to promote and foster the highest quality service to the maritime industry….for the benefit and development….of the peoples of the Caribbean region”.  

You must therefore be very concerned at the fact that of the 14 CARICOM states ranked in the 2013 UNDP Human Development Report, not one single country falls in the top quintile rank of the 186 states assessed, not even our best performers, Barbados (38), nor the Bahamas (49).  In this context it is essential to trace and to understand the link between low Human development and high levels of corruption.  That link is explained by the World Bank Institute which concludes “Countries that improve on control of corruption and rule of law can expect in the long run a four-fold increase in per capita incomes” and conversely  a four-fold loss in per capita income for no improvement.  The World Bank Institute further suggests that “the difference can be between two to four percent per annum in the countries annual income growth rates between countries with a different extent of corruption control”.

In respect of development aid, the World Bank again estimated that far from all assistance reaching the targets, to help improve education and schooling, water supplies and road infrastructure, clinics and hospitals – 20 to 40 Billion US Dollars or twenty to forty percent of all overseas development assistance is siphoned off into the pockets of corrupt public officials in developing countries.  Your mission, ultimatelyto promote the development of Caribbean people, must make you determined to comba corruption not only in international trade but wherever it occurs once we fully appreciate the devastating impact our people’s livelihood.

One colleague scholar who has engaged in a deep study of this issue has found that one unit of improvement in political corruption in Jamaica would bring with it an “84.7 percent increase in gross national product, a 1.7 Billion increase in capital formation, a 286.4 Million Dollar increase in foreign direct investment and a 761.6 Million increase in domestic savings” (Michael Collier, 2002).  

In other words, a one unit improvement in political corruption in Jamaica, and the same applies to some other Caribbean states, would facilitate a virtualeconomic miracle, extraordinary improvements in levels of human development and transformation in the lives of so many of our peoples, who remain in conditions of poverty.  And by the way, over five percent of the population in Jamaica has to survive on less than two United States Dollars per day, 18 percent in Guyana, 13 percent in Trinidad and Tobago, 40 percent in St. Lucia and over 77 percent in Haiti_ according to the latest figures in the 2013 World Development Indicators.   

I therefore repeat  _ to the extent that you take your mission of promoting the development of the Caribbean people seriously, to that extent you are compelled to assist in dealing with corruption more effectively in our public institutions, in our private sector, in our societies more generally.

And you as shippers are well placed at an intersection that facilities your effective intervention to build integrity and to combat corruption in a manner that benefits our people.  This is so because, as you know, the welfare of our people in our open economies is largely linked to the effectiveness of our integration into the Global Supply chain, to the volume, value and legitimacy of merchandise trade.  In fact the World Development Indicators 2013 tells us that over 63% of the gross domestic product of 13 CARICOM states comes from merchandise trade.  

This is well above the average of upper middle income countries and greater than every region in the world with the exception of the Middle East and North Africa.  And hence because our raw material base is relatively shallow and our international markets so small, a great deal of our growth and development rests on facilitating international trade.  Equally, much of our Government revenues depend on the collection _and dealing effectively with corrupt evasion _of  international trade taxes and hence the reduction of fiscal deficits, which bedevil almost every single Caribbean state. Much of our growth and develpmennt therefore,   as well, depends on the   facilitation of international trade and the reduction of incentives to corruption in the process of that trade facilitation.

Yet what do we find?  The World Economic Forum in their Annual Ease of Doing Business Report examines “Trading Across Borders” as one of eleven indicator sets.  Of the 185 economies reported on in the 2013 Report on  the Ease of Trading Across Borders, only one, namely, Barbados, of 14 CARICOM states ranks in the top quintile.  

More importantly for our purpose, the difficulties facing importers and exporters in relation to such matters as the number of documents needed to export and import, the time to export and import, the cost per container to export and import only makes trading more difficult than in the vast majority of countries with which we have to compete. But more importantly for our purposes, the red tape, high costs and bureaucracy immensely complicates integrated logistics and transportation management and provides a huge incentive to engage in corruption.  

For example, in Singapore, which ranks number one in the world on the Ease of Trading Across Borders indicator,  it takes five days to export, four days to import and four documents to export and import respectively.  Compare that to Jamaica where, if all goes well,  it takes twenty days to export and seventeen days to import and six and seven documents to export and import respectively.  

Worst, it costs in Singapore 456 US Dollars per container to export and 439 US Dollars per container to import.  Compare that to Jamaica where it costs One Thousand Five Hundred US Dollars per container to export and One Thousand Five Hundred and Six US Dollars per container to import. For our region overall, the average cost per container to export in the 14 CARICOM states is a little under US $1000 and to import over US$1600 per container_ even forgetting Singapore, in Mauritius the comparable costs are US$ 660 and US$695 respectively! These challenges render the Caribbean a relatively uncompetitive link in the global supply chain and, comparatively speaking, a corruption-vulnerable site in the community of international trade

To reduce the temptation of corrupt facilitation payments in international trade in our region, to increase the ease of earning foreign exchange through merchandise exports, a critical lifeblood of our region, this clearly requires an urgent,  frontal and sustained assault on red tape and bureaucracy which both discourages international trade and facilitates corruption.  

To make advances in this area requires an assault on entrenched interests at all levels who benefit from corruption and a coalition of importers, exporters, airlines, ports and airport authorities, trade consultants, customs officials and you, the shipping companies’ executives with one primary purpose_ to build integrity by making it easier and more cost-effective to engage in international trade.  

The elements of an integrity strategy are not rocket science; they are set out in many documents and policy proposals. For example, many imperatives for integrity are outlined in the revised Arusha Declaration of June 2003 of the World Customs Organization.  I mention four – transparency, automation, audit and investigation and a known as well as  enforced Code of Conduct.  Overall, shipping executives  need to be a robust participants  in  the leadership of that coalition for integrity, to reduce corruption, build revenue and grow GDP to the benefit of our people.

Then there is your role in reducing illicit trade and its harmful effects in corrupting public officials, in facilitating organized crime and in damaging the competitiveness of our region.  In this regard, illicit trade in narcotics and arms trafficking, often using your vessels, remains a major scourge in our region.  

For example, in 2012 the authorities in Trinidad and Tobago made five major seizures at sea ports during the year, contributing to the interdiction of over 146 kilograms of cocaine and 2.26 metric tons of marijuana. In Jamaica smugglers continue to use maritime shipping containers, ships, small boats, aircraft and couriers, as the INCSR 2013 Report tells us, “to move drugs into, from and through Jamaica to the United States”.  

In Guyana, cocaine originating in Columbia is smuggled to Venezuela and onward to Guyana by sea and air.  As ou know, Cocaine is often concealed in legitimate commodities and smuggled via commercial maritime vessels or air transport.  

The multi-million dollar proceeds from this illicit trade fuel organized crimes, contaminates state institutions, undermines confidence in the rule of law and underlies homicide rates such that  the Caribbean has the highest murder rate of all regions in the world.  In the context of this reality, You therefore cannot advance your mission to promote the development of the Caribbean people without finding more effective measures, along with the authorities, to investigate, arrest, convict and punish the smugglers as well as their facilitatora, ultimately reduce the illicit use of your vessels as a major cause and consequence of the high levels of corruption in the region.

Let us be clear, we cannot increase levels of human development in the Caribbean without rendering our region a more welcome, efficient, cost effective, productive link in the global supply chain , without  increasing  licit, international trade and without, at the same time, enhancing our global competitiveness.  

Raising investments, both foreign and local, is an important ingredient of this process.  Yet the Global Competitiveness Report 2012/2013 ranks corruption among the top three most problematic factors for doing business in four of six CARICOM nations surveyed namely Jamaica, Guyana, Suriname and Haiti. In this regard, the World Bank points out that corruption and bribery in effect add a 20% transactional tax for investors.

So let us be clear on a simple but critical equation: more integrity and greater efficiency equals  less corruption and less corruption means more investment, more international trade, more decent jobs, less poverty and higher levels of opportunity, of hope, particularly for our youth, and ultimately enhanced human development in the Caribbean.  

On your 40th Anniversary of Independence here in the Bahamas, and Jamaica’s 50th last year, let us renew our confidence in our capacity to cope with these challenges and to achieve these objectives.

After all, we are a people of exceptional talent; we are in the top rank of the international community on  many governance indicators: on freedom of the press we are invariably in the top 10%, very ofte ahead of mature democracies like the United States or the United Kingdom; moreover there is no other region in the world where the people have more consistently, over many decades, ensured that governing parties demit office with little hesitation and oppositions assume the mantle of authority peacefully, through relatively free and fair constitutionally mandated elections, without one-party dictatorship, without military rule, without genocidal civil war.

We can and need to urgently apply the talents which assure these and other accomplishments to the critical task of building integrity in our institutions, in our behaviours and our relationships within our region and with the international community.

May I therefore invite you members of the Caribbean Shipping Association, you participants in this 12th Caribbean Shipping Executives Conference, in your mission to promote the development of the peoples of the Caribbean region to become a critical component  part of the coalition to build integrity and to combat corruption more effectively. May I wish this Conference all the  very best in your proceedings and conclusions.

Munroe said this practice was being perpetrated by a number of the country’s employers. According to Munroe, while Jamaica has many “good laws, codes, and regulation” which help to define ethical standards in the workplace, there was enough evidence to suggest that workers were being unfairly separated from their jobs on the grounds of redundancy.

READ MORE: http://jamaica-gleaner.com/gleaner/20130504/lead/lead21.html

More importantly, I want to congratulate you for your choice of subject on which you have asked me to speak “The Importance of High Ethical Standards in the Work Place”.  In the first place you Rotarians, as members of that substantial global movement  Rotary Intrnational, need very little reminder as to what is meant by ethical standards nor by ethics generally.  Your 34,000 Clubs and 1.2 million members, including members of the Rotary Club of Liguanea Plains share a common mission “To provide service to others, promote integrity and advance world understanding” among other things.

Your four way test includes two questions – Is it the truth? Is it fair to all concerned? Words and deeds which answer those two questions in the affirmative uphold ethical standards and, conversely, dishonest words and unfair actions violate ethical standards.

Regrettably, it is increasingly apparent had more leaders in the international community, particularly the CEOs, Auditors and Accountants, in the financial sector telling the  truth about their balance sheets, practicing fair play with their clients, their internal and external stake-holders, and generally upholding ethical standards, neither the international community nor national economies, including our own, would have experienced and continue to experience the economic crisis which caused so many hundreds of thousands to lose their jobs and so many millions, especially of young people, not to be able to find decent work or to suffer loss of employment. 

In fact, in the recent World Economic Forum survey, over two thirds of the one hundred and thirty thousand participants surveyed from various countries including France, Germany, the United States, India, Israel, South Africa among others associate the current economic crisis with a crisis of ethics and values.

What we mean by ethics and ethical standards_ applicable in all spheres, including the work-place_ is not rocket science. Each of us, at least from my generation was taught “talk the truth cost it what it will”; from the good book we  also learnt when we were knee high “to do unto others as you would have them do unto you” ; we accepted that each of us has to be our brother’s keeper.  Clearly, the socialization process through which so many of us learnt these standards has been severely fractured and is in urgent need of repair.

That repair has to include conversations such as we are having this evening; the resuscitation of the household, the community, the church, the media and very importantly the formal institutions of training and education as organs for the  revival of ethics.  Hence in all of our professional training and recertification processes – as managers and business people, as lawyers and doctors, as bankers and academics, formal instruction in ethical conduct needs to be strengthened.

Applied to the work place one of the first imperatives must be that our word is our bond.  Consider Jamaica as one big work place.  Consider if our authorities had kept their word in relation to the agreement which we signed with the International Monetary Fund in 2010.  Our authorities committed then to implement a number of agreements, including Public Sector Reform by December 2012; Reform of Tax Incentives by September 2010.

In return the International Monetary Fund and other multi-laterals had committed to Jamaica 2.4 Billion US Dollars over a two year period, representing the largest financial commitment to Jamaica by multi-lateral financial institutions with much of it front-loaded.  Then our word was not our bond_ We did not live up to our commitment and no one can honestly doubt that this contributed to a deepening of our economic crises in so many ways that  are now impacting each and every household in Jamaica – with the devaluation of our currency, the rapid increase in the cost of living and most of all the frustrations and alienation from Jamaica, increasing every day, being felt amongst our young people.

 A high ethical standard must mean promises made have to be promises kept.  Both because keeping your word should be a value in itself.  But more so because breaking your word reduces trust confidence with dire consequences.  This administration had better learn this lesson. 

I and NIA have been associated with producing the Jamaica Civil Society Coalitions’ Jamaica Governance Scorecard 2012/2013.  To summarize our findings, the Government during this period made 35 promises, 9 have been kept, 11 are still in the works and 15 have been broken, that is over 40 percent. 

This is far from good enough. This record has got to be transformed in going forward to the 16 performance reviews scheduled with the IMF over the next 4 years. To ensure promises made are promises kept on our behalf demands the establishment of a serious ‘ oversight committee’, such as the one co-chaired by Richard Byles and Bryan Wynter.

More than that, it is going to require each of us knowing what are these performance indicators , what do each need to do to make sure they are met and, most of all, it  is going to require that each of us help to hold the Authorities to account to fulfill commitments made on our behalf, commitments which if not met shall have the most dire consequencies in deepening our economic crisis. Towards this objective, each of us , each citizen who tries to uphold ethical standards, and I dare say Rotarians, with your mission to promote integrity, need to hold ourselves,  Government, and our authorities generally, to account.

Moving from the national work place as a whole to specific businesses and work places; how and why should we uphold  ethical standards?  This requires not just making sure our word is our bond but compliance with the laws, regulations and codes of conduct governing these standards at the work-place.  In a word it requires making that owners, managers and employees at all levels make the “right” choice, take the moral option, especially when other alternatives are very attractive and especially when you can “get away with” a less ethical choice.

In this regard, there is here, I suggest, a developing if not a full blown crisis, not only in Jamaica, but elsewhere as well.  In the United States for example, the 2011 National Business Ethics Survey found that 45 percent of employees observed misconduct at the work place and ,believe it or not, this was an improvement on 49 percent which witnessed work place misconduct in 2009.  Very worryingly, 22 percent of employees who reported bad behavior said they experienced some form of retaliation, a 10 percent spike over the prior survey’s result.

In Jamaica we have many good laws, codes and regulations which help to define ethical standards in the work place.  Of course, there is also room for improvement but moreso compliance.Perhaps the most important of these guide-lines are set out in  the Labour Relations Code under the Labour Relations and Disputes Act.  The Code, with near force of law, imposes obligations on employers to develop “good management practices and industrial relations policies which have the confidence of all”.  Amongst the obligations that the employers are required to ensure are “respect for the workers rights to belong to a trade union and for such trade unions to negotiate for improved conditions of workers.”

Amongst the more important personal management practices required by this Code at the work place relate to “security of workers” particularly in respect of redundancies.  Ethical conduct spelled out in the Code rules out overnight, ‘ nicodemus-like’ separation of workers from their employment and demands that “all reasonable steps to avoid redundancies” be taken in consultation with employees and that in consultation, employers should  actively develop contingency plans to ensure that workers do not face undue hardship as well as receive assistance in securing alternative employment.

Evidence suggests that far more needs to be done to uphold this ethical standard.  In 2011, there were 124 industrial disputes related to “dismissals and suspensions”, this jumped to 230 in 2012, the most significant subsector contributing to these disputes was financing, insurance, real estate and business services.

Moreover, at the very minimum, upholding ethical work place standard requires not only observing the Codes but the law.  Last year, the Ministry of Labour and Social Security recorded almost 7000 complaints regarding breaches of core labour legislation, over 50 percent of these relating to the laws governing redundancy and the minimum wage.  Happily this represented an improvement on 2011, where almost eight thousand five hundred complaints were recorded.

But these complaints are far too many, reflecting the fact that either employees are not understanding the law or owners and managers are not in compliance with the legislation.  To the extent that employees feel aggrieved, it does not take rocket science to see that one consequence of this is a poor attitude to work and a further consequence thereby is low levels of productivity.

Low levels of productivity at the work place is perhaps one of the most significant contributors to our sustained economic crises, in which GDP per capita has grown by less than one percent per annum for over 40 years and today is only where it was 40 years ago in 1973.

This could hardly be otherwise, if as the Jamaica Productivity Centre reports, between 1973 and  2007, labour productivity declined at an average annual rate of 1.3 percent and total factor productivity (including other elements such as organization, technology, innovation, etc.) declined by almost two percent per annum.  One central reason therefore for improving ethical standards in the work place is to enhance a more positive work attitude and thereby assist in arresting the decline in labour productivity.

Leadership is critical in ensuring this turnaround.  Leadership at the national, political, private sector and civil society levels but also leadership at the work place.  Already the levels of inequality in income, the gap between the top and the bottom is not only the highest in the Caribbean but in the hemisphere – breeding levels of social envy, resentment and making it more difficult to build the high levels of cooperation required to strengthen social capital, an indisputable element of economic growth.  So at the work place,  leadership carries a special responsibility, to practice the honesty which it so often  preaches,  to avoid “the do as I say but not as I do” approach.

Leadership has to be seen to treat employees at all levels and of both genders with fairness – to avoid, for example, the perception and the reality of high levels of sexual harassment, recently reported particularly in the hospitality and tourism sectors.  Work place leadership,  particularly that on behalf of foreign investors, whom we welcome, must uphold the right of workers to unionization and avoid discrimination and victimization against those who seek to exercise this fundamental right.  Ethical leadership at the work place requires that not only that employees make sacrifices through wage freezes when times are bad, but owners and managers as well and that when circumstances improve, the information is shared and all participate in the fruits of that improvement, not just top management, owners and shareholders.

As is now being stressed, correctly so in my opinion, by all leaders in our society, Jamaica and Jamaicans do have the capacity to pull our country and ourselves out of this deep crisis which now places us at number 90 of 140 odd countries ranked globally in terms of competitiveness – following eight successive years of decline – number 85 of 185 countries ranked internationally in terms of Human Development, after two years of decline.

We are a people of exceptional talent and extraordinary capability.  We can and should rank in the top ten percent as we do when it comes to Freedom of the Press on every positive indicator.  For us to accomplish this transformation, amongst the many things which we have to do, it is critical to practice high ethical standards in the work place.  In fulfilling that imperative, given your mission “To Promote Integrity”, you Rotarians have a fundamental role to play.  We in NIA want to encourage sincerely and look forward in this regard with anticipation to  partnering with you and indeed with Rotarians in the 30 odd clubs across Jamaica to advance this fundamental mission on which so much of our future depends.

JCSC – NIA Jamaica Governance Scorecard 2012-13

National Integrity Action and Institute of Chartered Accountants of Jamaica recently collaborated and hosted a forum entitled“Combatting Corruption, the Role of the Professional” at the Knutsford Court Hotel. Seen in photo left to right are: Professor Munroe, ED, NIA; Mrs. Pamela Monroe Ellis, Auditor General; Selvin Hay, Head of the Anti corruption branch of the JCF; Dirk Harrison, Contractor General and Vintoria Bernard, President of the ICAJ

National Integrity Action in its continued programme of building integrity and combatting corruption in all spheres of the Jamaican landscape, joined forces with the Institute of Chartered Accountants of Jamaica to host a public forum under the theme: “Combatting Corruption, the Role of the Professional”.

Harrison, who was addressing the Jamaica Constabulary Force’s Staff and Junior Command Course graduation ceremony, told the officers that as they take up their duties, they should strike a balance between professionalism and friendship.

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A whistleblower alleges that McCormick paid millions of pounds in bribes to at least 15 senior Iraqi officials. This resulted in over 6,000 fake bomb detectors sold to the country, hundreds of people killed because of them, and McCormick pocketing £55 million from the Iraqi government for the job.

READ MORE: http://www.trust.org/item/20130424095632-ak6fq/?source=hpblogs

Up until now, the Turks and Caicos Special Investigation and Prosecution Team headed by Helen Garlick has said it only wanted former Premier Michael Misick to return for questioning in a criminal investigation of government corruption.

But a statement Thursday by Garlick acknowledged that Misick will have to join 10 others, including four of his cabinet ministers, in defending allegations that they illegally sold government land for a profit and cut other sweetheart deals to enrich themselves during their tenure in office.

More than 200 people died and more than 1,000 were injured following the collapse of a building that housed several garment factories in Savar, near the capital city of Dhaka. While families mourn loved ones lost, the nation is asking how yet another preventable catastrophe in the workplace took such an enormous toll.

Savar’s tragedy is not the first; violations of building codes and faulty inspections have caused fatal accidents before. In November of last year, a fire swept through a textile factory outside of Dhaka and claimed the lives of more than 100 people. In 2005, 73 people were also killed in a different garment factory in Savar.

READ MORE: http://www.transparency.org/news/feature/in_bangladesh_corruption_kills_hundreds