Panalpina’s travails

Doing business in Africa is not for the risk-averse. Before wading in, smart companies should heed the lessons Panalpina learned after operating for 54 years in Nigeria.

The Swiss logistics group spent much of 2007 and 2008 struggling with allegations that it had bribed Nigerian officials and undergoing a lengthy probe of its dealings in that country by the U.S. Department of Justice. The company lost millions in profits and spent another $15 million-plus on legal and consulting fees.

In July 2007, 11 oil and oil service companies received a letter from the Justice Department’s criminal fraud unit asking them to describe their relationship with Panalpina. The letter reportedly cited concerns about alleged payments to Nigerian customs agents made by Panalpina that may have violated the U.S. Foreign Corrupt Practices Act. The Securities and Exchange Commission launched a related civil investigation.

“Nigeria has long been known for its corrupt practices,” attorneys Joseph P. Covington and Jessica Tillipman with the Washington law firm Jenner & Block said in a report on the Panalpina situation at the time. “Even those businesses that maintain strict internal controls and work hard to comply with U.S. anti-bribery laws have difficulty with FCPA-compliance in this region.

“Corruption is so prevalent in Nigeria that it is nearly impossible to conduct business in the country without being asked to pay a bribe,” the report said.

Panalpina ceased all Nigerian operations last year. CEO Monika Ribar said at the time that a withdrawal would be in the company’s best interest. In December 2008, Nigeria-based investing group Worldwide Premier Logistics Solution took over Panalpina’s operations in the country.

Contact Janet Nodar at jcnodar@bellsouth.net.