SEAFOODNEWS.COM [The Editor’s View] by John Sackton June 4, 2015 — The world has given a sigh of relief as the US and Switzerland have tackled corruption in FIFA – the world soccer organization where bribery and corruption have been endemic. The FIFA scandal involved a basic pay to play: bribes for votes and contracts.
In the fisheries world, the MSC has a dominant position in seafood certification, and yet it also has a corruption problem. The MSC’s ‘pay to play’ is not explicit bribery, but it is a complex structure of exclusivity that gives some clients the ability to hijack public resources for their own gain. This goes directly against FAO ecolabel guidelines, and this arrangement directly helps the MSC sell certifications, and thereby derive logo revenues.
We have no news yet on how the Marine Stewardship Council is going to resolve its horrendous mis-management of Alaska Salmon certifications. Its current inaction however shows that its commercial model is now morally bankrupt, and must be reformed.
As of today, numerous Alaskan companies, both large and small, are being stonewalled by a rogue client group whose manager, Rob Zuanich, is largely seen in the industry as being driven by personal vendettas.
As a result, his group, called the Alaska Seafood Processors Association, has violated the MSC requirement that it follow a written procedure to allow additional eligible companies to share the certificate for Alaska salmon, which applies to all salmon in the state except in Prince William Sound.
The MSC has allowed a situation to develop where a small minority of users can hijack the public resources of fishery management in Alaska for their own personal gain. And they have done this to support the MSC’s own commercial interest.
Here is why MSC’s hands off stance is morally bankrupt.
Private businesses compete with each other. There are many ways businesses can structure contracts to protect exclusivity, or to exert control over their brand or products downstream. If a private business wants to give exclusive distribution rights to a single company of course they can do so, and in many cases they gain better market access and control through this exclusivity.
But the MSC is not like other private businesses. They do compete with other ecolabels, and they do depend on revenues based on use of their ecolabel.
But they are also a registered public charity in the UK, and even more importantly, they make an assertion of absolute credibility for their standard and claim it is the best mechanism for verification as to whether a wild caught fishery is sustainably harvested. Their business is measuring the effectiveness of public governmental fishery management and giving a third party seal of approval.
Retailers have come to rely on the MSC’s certificates as a shorthand way to ensure they are purchasing from well managed fisheries.
We do not object to MSC’s practice of contracting with client groups. That is standard business practice. But we do object to a failure to contractually enforce how client groups adminster their MSC certificate. It is our contention that the failure to include an enforcement mechanism regarding certificate sharing is a deliberate attempt to profit from unethical behavior by client groups who leverage their exclusivity to discriminate.
The heart of MSC’s claim to legitimacy is that it embodies the FAO guidelines for ecolabels and responsible fishing. One of the key principles of these guidelines is non-discrimination.
A second principle, obvious to conservation groups, is that the mechanisms of certification must not be damaging to fisheries, or take resources away from conservation and management efforts.
Like any organization with a product to sell, the MSC has a sales team whose job is to go out and recruit fishery clients. These are groups who will sponsor MSC certification for their fishery, and who will hire and pay for an assessment body to measure them against the MSC standard.
Without these clients, there would be no revenue to the MSC from the MSC ecolabel.
But what’s in it for the client? When the client is a government group, or a broad based association representing all the users of a particular fishery, it is obvious that the hoped for benefit is higher value and improved market access for the entire fishery.
But what happens when only one or two companies step forward, or a small number of companies seek certification without the support of all users of the fishery.
In this case, the benefit of certification would normally flow to the entire fishery. The unit of certification generally includes the whole area under management. In the case of Alaska salmon, all salmon except in Prince William Sound have been found to meet the MSC standard.
But the MSC contract promises exclusivity to the client group… ie. only to those companies who are named on the certificate. Again, in the case of Alaska, these companies represent less than 20% of the total salmon production.
This promise of exclusivity to a subset of companies is a key driver of the MSC sales process. Companies have been promised help with market access, or introductions to new retail buyers if they sign on as clients. Without the promise of exclusivity, the MSC might have a harder time recruiting companies to be fisheries clients.
But the exclusivity clause violates FAO requirements of non-discrimination.
The MSC tries to fudge this in two ways. First, it says it does not discriminate because any group of companies can form a client group and apply to certify the fishery. Thus it does not matter that they have promised exclusivity to a subset of users, because other users can also apply for the same certification.
But this is not a practical solution, because it leads to multiple certifications of the same fishery.
Every certification requires time and effort from the fishery managers and scientists responsible for assessments to meet with the certifiers, to answer their questions, and to provide them the information. In some cases, these requirements have resulted in huge amounts of time, i.e. thousands of hours, devoted by fishery managers to the certification.
When the MSC allows multiple certifications they are in essence saying they will put more costs on to a fishery management body, solely to make it easier for the MSC to sell the idea of exclusive certification to their clients. This is not acceptable behavior for an organization claiming to support fishery conservation.
Recognizing how bad multiple certifications of the same fishery look to outside observers, the MSC has tried to specify that client groups must have a procedure in place to add new members.
But they largely leave it up to the client group to determine the procedure, and they deliberately have no enforcement mechanism.
The MSC attitude has been to tell clients that they must appeal to the certifying body if they have an objection… that the MSC has no legal authority. This is a dodge.
By failing to adopt an enforcement mechanism, and hiding behind the ‘no legal authority’ argument, the MSC tries to have it both ways – i. e. to promise potential clients a financial benefit from exclusivity, and at the same time hide the fact that the MSC is profiting by requiring multiple certifications in some instances.
This is a corrupt system.
The GSSI (Global Seafood Sustainability Initiative) is developing a benchmark tool for seafood certification schemes. The GSSI governance benchmark should prohibit multiple certifications of the same fishery to the same certification standard.
It is a waste of resources, harms the fishery in question by adding to management costs, and is a vehicle for discrimination and unethical behavior.
To avoid multiple certifications for the same fishery, the MSC should simply enact a contractually enforceable mechanism to add eligible clients to the certificate if the client group fails to adhere to the MSC requirements for certificate sharing. Currently the MSC claims the requirements are ‘guidance’ only, and not legally enforceable. That is a corrupt and morally bankrupt stance if the MSC aspires to be the leader in seafood sustainability certification.
If the MSC fails to resolve this issue, they should fail any benchmark on governance because they have not taken steps to ensure that their own commercial interests in gaining clients will not harm the very fisheries they are telling buyers are sustainable.
In Maine, the cost of duplicate certifications for lobster was more than $100,000.
In Russia, there are widespread reports of corruption on the part of client groups who keep other companies from joining in salmon certificate sharing without bribes or excessive payments.
We have heard many instances where smaller companies are simply blown off and told to go away by client groups.
In Newfoundland, there had to be multiple certifications of cold water shrimp.
And in Alaska, Robert Zuanich has been totally unresponsive to any company wanting to join their client group, from the smallest Yukon river native salmon processor to large companies like Trident, Ocean Beauty and Icicle.
The MSC clearly has a crisis of legitimacy on its hands.
As the near universal acclamation for the FIFA corruption charges show, the world is quickly losing patence with corruption in international bodies. For the MSC, how it resolves the situation in Alaska, and how quickly it addresses its governance problems, will determine if it continues to deserve the leadership role it currently claims.
This opinion piece originally appeared on Seafood.com, a subscription site. It is reprinted with permission.
Read a response to this opinion piece from the Marine Stewardship Council here