Misuse of flags of convenience

Published January 19, 2004

After having noticed a rise in sub-standard shipping, the Organization for Economic Cooperation and Development (OECD) has observed that as long as sub-standard ship operators get away with breaking the rules and make money and gain market share by doing so, the reputable national flags are bound to decline.

Those who maintain standard ships shall find difficulty in getting cargo on the rates which are being offered by sub-standard ship operators.They shall thus either be wiped out or may be tempted to follow the foot steps of sub-standard ship operators with repercussions on the safety of vessels, the well being of the crew and on environment.

The flag of convenience (FOC) registers provide cover to the owners; owner can remain anonymous and use the anonymity to escape liability when thinks go wrong. So, when criminally dangerous ships sink or pollute waters owner can hide behind the brass plates.

The ship owner can declare a company bankrupt (after claiming on the insurance), depriving all other parties and can carry on trading with their other ships. This secrecy has also been exploited time and again to facilitate illegal activities such as people smuggling and trafficking, drugs and arms smuggling, and money laundering.

A ship has the nationality of the state whose flag she fly and is subjected to its laws. Traditionally flag states like Pakistan would only register the ship of ship-owner having Pakistani nationality and would apply strict nationality rules.

A Pakistani owner investing in shipping is required to produce statement as to where from he has earned huge finances for investment in shipping, the monies earned and ships operating profits is subject to tax; the ship owner is bound to employ Pakistani seafarers on board ship and has to abide by national and international maritime legislations.

But, if a Pakistani has gathered enormous wealth and invests in FOC registry his identity is anonymous; he is allowed to earn huge profits without any taxes; he curtails the rates of freight; flouting international safety standards thereby creating an atmosphere to greatly damage the Pakistan national fleet including that of others and yet remains un-noticed.

Such a Pakistani has enormous wealth and in Pakistan where the atmosphere un-fortunately exists for breeding corruption he can move easily in the higher/power corridors and grease the palms of the stewards of the government of Pakistan.

Regarding the sad incidence of the grounding of m.t.Tasman Spirit and subsequent oil spillage at Karachi, all efforts to be made to identify the true beneficial owner of m.t.Tasman Spirit which we consider shall reveal startling facts, even those Pakistanis involved in procuring this tanker without tender may be found responsible in some way or the other.

As to why the stewards of Pakistan including even the federal minister for communications are found calling a Malta's flag tanker as a Greek tanker whereas the nationality of the ship is by the flag it flies. In case the beneficiary is a Pakistani national , then the Government of Pakistan must take strict steps against the owner and should not allow him to hide behind brass plates irrespective of his wealth and rank.

A genuine link between a state and the ship that flies its flag is required by the UNCLOS, which sets out the legal frame work for international shipping. The convention also requires flag states to effectively exercise their jurisdiction and control in administrative, technical, and social matters over ships flying their flags; yet FOC's are allowed to ignore these obligations.

One of the major factors that have allowed the use of "rust/bucket" ships that are a danger to their crews and the environment alike has been the lack of accountability allowed by FOC system. Each new FOC promotes itself by offering the lowest possible fees and the minimum of regulations, allowing ship owners to flout health, safety and environmental standards.

In addition, the flag of convenience system provide ship owners with the opportunity to hide their identity under multiple dummy corporations, register their vessels with little or no checks from the flag states and engage in a range of illegal activities in the absence of direct state control.

Presently, there exist some 28 countries offering FOC registry system. Malta offers FOC registry system, and the growth of its register can easily be understood by the fact that it had 410 ships on its register in 1989 but in 2002 the number had grown by 246 per cent to 1421.

There is a growing sense that the governance of the ocean and seas is at cross roads due to flags of convenience and sub- standard shipping. A choice is to be made for proper flag state which takes responsibility for enforcing international standards on ships flying their flags.

Sub-standard shipping means unsafe shipping, with major implications in such a vast globalized industry. At any one time, there are around 45,000 merchant ships moving around the world's sea lanes, in and out of hundreds of coastal jurisdictions and through international waters. In 2000, according to the International Shipping Federation (ISF), the industry shipped around 5,000 million tonnes of goods over the distance of about 4.6 million miles, giving roughly 23,000 billion tone-miles of total trade.

The cargo i.e. transported includes million of tonnes of highly dangerous goods, such as liquid gas, toxic chemical and oil, which are potentially harmful to ecologically sensitive coastal environments and coastal livelihood. It is universally accepted that Flags of Convenience neglect international law. To ensure safety of life at sea it is imperative to re-establish the full role and responsibilities of the flag state, and by ensuring that there is a genuine link between a ship and the flag it flies so that effective maritime governance can be achieved.

M.T. Tasman Spirit was a 24 years old single hulled tanker. As per Safety of Life at Sea Regulation (15-1) all tankers over 20,000 tonnes deadweight must be fitted with emergency towing arrangement on tankers.

The ship should have been fitted with emergency towing arrangements but regretful to note that when through the press media we have drawn the attention regarding the existence and use of this arrangement, the chairman of the KPT refuted the need and use of this arrangement due to his sheer ignorance. A detailed clarification was issued in the press to educate the KPT chairman.

The non-compliance of SOLAS regulation is a criminal violation of the international safety standard and the flag state is responsible, which in this case is Malta.

We suggest taking up the matter with the Maltese government for this criminal violation of SOLAS and holding them responsible for the breaking up of Tasman Spirit and consequent spillage of almost 40,000 tonnes of crude causing disaster to Pakistani waters. Furthermore, ask for assistance from the International Maritime Organization (IMO) to exert pressure on Malta which offers flag of convenience registry and has caused major oil pollution in Pakistani waters and obtain compensation.

It is suggested to issue directives to the Pakistani maritime administration to regularly check and inspect all ships under FOC registry during their stay at Karachi regarding the seaworthiness, safety appliances and well being of the seafarers to ensure better shipping and safer seas.

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