All manning agents in Manila wear two hats: crew supplier and money changer. The second function is an incidental adjunct to the first. It is not wrongful or illicit per se, but it has given rise to a silent scam that has gone on for decades.
Under government rules, foreign principals are obliged to remit at least 80 per cent of a Filipino seaman’s basic monthly salary to be paid to his designated allottee through an authorised Philippine bank. The steady stream of greenbacks presents a tempting target for even the most reputable crewing firms.
It is not uncommon for manning agents to shave off a peso or two from the official rate when coverting the money to pesos. Many years ago, when the exchange rate spiked to 56 to the dollar, I found out that one Greek-controlled agency pared down the rate by PHP5.00. Another, a large and respectable Filipino-owned manning company, was not as greedy: it chopped off only PHP2.00.
Such tampering with the dollar-to-peso rate means that families of seamen receive less than they should in allotments. Naturally, the hardest hit are the ship officers as they have higher salaries.
To illustrate, an officer with a basic monthly salary of $2,000 has 80 per cent of the amount or $1,600 remitted to his allottee’s account. Let’s assume that the receiving bank in Manila charges 3 per cent for a net amount of $1,552. The allotment in pesos should be PHP82,256 based on the current rate more or less of 53 to the dollar (the Philippine central bank’s reference rate stood at PHP53.31 for every dollar on 18th June 2018).
If the manning agency knocks off PHP2.00 from the conversion rate, the allotment would amount to only PHP79,152, or a difference of PHP3,104. Assuming that the officer is at sea for 10 months and the exchange rate remains unchanged, his family would have forfeited PHP31,040 or $585.66.
Seen from a broader perspective, the total amount involved in the forex scam is potentially so large as to be mind-blowing. In 2017 total cash remittances from Filipino sea-based workers reached $5.871 billion. If the manning agents trimmed the exchange rate by just 50 centavos and applied it to just a fifth of the total, their collective take would be a whopping PHP580 million.
“It’s a small service fee,” the president of one crewing firm once told me. I was astonished by the cavalier remark. Banks already charge for every dollar remitted. Why should manning agents impose a “fee” when they are not licensed as bankers or even as money changers? It’s a lucrative business and downright dishonest. I am reminded of ‘The Money Changers’, a 16th-century oil painting attributed to a follower of the Dutch painter, Marinus van Reymerswaele (pictured below).
The Philippine Overseas Employment Administration’s Standard Employment Contract (SEC) for seamen mandates crewing agents to follow the official reference rate. Paragraph “C” of Section 8 (Allotments and Remittances) of the SEC as amended in 2010 stipulates that “the allotments shall be paid to the designated allottee in Philippine currency at the rate of exchange indicated in the credit advice of the local authorized Philippine bank.”
That provision is honoured more in breach than in the observance. The violation is easier to pull off if a bank is in cahoots with the manning agency — which would not be suprising at all.
In Manila, seamen are swindled, screwed and shortchanged with more regularity than the city’s unpunctual and unreliable light rail trains. As I wrote in my latest e-book ‘Close Encounters in Maritime Manila‘ (Chapter One: The Great Money Chase):
When I look at all the players, I don’t see a bustling market. I see a mega aquarium populated by a multitude of fishes and other water creatures swirling round and round — the big ones preying on the smaller ones and occasionally on each other. In this enclosed space, to feed oneself is the main point. Ethical considerations are like underwater bubbles that are gone as quickly as they appear.
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