Panalpina: The Bribe Came Back as a Freight Charge

In the Panalpina FCPA case, Panalpina Inc. agreed to pay $11,329,369 in the civil settlement over allegations that it paid customs bribes for customers and concealed them in freight invoices. The Securities and Exchange Commission alleged that customers often authorized the payments, then received bills describing ordinary processing or handling fees.

The scale alleged in the parent company’s criminal information was larger: approximately $49 million in bribes between 2002 and 2007. For someone in logistics or accounts payable, the revealing detail is the difference between the service on the bill and the official decision the money bought.

The commission announced its Foreign Corrupt Practices Act settlement on November 4, 2010, identifying Panalpina Inc. as the U.S. subsidiary of Swiss freight forwarder Panalpina World Transport (Holding) Ltd. Its allegations covered payments from 2002 to 2007 in Nigeria, Angola, Brazil, Russia and Kazakhstan.

What Panalpina Handled at the Border

Panalpina’s work put it between customers shipping goods and officials deciding whether those goods could enter a country. The criminal information against the U.S. subsidiary describes freight forwarding, customs clearance and importation services for customers, including public companies. Its Houston office was the hub for oil-and-gas customers, while Panalpina Nigeria handled services locally.

The information describes Nigerian import requirements involving inspections, satisfactory paperwork, duties and taxes. It charged that some customers wanted to bypass those requirements and that Panalpina Nigeria, assisted by the U.S. subsidiary, used customer revenue to pay Nigerian Customs Service officials. The information alleged that the local operation made the payment and billed the customer under an ordinary business description.

That is the commercial setting for customs bribery through a freight forwarder. The person handling the cargo, the person approving the charge and the person entering it into the accounts can each see a different part of the transaction. Here, the criminal information alleged that certain employees and customers understood what the charges really paid for.

Pancourier Charged a Premium Without a Customs Receipt

Pancourier was an express courier service to Nigeria that, according to the subsidiary’s criminal information, customers used to obtain preferential treatment or bypass customs requirements. The information charged that Panalpina billed a weight-based shipping charge and a separate special fee. Customers were told that no government receipt or paperwork would be available for the imported goods.

The information charged that the special fee paid customs officials and appeared on the invoice as a “local processing fee” or “administrative/transport fees.” In that account, the invoice joined a real shipment charge to a disguised payment for getting the shipment through customs.

The customer’s role went beyond receiving a bill. The information described a condition set by an employee of the energy and petrochemical business it called Customer A:

The same charging document alleged that Panalpina Nigeria subsequently invoiced the subcontractor using the revised description and that the customer reimbursed those charges. It also described a subcontractor’s email to the customer in Houston warning that Pancourier was illegal, followed by the customer’s recording of bribes as legitimate customs costs and use of false records in its financial statements.

We see a customer asking for a more comfortable description of the same payment. Changing the words on the invoice allegedly made the bill payable while leaving the customs bribe underneath it. An employee who saw the earlier description or the instruction to change it would know something the final invoice concealed.

Temporary Import Permits for Vessels That Never Left

The subsidiary’s criminal information also charged that Panalpina helped customers keep rigs and vessels in Nigeria through improper permit extensions and false export documents. The temporary import permits described in that document allowed specialized equipment to remain for a limited period. When the permitted period expired, the vessel had to leave before the customer could begin the process again.

According to the information, payments to Nigerian customs officials bought extensions outside the rules. It alleged that Panalpina also created documents saying vessels had been exported and re-imported when they had stayed in Nigeria. Customers allegedly avoided the time and cost of removing them, with bribes billed as “TI interventions” or “TI recycling” costs.

The charging document followed one such payment into a vessel operator’s accounts. A Panalpina Nigeria employee allegedly emailed the operator that an intervention had been provided to customs because the vessel arrived without temporary-import papers. The operator, identified as Customer B, allegedly recorded bribe payments as agent costs and incorporated the false descriptions into consolidated financial statements filed with the SEC.

Noble Corporation shows the same permit mechanism from a drilling customer’s side. In its civil announcement, the SEC alleged that Noble authorized payments through its Nigerian subsidiary and customs agent to obtain false export and re-import documents. The agency said Noble obtained eight temporary import permits with false documentation. For an operations employee, the rig’s actual movements could contradict paperwork that otherwise looked complete.

The Parent Company’s Role in the Payments

The criminal information against Panalpina World Transport alleged that senior management in Switzerland knew of and tolerated bribery. It described customer pressure for speed and preferential treatment alongside management involvement in keeping the practice going.

The parent information alleged that Panalpina used approximately 160 different terms to describe customs bribes in Nigeria, including “CPC Processing” and “Customs Intervention.” According to the charges, those descriptions appeared internally and on customer invoices. We see an elaborate vocabulary for a simple transaction: paying an official to bend the rules.

The parent’s information charged bribery under the Foreign Corrupt Practices Act, while the subsidiary’s information charged it with conspiring to falsify customers’ books and helping a customer make false entries. The customers’ public-company accounts connected the freight charges to financial reporting. The connections between the foreign parent, U.S. operation and customers show up in the charges: the parent information described emails and a conference call involving Houston and Switzerland about a payment to secure a Nigerian logistics contract.

That contract allegation also reached the allocation of the expense. The information described an instruction to split the bribe cost among Panalpina Nigeria, Panalpina U.S. and another Panalpina business because they would benefit from the contract. For a finance employee, the internal allocation could connect the payment to the offices expecting the revenue.

The Ghost Employee Behind an Angolan Contract

The parent information alleged another route to a logistics contract in Angola: billing a government-controlled entity for an employee who did not exist. Panalpina Angola allegedly used the money from that bill to fund cash bribes to an official responsible for oil-and-gas operations. The supposed employee was presented as dedicated to the customer’s project.

That allegation ties the payroll description to government money and the contract decision. We see a public customer allegedly paying for imaginary staff while its payment financed the official’s bribe. Someone who knew the project team could recognize the gap before ever seeing the cash change hands.

Customs Bribery Across Industries

The Panalpina allegations follow the money from the customer to the forwarder, through a customs decision and back into the customer’s accounts. A 2022 Journal of Forensic and Investigative Accounting case study of Fresenius Medical Care describes a similar freight-company route in healthcare. In its account of the company’s criminal non-prosecution agreement, the study describes payments to Saudi customs officials to clear shipments more quickly or avoid penalties and fees.

The study, Fresenius Medical Care: A Case Study on the FCPA, explains that the payments passed through a third-party freight company and were disguised as “handling charges” or “miscellaneous expenses.” The commercial goods were different, but the accounting disguise was familiar. A service provider’s bill supplied a respectable description for a payment to an official.

The Panalpina matter itself reached beyond the freight forwarder. The SEC announced settlements with Panalpina and six oil-services companies, coordinated with the Justice Department’s Fraud Section. The SEC’s investigation connected companies seeking customs benefits with the intermediaries arranging them. That makes the customer’s approvals and accounts part of the story alongside the local agent’s payments.

What Your Part of the Transaction Can Show

The useful payment trail connects the service, approval, recipient and accounting entry. In the Panalpina charging documents, the distinctive evidence included an invoice description changed at a customer’s request, an email explaining a permit intervention, financial entries and an internal allocation of a contract-related bribe. Each could make sense to a person whose ordinary work involved only part of the transaction.

A logistics employee may know what happened at clearance or whether a vessel moved. An accounts-payable employee may know why an invoice was revised, while a project or finance employee may know who approved the charge and which office benefited. We work with you to connect that knowledge to the government decision and the description that entered the books.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Foreign-bribery information calls for a separate assessment of FCPA whistleblower rewards, which we work through with you alongside the payment evidence.

You Know What the Freight Charge Bought

If you saw a customs charge renamed, a permit renewed without a vessel moving or a project billed for someone who never worked there, speak to one of our Whistleblower Experts about the payment behind the paperwork. We build the case around your knowledge and bring in FCPA whistleblower lawyers who understand customs transactions and multinational accounts. We stay beside you, using the approvals, invoices and operating facts to build your strongest FCPA whistleblower case.