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Chapter 13 Security. Corruption The abuse of official position for private gain. The abuse of official position for private gain. Corruption is a transaction.

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Presentation on theme: "Chapter 13 Security. Corruption The abuse of official position for private gain. The abuse of official position for private gain. Corruption is a transaction."— Presentation transcript:

1 Chapter 13 Security

2 Corruption The abuse of official position for private gain. The abuse of official position for private gain. Corruption is a transaction that implies a two-way flow. Corruption is a transaction that implies a two-way flow. In recent decades the rapid development of world trade has brought new challenges for the customs administration. In recent decades the rapid development of world trade has brought new challenges for the customs administration. On the one hand it has increased the need to facilitate and speed up trade, in order to benefit as fully as possible from the positive effects of trade on economic progress. On the one hand it has increased the need to facilitate and speed up trade, in order to benefit as fully as possible from the positive effects of trade on economic progress. On the other hand the possibilities for corruption and smuggling have increased markedly; if the customs regulations have not been modernized, corruption itself can present the means for the facilitation and speeding- up foreign of trade. On the other hand the possibilities for corruption and smuggling have increased markedly; if the customs regulations have not been modernized, corruption itself can present the means for the facilitation and speeding- up foreign of trade.

3 Corruption The supply of corruption depends on the readiness of customs officials to provide it. The supply of corruption depends on the readiness of customs officials to provide it. Of course, that readiness is itself determined by numerous factors. Two major ones are: Of course, that readiness is itself determined by numerous factors. Two major ones are: The salaries of customs officials The salaries of customs officials A corrupt organization A corrupt organization

4 Corruption The demand for corruption is influenced by many factors: The demand for corruption is influenced by many factors: Insufficient supply of customs services Insufficient supply of customs services Protectionism Protectionism The high degree of regulations and complicated procedure The high degree of regulations and complicated procedure

5 Which is the best way to motivate customs officials to work better? The total number of answers Competition in getting employment 5.8 Good salaries 87.7 Bonuses and premiums 20.5 Other kinds of benefits 15 Work evaluation and promotion 44.7 Training opportunities 8.1 Disciplinary measures 10.2 Professional ethics 4.1 Doesn’t know doesn’t want to answer 3.7

6 The best measures for the improvement of work in customs-control points/units Measures % of total number of answers Bigger budget 10 Regularity in fund supply 3 More employees 2 More competent personnel 5 Better training 7 Higher salaries 29 Bigger independence for managers 1 Absence of political influence 3 Result related rewards 11 Better equipment 13 Better organization 7 Better staff relations 6 Employee participation in decision making 3

7 Opinions on the most important causes of corruption in society Causes % answers Poverty33 Moral crisis 16 Bad legislation 4 Heritage from previous regime 5 War, sanctions 1 Political-economic system 3 Lack of control 5 Civil servants’ small salaries 28 Human nature 1 Don’t know 4

8 The most efficient measures against corruption Measures % of given answers Better legislation 14 More frequent rotation of employees 11 Better control and supervision 17 More confidence in judiciary 3 Better cooperation with the police 3 Bigger salaries for customs officials 34 Better organization of customs procedure 8 Fewer discretionary rights for customs officials 3 Educational measures 7

9 Corruption The United States’ Foreign Corrupt Practice Act (FCPA) of 1977 has made it a crime for American firms to bribe foreign government officials. The United States’ Foreign Corrupt Practice Act (FCPA) of 1977 has made it a crime for American firms to bribe foreign government officials. Bribe: when a payment is made for someone to do something illegal. Bribe: when a payment is made for someone to do something illegal. Grease payments (facilitation payments): payments for the purpose of expediting the performance of routine governmental actions. Grease payments (facilitation payments): payments for the purpose of expediting the performance of routine governmental actions. The US Amendment to the Foreign Corrupt Practices Act (FCPA) explicitly distinguishes facilitation payments from bribes, and allows payments used to facilitate the process of "routine governmental action" as long as they are not "inappropriately large." The US Amendment to the Foreign Corrupt Practices Act (FCPA) explicitly distinguishes facilitation payments from bribes, and allows payments used to facilitate the process of "routine governmental action" as long as they are not "inappropriately large."

10 Corruption Five general policies in dealing with corrupt government agencies: Five general policies in dealing with corrupt government agencies: Never participate Never participate Grease payments only Grease payments only Bribes as necessary Bribes as necessary Bribes whenever possible Bribes whenever possible Match local standards Match local standards

11 Dangerous Goods (DG) Capable of posing an unreasonable risk when transported in commerce to health, to safety, and to property. Capable of posing an unreasonable risk when transported in commerce to health, to safety, and to property. Examples are explosives, compressed gas (such as oxygen, propane, aerosols), flammable liquids (such as paint, gasoline, diesel fuel), oxidizing substances, toxic substances (formerly called poison), infectious substances, corrosive substances, and miscellaneous goods that pose enough of a risk in transport to justify regulation. Examples are explosives, compressed gas (such as oxygen, propane, aerosols), flammable liquids (such as paint, gasoline, diesel fuel), oxidizing substances, toxic substances (formerly called poison), infectious substances, corrosive substances, and miscellaneous goods that pose enough of a risk in transport to justify regulation. In the United States, the equivalent term is Hazardous Material. In the United States, the equivalent term is Hazardous Material. Hazardous Materials Regulations (Title 49 CFR Parts ) is the US transportation law on DG. Hazardous Materials Regulations (Title 49 CFR Parts ) is the US transportation law on DG. The purpose of the DOT hazardous material regulations (HMR) is to promote the safe transportation of hazardous materials through the effective communication of information concerning the hazards of hazardous materials being transported. The purpose of the DOT hazardous material regulations (HMR) is to promote the safe transportation of hazardous materials through the effective communication of information concerning the hazards of hazardous materials being transported. In Canada The Transportation of Dangerous Goods Act and Regulations set standards for the movement of harmful chemicals to protect both the public and people moving goods. In Canada The Transportation of Dangerous Goods Act and Regulations set standards for the movement of harmful chemicals to protect both the public and people moving goods.

12 Dangerous Goods (DG) IATA has regulations for DG in air transport. IATA has regulations for DG in air transport. The IATA 'DG Center of Expertise' strives to lead industry efforts to ensure the safe handling of dangerous goods in air transport. The IATA 'DG Center of Expertise' strives to lead industry efforts to ensure the safe handling of dangerous goods in air transport. Ocean cargo is governed by UN’s International Maritime Dangerous Goods Code. Ocean cargo is governed by UN’s International Maritime Dangerous Goods Code.

13 Dangerous Goods (DG) Main areas in the regulations: Identification: DG must be properly identified with its proper shipping name and the technical name. Identification: DG must be properly identified with its proper shipping name and the technical name. Classification Classification Marking: Markings include the proper shipping name, ID number, technical names, up arrows on liquid packages. Marking: Markings include the proper shipping name, ID number, technical names, up arrows on liquid packages. Labeling: All hazardous materials which meet one or more hazard class definition must be labeled as specified in the HMT. Labeling: All hazardous materials which meet one or more hazard class definition must be labeled as specified in the HMT. Placarding requirements apply to each person who offers for transportation or who transports a hazardous material. Placarding requirements apply to each person who offers for transportation or who transports a hazardous material. Placards must be displayed on each end and side of motor vehicle. Placards must be displayed on each end and side of motor vehicle. Placards are required when aggregate gross weight is 1001 pounds or more of one or more classes of hazardous material. Placards are required when aggregate gross weight is 1001 pounds or more of one or more classes of hazardous material. Placards may be required for any weight of explosives, poisonous gases or radioactive materials. Placards may be required for any weight of explosives, poisonous gases or radioactive materials. Packaging: Performance oriented packaging must be used when transporting hazardous materials. Packaging: Performance oriented packaging must be used when transporting hazardous materials. These requirements are based on the United Nations (UN) recommendations on the transport of dangerous goods. These requirements are based on the United Nations (UN) recommendations on the transport of dangerous goods. Effective Oct. 1, 1996 shippers of hazardous materials must use packaging manufactured in accordance with these standards. Effective Oct. 1, 1996 shippers of hazardous materials must use packaging manufactured in accordance with these standards. Each package must be stamped with a UN designation which certifies that the manufacturer meets the performance oriented packaging standards. Each package must be stamped with a UN designation which certifies that the manufacturer meets the performance oriented packaging standards.

14 Dangerous Goods (DG) Documentation: Each person who offers a hazardous material for transportation shall certify that the material is offered for transportation in accordance with the regulations by including a shippers certification statement on the shipping papers. Documentation: Each person who offers a hazardous material for transportation shall certify that the material is offered for transportation in accordance with the regulations by including a shippers certification statement on the shipping papers. This statement might read: This statement might read: “I hereby declare that the contents of this consignment are fully and accurately described above by proper shipping name and are classified, packed, marked, labeled/placarded, and are in all respects in proper condition for transport according to applicable international and national governmental regulations” “I hereby declare that the contents of this consignment are fully and accurately described above by proper shipping name and are classified, packed, marked, labeled/placarded, and are in all respects in proper condition for transport according to applicable international and national governmental regulations” Emergency response: Any person who ships a hazardous material must provide a 24 hour emergency response telephone number for use in the event of an emergency. Emergency response: Any person who ships a hazardous material must provide a 24 hour emergency response telephone number for use in the event of an emergency. The phone number must be listed on the shipping papers. The phone number must be listed on the shipping papers. The telephone number must provide uninterrupted access to emergency information. The telephone number must provide uninterrupted access to emergency information. Training: Employee training is designed to increase an employee’s awareness of safety considerations involved in transportation of hazardous materials, thereby helping to reduce the number of incidents and mitigate their effect. Training: Employee training is designed to increase an employee’s awareness of safety considerations involved in transportation of hazardous materials, thereby helping to reduce the number of incidents and mitigate their effect. Transportation: The carrier is required to refuse any shipment if there is reason to believe that DG is being improperly transported and the shipment has not been offered according to the appropriate regulations. Transportation: The carrier is required to refuse any shipment if there is reason to believe that DG is being improperly transported and the shipment has not been offered according to the appropriate regulations.

15 Security Threats of attack to both cargo and the people involved in logistics process. Threats of attack to both cargo and the people involved in logistics process. Statistics compiled by the Washington, DC-based International Cargo Security Council (ICSC) in 2006 indicate more than $25-billion worth of goods in transit are stolen annually in the U.S. Statistics compiled by the Washington, DC-based International Cargo Security Council (ICSC) in 2006 indicate more than $25-billion worth of goods in transit are stolen annually in the U.S. Two greatest threats to cargo: Two greatest threats to cargo: Dwell time: when cargo is not physically moving. Dwell time: when cargo is not physically moving. Changes in control: those points in a shipment where cargo is being passed from one party to another. Every transaction is a risk point. Changes in control: those points in a shipment where cargo is being passed from one party to another. Every transaction is a risk point. The great majority of theft involves insiders, especially with containerized cargo. The great majority of theft involves insiders, especially with containerized cargo. Some businesses are reluctant to report thefts out of concern for their reputations or their insurance premiums. Some businesses are reluctant to report thefts out of concern for their reputations or their insurance premiums.

16 Security While theft of containerized and “loose” freight can occur anywhere, the FBI estimates that $1- to $2-million worth of cargo theft occurs daily in just three regions of the country but accounts for about 75% of the bureau's estimate for the nation's total cargo theft loss. While theft of containerized and “loose” freight can occur anywhere, the FBI estimates that $1- to $2-million worth of cargo theft occurs daily in just three regions of the country but accounts for about 75% of the bureau's estimate for the nation's total cargo theft loss. The three hot spots as fingered by the FBI are: The three hot spots as fingered by the FBI are: New York/New Jersey: More than $1-billion worth of cargo is stolen annually in this area alone. New York/New Jersey: More than $1-billion worth of cargo is stolen annually in this area alone. Miami: Cargo theft here is “tentatively” estimated as ranging between one-half and three-quarters of a billion dollars. Miami: Cargo theft here is “tentatively” estimated as ranging between one-half and three-quarters of a billion dollars. Southern California: It's estimated that some $500 million worth of cargo is stolen annually in this part of the state. Southern California: It's estimated that some $500 million worth of cargo is stolen annually in this part of the state.

17 Security Some companies contract out security. Some companies contract out security. Some companies prepare a security plan. Some companies prepare a security plan. The human factor in a security report is important. The human factor in a security report is important. Terrorism is another security issue. Terrorism is another security issue. Many national laws forbid companies from doing business with people suspected of terrorism, arm dealers. Many national laws forbid companies from doing business with people suspected of terrorism, arm dealers. After September 11 there have been major changes in US in terms of security. After September 11 there have been major changes in US in terms of security. Transportation Security Administration (TSA), formed immediately following the tragedies of Sept. 11. Transportation Security Administration (TSA), formed immediately following the tragedies of Sept. 11. TSA is a component of the Department of Homeland Security and is responsible for security of the nation's transportation systems. TSA is a component of the Department of Homeland Security and is responsible for security of the nation's transportation systems. TSA oversees security for the highways, railroads, buses, mass transit systems, ports and the 450 U.S. airports. TSA oversees security for the highways, railroads, buses, mass transit systems, ports and the 450 U.S. airports. Employs approximately 50,000 people. Employs approximately 50,000 people. The known shipper is a concept designed to identify legitimate shippers. The known shipper is a concept designed to identify legitimate shippers. TSA maintains a database of known shippers. TSA maintains a database of known shippers. Shippers should protect their cargo from being used as a naïve host. Shippers should protect their cargo from being used as a naïve host.

18 Smuggling Conveying goods or people, without permission, across the borders of a country or other political entity to evade customs duties or import or export restrictions. Conveying goods or people, without permission, across the borders of a country or other political entity to evade customs duties or import or export restrictions. Smuggling is found in the following conditions: Smuggling is found in the following conditions: Large differences in tariffs between countries Large differences in tariffs between countries Large differences in wealth Large differences in wealth Low to medium political controls Low to medium political controls Borders that are difficult to control. Borders that are difficult to control.

19 Smuggling Smuggled products are high-value and low- volume. Smuggled products are high-value and low- volume. Luxury articles, stolen art and other goods, electronic devices and software, and specifically prohibited items such as narcotics are smuggled worldwide. Luxury articles, stolen art and other goods, electronic devices and software, and specifically prohibited items such as narcotics are smuggled worldwide. The United States polices smuggling through various federal agencies, including the U.S. Customs Service, the U.S. Border Patrol, the U.S. Coast Guard, and the Drug Enforcement Administration. The United States polices smuggling through various federal agencies, including the U.S. Customs Service, the U.S. Border Patrol, the U.S. Coast Guard, and the Drug Enforcement Administration.

20 Smuggling Smugglers use several methods to move goods: Smugglers use several methods to move goods: One is to move cargoes undetected across borders. Avoiding border checks, such as by small ships, private airplanes, through overland smuggling routes and smuggling tunnels. Ex: Smugglers move illegal narcotics from Mexico into remote areas of the Southwest United States using airplanes, trucks, and human "mules." One is to move cargoes undetected across borders. Avoiding border checks, such as by small ships, private airplanes, through overland smuggling routes and smuggling tunnels. Ex: Smugglers move illegal narcotics from Mexico into remote areas of the Southwest United States using airplanes, trucks, and human "mules." The other method is one of concealment. For example, a smuggler may hide illegal narcotics in unlikely places on ships or cars, in baggage or cargo, or on a person. The other method is one of concealment. For example, a smuggler may hide illegal narcotics in unlikely places on ships or cars, in baggage or cargo, or on a person.

21 Smuggling Documentation plays a key role in smuggling. Documentation plays a key role in smuggling. Since forged visa and quota documents create problems for legitimate traders, The Electronic Visa Information System (ELVIS) is developed by U.S. Customs and Border Protection. Since forged visa and quota documents create problems for legitimate traders, The Electronic Visa Information System (ELVIS) is developed by U.S. Customs and Border Protection. Foreign countries wanting to participate in the ELVIS, can transmit textile visa data electronically. Foreign countries wanting to participate in the ELVIS, can transmit textile visa data electronically. After transmissions are accepted by U.S. Customs and Border Protection, visa results are returned to the country of origin electronically. After transmissions are accepted by U.S. Customs and Border Protection, visa results are returned to the country of origin electronically.

22 Smuggling ELVIS data moves electronically between government systems. ELVIS data moves electronically between government systems. There is an immediate reduction in the chance that counterfeit paper visas will be used because the information provided by the importer must match the information transmitted by the foreign government There is an immediate reduction in the chance that counterfeit paper visas will be used because the information provided by the importer must match the information transmitted by the foreign government

23 Smuggling Transshipment plays a special role in smuggling as well. Transshipment plays a special role in smuggling as well. Smugglers use transshipment points where security is lax enough to get through but has a good enough reputation so as not to attract attention. Smugglers use transshipment points where security is lax enough to get through but has a good enough reputation so as not to attract attention. Those which have large volumes of traffic so one shipment would not gain as much notice. Those which have large volumes of traffic so one shipment would not gain as much notice.


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