The Outlaw Ocean, Part Two: Corruption in Port Cities
The outlaw ocean, a space apart, hidden from view, a place of rampant criminality and exploitation. This week we offer part two of a four-part series devoted to The Outlaw Ocean, a new book by award-winning New York Times investigative journalist Ian Urbina.
Not all maritime corruption occurs at sea. Ports are key points where ships and crews come in contact with authority, sometimes for good when vessels can be apprehended for illegal fishery, the captains arrested, the boat destroyed, and the crews sent home, sometimes for bad when port fees can be extorted, fake repair bills and docking charges applied, fines adjudicated, schedules interrupted resulting in cargo spoilage and failed deliveries, ships condemned and held hostage as leverage for inflated shippers’ ransom, and possibly fraudulent appropriation through a forced public auction or judicial sale.
“For all the expense imposed by this sort of port corruption,” Urbina writes, “shipping is still highly lucrative because most seasoned operators know whom to pay off and how to pass to consumers these hidden and inevitable costs of doing business. More than 90% of the world’s goods, from fuel to food to merchandise, is carried to market by sea, and bribery in ports adds hundreds of millions of dollars each year in unofficial import taxes and added costs of cargo and ship fuel, which in turn raise transport costs, insurance fees, and sticker prices by more than 10%.”
“There are also geopolitical costs to the world’s vast ‘phantom fleet’ of purloined ships, which are virtually impossible to track as they are used to carry out a broad area of crimes. In Somalia, Yemen, and Pakistan, for example, phantom ships are used to transport fighters tied to Islamic militant groups, and they were used in 2012 by the terrorists who attacked Mumbai. In Iran and Iraq, phantom ships have been popular or circumventing international oil or weapons embargoes. Elsewhere they are typically used for other purposes: in Southeast Asia, human trafficking, piracy and illegal fishing; in the Caribbean, smuggling guns and drugs, and off the coast of West Africa, transporting illegal bunker.“
“Some peculiarities in maritime law play into the crooks’ hands. A captain’s logbook carries unusual legal weight in a courtroom, for example. If a corrupt charterer pays a captain to write that the cargo was damaged during the trip, that ship is probably not leaving port until someone pays up. Ship sales are also more anonymous and final than sales of other types of property. This is one reason why ship purchases are a popular method for laundering money and dumping assets that corrupt individuals or corporations don’t want governments to find and tax. Because a ship may be bought in one country, flagged to another, and parked in a third, it becomes difficult for countries to trace the origins of the money invested in a ship.”
“[More anonymous] ship trading also makes stealing easier. If the rightful owner can catch up with a stolen painting, car, or artifact at an auction, he can make a claim and, in may cases, repossess his property. Such redress is far more difficult under international maritime law. A vessel sold at a judicial auction is deemed in industry parlance to have had its ‘face washed” clean of liens and other previous debts, including mortgages.”
“Police struggle to chase stolen ships. In most cases, marine authorities can pursue, intercept, board, and seize a foreign-flagged ship on the high seas only if the pursuit started in the authorities’ territorial waters and the kept the fleeing visual in visual contact the entire time. In many courts of law, visual contact means neither satellite nor radar observation but actual line of sight with the human eye. From the bridge of a ship, that’s usually about seven miles in clear weather.”
“If a chase starts on the high seas, it’s even more fraught. Except under special circumstances, a ship may only be stopped in international waters by a warship of its own flag, or with permission granted from the fleeing ship’s flag state. Liberia, the country with the most vessels sailing under its flag — more than 4,100 — has no warships. The country with the second most, Panama, does not routinely operate warships beyond its own coast. Therein lies the beauty of international ship thievery: crooks only have to run if someone’s chasing them, and that’s rarely the case.”
If you look at the routes of ships from a satellite perspective, you can trace a complicated network of passages across every ocean to every part of the world, a complex web of commerce and financial exchange that reveals our connectivity but also hides an equally diverse, less visible skein of corruption. Follow the money, they say, and when you do so across the ocean, you will inevitably find moral indifference and overt crime for which all of us pay the price.
PETER NEILL is founder and director of the World Ocean Observatory and is author of The Once and Future Ocean: Notes Toward a New Hydraulic Society. He is also the host of World Ocean Radio, a weekly podcast addressing ocean issues, upon which this blog is inspired.