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Summary

Panalpina: case study

FCPA case involving a Swiss logistics and freight forwarding company that had paid extensive bribes for the benefit of its clients, illustrating the illegality of facilitation payments.

In 2010, Panalpina and five of its clients in the oil and gas services sector agreed to pay combined civil and criminal penalties of approximately $236 million to the US Department of Justice and Securities and Exchange Commission for violations of the Foreign Corrupt Practices Act (FCPA). The penalties resulted from bribe paying between 2002 and 2007 in at least seven countries, including Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia and Turkmenistan.

Panalpina's logistics business involved the import and export of goods and supporting its clients with customs clearance. Court documents show that during this period Panalpina systematically engaged in bribery to negotiate customs processes. US authorities estimated the total bribes paid by the company over this period at $49 million but these ranged significantly in size, from small cash payments to payments of up to $75,000 per transaction. The bribes served various purposes, including allowing Panalpina and its customers to avoid fines, inspections, and audits; to speed up approvals; to provide false documentation; and often to simply look the other way and allow Panalpina to avoid the customs process all together.

In Nigeria for example, Panalpina provided an express delivery service known as “Pancourier”. It charged a premium for this expedited service which allowed customers to by-pass customs procedures, telling them that no government paperwork or receipts would be provided by the Nigerian Customs Service (NCS). Panalpina also helped large oil and gas clients avoid customs duties on Temporary Import Permits for equipment such as oil rigs and support vessels. Panalpina maintained this service by making hundreds of weekly and monthly payments to government officials in Nigeria working in the NCS, the Port and Maritime Authorities, Immigration Authority, the Police, and Department of Petroleum.

Panalpina's employees had various ways of describing these payments, such as “processing fees”, “sunshine”, and “apples”, using around 160 different terms in Nigeria alone. In some cases, Panalpina characterized the extra fees to public officials as facilitation or facilitating payments. This is a term which originates from the FCPA and allows a limited exemption from pros-ecution for payments to expedite or secure the performance of a “routine governmental action”.