A Change of Guard

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Friday, 16 September 2016

The cargo ship called the Pu Hae, formally known as the Sky Peace, in 2008. west-jp/ShipSpotting.com
The cargo ship called the Pu Hae, formally known as the Sky Peace, in 2008. west-jp/ShipSpotting.com

History of crimes, ineptitude for Cambodia’s flag of convenience scheme

The Cambodian shipping register rescinded hundreds of so-called flags of convenience last month. In doing so, it began to draw the curtains on 22 years of the Kingdom’s banner flying over arms trading, drug smuggling, human trafficking, sanctions violations, embargo busting and unsafe practices.
The Cambodian Shipping Corporation was established by the government in 1994 and, according to a Ministry of Public Works and Transport website, “began immediately flagging ships of other nations”.
Ships from as far afield as Ukraine and the United States adopted the Cambodian flag as their own, and experts say little or no oversight has been applied to ships that fly the ensign of Angkor Wat.
‘Protecting the abusers’
The past two decades have seen the Cambodian flag blacklisted by the world’s largest shipping watchdogs – the Tokyo Memorandum of Understanding (MoU) and the Paris MoU. Trawling through shipping registries, vessel tracking data and corporate ownership documents across multiple continents, the Post has attempted to catalogue what has been an embarrassing era for Cambodia’s ad hoc merchant marine as it comes to an end.
A 745-tonne cargo ship named the Tallas has been floating inert off the coast of Turkey since August 2015 after years of plying a route across the Black Sea from Crimea to Istanbul. It has not been abandoned in the strictest sense: five of its seven crewmen are still aboard.
But its owner – nominally Importica LP, a shadowy partnership registered, along with 300 others, to a detached home in Inverness, Scotland; whose two listed partners are Belize-registered companies, but whose beneficial owner is reportedly Crimea-resident Nuraddin Asadov – has cut off all funds to vessel and crew.
Russian-language media reported that without cash to replenish the ship’s stocks, fresh water, food and fuel soon ran out. Since then, the crew has reportedly resorted to alternately gathering rainwater and begging fresh stocks off passing ships. For food, they are said to be casting out lines to fish.
The same reports claim the crew has not been paid since July 2015 and has been unable to come ashore in Turkey due to expired documents, leaving them stranded.
The Tallas tangled global ties
Problems mounted for the crew after a Turkish fighter jet downed a Russian bomber conducting a sortie over Syria in November 2015, four months after the Tallas was abandoned by its owner.
The ship’s captain, Valery Nalivaiko, told the Russophone Seafarers Journal that until then, Turkish authorities had been providing support to his crew, but that the deterioration in relations between Ankara and Moscow that followed the shooting saw assistance dry up.
The International Transport Workers’ Federation (ITF) visited the Tallas last October, according to ITF’s maritime coordinator Jacqueline Smith.
“We have tried to assist them, with advice and representation on their behalf to port state control, embassies and the Cambodian register. That register has failed to act to assist them in any way,” Smith said in an email. “The owner has washed his hands of this ship and of its crew. Sadly, the Cambodian flag register has done the same thing.”
“Abandoning a crew miles from home is made much easier if the ship is flying a flag of convenience that embodies lax oversight, anonymity, and a desire to pocket the registration fee and ignore the responsibilities that go with it,” Smith continued. “Those are features long associated with the Cambodian flag.”
But the Tallas’ chequered history did not begin there. In July 2015, the Tallas was identified by Ukrainian NGO the Maidan of Foreign Affairs as one of 105 commercial vessels docking at Crimean ports after the peninsula’s annexation by the Russian Federation, having made its last recorded call at its home port of Yevpatoriya on September 12, 2014.
A legal analysis published in August 2014 by London law firm Reed Smith found that under the EU sanctions, “no funds or economic resources may be made available, directly or indirectly, to or for the benefit” of Crimean ports, raising the question of how UK-registered Importica could have paid for the Tallas to dock in Yevpatoriya without violating those sanctions.
The Tallas, pictured in 2009. Wil Weijsters/ShipSpotting.com
The Tallas, pictured in 2009. Wil Weijsters/ShipSpotting.com

Despite his name not appearing on any documents connected to the company that owns the Tallas, the ITF and Russian-language media outlets both identified Nuraddin Asadov as the principle owner of Importica LP. Russian and Ukrainian numbers listed for Importica have been disconnected and the company’s email address has been disabled. As of press time, a message sent to Asadov’s Facebook account had not been read.]
The ITF’s Smith said that anonymity was a core feature of the flags of convenience system, which often makes it easier for seagoing lawbreakers to escape justice. “[It] allows abuses and enshrines secrecy, protecting the abusers,” she said.
2003-2016: Letting your ‘clean’ flag fly
Until the flag of convenience scheme was scuttled, the body responsible for handling registrations was the International Ship Registry of Cambodia (ISROC), established in 2003 as the successor to the Cambodian Shipping Corporation (CSC), which was dissolved in 2002 as a result of international pressure.
In 2002, French commandos exchanged fire with the crew of a Cambodian-flagged vessel discovered to be laden with more than a tonne of cocaine, according to the New York Times. Also reported in the New York Times was the seizure of 15 scud missiles from a Cambodian-flagged ship destined for Yemen.
The incidents were the straws that broke the back of the international community’s patience.
An inquiry was held by the Cambodian government and the CSC was shut down to be replaced with ISROC.
The new firm, run by a South Korean company and boasting several deputy registrars in such far-flung locales as Russia, Dubai and Greece, presented itself as a safe and reputable one-stop shop for Cambodian ship registration. An archived version of ISROC’s now-defunct website touted Cambodia as “the CLEAN flag”.
But if the change of agencies – briefly – cleaned up the Cambodian flag’s image, it did nothing to help its actual performance. Vessels registered to the Kingdom have continued to flout maritime law and draw regulators’ scrutiny. Last month, six of the nine vessels on the Tokyo MoU’s August 2016 “under-performing ships” list were Cambodian flagged.
Jack Davies and Daniel Nass
North Korea’s couriers
The 5,300-tonne cargo ship called the Pu Hae was flying the Cambodian flag when it made its way across the Yellow Sea from the Chinese port of Weihai to the North Korean port of Nampo on April 30.
The ship has made more than a dozen calls to Nampo, North Korea’s busiest port, and its neighbouring port, Kyomip’O, since late 2013, according to maritime tracking site FleetMon.
Over that three-year period, nearly one in 10 of the vessels that called at Nampo were registered in the Kingdom.
GPS tracks examined by the Post revealed dozens of Cambodian-flagged ships crisscrossing the sea between China and other Pacific nations including Japan, the Philippines, and – for a few – North Korea.
Little information is available about the companies that own and manage these ships, though records reveal they are based primarily in Taiwan, Hong Kong and mainland China.
The Pu Hae’s manager, Hong Kong-based Hua Heng Shipping Ltd, made the news last year when it defaulted on debt, leading South Africa to seize and auction off two ships managed by the firm, according to NK News. Both were crewed by North Koreans, an indicator that the company may have ties to the hermetic state.
Daniel Sneider, associate director for research at Stanford University’s Shorenstein Asia-Pacific Research Center, said via email that ships from both North Korea and China could have reason to hide behind flags of convenience.
Chinese firms wishing to do business with North Korea would benefit from foreign flagging, he said, because “United Nations sanctions against North Korea have put added attention on that traffic.”
China is North Korea’s largest trading partner, he added, accounting for as much as 90 percent of total trade. Trade between the two countries reached nearly $7 billion in 2014, according to the Council on Foreign Relations.
Some North Korean shippers are also compelled to avoid the scrutiny that accompanies the flag of their home nation. “The North Koreans have long used foreign flagging to conceal their activity, particularly things like arms shipments,” said Sneider.
But with its ignominious history, the Cambodian flag does not provide ideal cover for ships hoping to stay under the radar.
“The fact that a ship is flying a Cambodian flag has long acted as a signal to port state control authorities that it requires particular oversight,” said the ITF’s Smith.
The trail of the Pu Hae
The Pu Hae was detained in China in May of this year after a routine inspection – conducted under the auspices of the Tokyo MoU, which regulates international maritime conventions among Asia-Pacific states – found 10 deficiencies, including issues with radio communications, fire safety, navigation safety and lifesaving devices.
Because of these shortcomings, the website of the Tokyo MoU classifies Pu Hae as a “high risk ship”. This is far from a rare distinction: of the 4,150 inspections of Cambodian ships conducted under the MoU between 2013 and 2015, 13.5 percent led to detentions, far above the regional average of 4 percent.
And under the Paris MoU, whose purview covers Europe and the North Atlantic, Cambodian ships had a 10.7 percent detention rate, earning the flag a spot on the organisation’s 2015 black list. Of the 19 Cambodian-flagged ships identified by the Post that had been to North Korea, 12 had been detained at least once.
Cambodia-registered ships with ties to North Korea have a long history of maritime mishaps. In 2002, a North Korean freighter was caught carrying 15 Scud missiles to Yemen under the Cambodian flag, according to the New York Times.
And in 2011, Japanese media reported that China had shipped missile-launching vehicles to North Korea aboard the Cambodian-flagged cargo ship Harmony Wish, a claim which China denied.
But as the days of foreign companies doing business – illicit or otherwise – under the Cambodian flag draw to a close, firms must re-register elsewhere.
A representative of Taiwan-based World Merge Shipping Management SA, which manages at least eight ships that have previously flown the Cambodian flag, said she was aware that Cambodia’s flag of convenience program had been terminated at the end of August.
The representative, who did not wish to be identified by name, said the firm had chosen to register in Cambodia because it was convenient “transportation-wise”, but declined to elaborate. She said the company had already taken action to register its ships in another country, which she would not identify.
Online records are gradually beginning to reflect the demise of Cambodia’s flag of convenience policy. In the two weeks since the announcement, re-registrations have been logged for several formerly Cambodian-flagged ships, including the Pu Hae.
As of September 6, the ship had traded the spires of Angkor Wat for the flag of Tanzania.
Circulated to member states
But even as fleets search out new flags, plenty of vessels still roam the oceans bearing Cambodia’s.
The ITF’s Smith cautiously welcomed the rescinding of the Cambodian flag to foreign vessels.
“There will be plenty of Cambodian flag ships at sea . . . Common sense suggests that many, at least for the near future, will be foreign owned,” Smith said. “Potentially this is a very positive step, but it is still way too early to judge its sincerity or effectiveness.”
Kingdom of the sea
The Ministry of Public Works and Transport did not respond to a request for comment. However, on August 17, it sent a letter to the International Maritime Organisation (IMO) advising of its decision to close its shipping registry.
“Any ships claimed to be under Cambodian flag after [the end of August], are considered illegal and subjected to applicable international laws and regulations,” the letter signed by Senior Minister Sun Chanthol read, going on to ask the IMO to “convey this information to all concerned member states and authorities”.
The IMO confirmed in an email that it had received the ministry’s letter and had circulated it to all member states. However, between Wednesday and Thursday of this week, the ship-tracking website MarineTraffic received positional updates from 26 ships that were still identifying themselves as registered to Cambodia.
The International Chamber of Commerce’s Commercial Crime Services (ICCCCS) division welcomed the move, although ICCCCS spokesman Pottengal Mukundan noted in an email that it is “not difficult” for a vessel to hop from one flag of convenience to another.
“Managing a shipping registry properly takes considerable resources and if this is not possible then [closing] it is probably a positive step,” he said.
Additional reporting by Kali Kotoski and Joey Chua Xue Ting

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