Shipping bribes between government agencies in India brought to light
A story coming out of India this week perfectly encapsulated the two major hurdles the South Asian nation's fragile but explosively growing supply chain sector face — inadequate infrastructure and widespread government corruption.
On Wednesday, Indian news outlets reported that the Shipping Corp. of India admitted paying bribes to Indian customs officials to speed the clearing of its shipments at Indian ports.
Maybe graft doesn't seem that unusual, but the unique situation here is that SCI is a state-run entity, meaning that one division of the government was essentially greasing the palms of another division.
The bribes were exposed recently in an audit performed last winter by yet another government agency, the Central Vigilance Commission, and SCI said the cost to bribe customs officers (about $1,250) was far less than the cost of a Panamax vessel waiting in port for an extra day (about $5,000).
The acknowledgement of widespread bribes by SCI — which operates about one-third of all Indian ship tonnage — should serve as some sort of wake-up call for the logistics industry. While most analysts have fervently complained about India's below par transportation infrastructure, institutionalized corruption may be just as big a problem.
' 'Speed money' is one of the worst-kept secrets of the shipping industry, said former director general of shipping J.S. Gill,' reported LiveMint.com (a joint venture between Hindustan Times and the Wall Street Journal). ' 'Unless you weed out corruption at the ports, our logistics cost will never be under control. If you allow the bribe takers to dictate terms, then they can hold any vessel to ransom.' '
The CVC, in its review, said shipping bribes to customs officers total about $6.25 million a year.
An SCI official told the news agency, 'speed money was a rather touchy issue in the government' and that 'if we don't pay the bribe, then our ships would be held up for days together. Then we will have losses in (millions) for not making these payments.'
Shipping bribes between government agencies in India brought to light
