Posidonia 2016: A herd of elephants in the room

Just keep smiling for the cameras – that’s what I took away when I attended my first-ever Posidonia in Athens last week.

Don’t get me wrong: I had a great time, I learned so much, made new friends, but perhaps it was naive of me to assume that this event – which earns Greece millions of Euros in revenue – would be anything other than a slick PR job.

According to Greece’s national statistics office, shipping contributes around $9bn or 4% of the country’s annual GDP. This figure increases to 7.5% of GDP, or about $17bn a year, when shipping-related services are included.

But an investigation by Reuters last year established that “shipping’s heroic role in Greece’s economy is largely a myth”. Many billions of dollars made by the country’s industry never actually enter the Greek economy.

“If Greece counted only payments to Greek companies and individuals – as other countries do – the deep-sea shipping industry’s contribution would be equivalent to around 1% of GDP,” the report said.

It also criticised the many hundreds of millions of Euros that could be raised, should the Greek government end or amend tax breaks for shipping companies in Greece.

Last year, EU commissioner Jean Claude Juncker personally put pressure on Greece to increase taxes on the industry and to abolish Law 89, the law that grants offshore tax status to shipping and service companies based in the country.

By November 2015, at least 42 Greek shipping firms had emigrated to Cyprus and entered the island republic’s commercial registers, according the Limassol Chamber of Commerce and Industry.

Futhermore, many shipowners have quietly moved their family homes from Greece to places such as Monaco and Switzerland, and either work remotely or commute regularly to and from Athens.

But Posidonia maintained perfect ignorance of the fraying fibres of Greece’s shipping community.

I’m sure I must be stating the obvious here, but so many things are said, only for the opposite to happen in reality – particularly in Greece. Remember last summer’s referendum when Greeks voted to reject the terms of the troika’s bailout proposal, and the government accepted it anyway? (Does oxi actually mean nai? – It’s all Greek to me.)

At Posidonia, Nikolas Tsakos, the founder, president and CEO of Tsakos Energy Navigation (TEN), proposed a “newbuilding addicts’ centre” to rehabilitate shipowners addicted to ordering new vessels.

A couple of days later, the news broke that TEN had placed an order for two-option-two LR1 product tankers at Sungdong in South Korea. Presumably Mr Tsakos is not yet ready for a newbuilding detox (the first step is admitting you have a problem…)

“Let’s be honest, the shipowner wakes up and finds his biggest competitor has ordered an aframax when he wanted to buy a suezmax, and he’s thought ‘Well, if he’s going to order an aframax, I’ll order an aframax’,” said Giuseppe Rosano, founder and CEO of London-based broker Alibra Shipping, who called out the shipowning community in an article I published last Tuesday. Lots of you online agreed.

But times are a-changing, and the issue of transparency was a big talking point at this year’s Posidonia. Friends who have worked in shipping for much longer than I have told me that shipowners have already opened up quite a lot, in comparison to years ago. “Nowadays they’ll actually admit to owning the ships,” a friend said. “Years ago, they just used to call themselves managers.”

Klaus Stoltenberg, Deutsche Bank’s global head of ship finance, advocated for transparency in shipping companies’ cash flows. “Client adoption is getting tougher and tougher,” he said. “We need to be able to break through every corporate veil.”

This trend towards transparency could also extend to Greece’s fiscal regimes. An initial investigation by the European Commission (EC) concluded in December that aspects of Greece’s tonnage tax regime violate EU guidelines for state aid to the maritime sector.

Now EC investigators want to dig deeper, and Theodore Veniamis, president of the Union of Greek Shipowners (UGS), used Posidonia as an opportunity to ward them off, saying it would open a “Pandora’s box” for both Greece and other countries.

“We know about other tax regimes in which [people] hide behind labyrinthine laws and legal tricks but we have refused, and will refuse, to snitch on them,” Veniamis reportedly said during a press conference on Friday.

Indeed. Police investigators in Cyprus are looking into what caused the collapse of Marfin-Laiki Bank and of the Cypriot economy. The investigation is looking closely at loans worth hundreds of millions of Euros lent by the bank while under the governance of Andreas Vgenopoulos, one of Greece’s richest men. The loans are said to have been inadequately secured by tiny amounts of collateral. Press reports in Cyprus have named a number of very high-profile Greek shipowners who received such loans before the bank collapsed.

Some of you will know that I lived in Athens for four months last year, during what was Greece’s summer of discontent. 2015 was the year the Greek government’s negotiations with the EC, the European Central Bank (ECB) and the International Monetary Fund (IMF) reached an impasse.

I went with a friend when he returned to his village in northern Greece, near the Metéora, to vote in the Greek referendum.

Driving back to Athens, we listened as the results were announced over the radio. Nikaia, a poor/working class area near Piraeus, traditionally inhabited by port and shipyard workers, had voted in almost a 100% majority to reject the troika’s plan.

It is the poor who have been hit hardest by rising food prices, unemployment, pension cuts and other austerity measures, and they’ve had enough.

Ordinary working-class Greeks are still hurting in 2016, though their plight doesn’t attract as much press attention as it did last summer. Capital controls are still in effect, including the 60-Euro-per-day limit on cash withdrawals. Public sector workers, including those at the nation’s major ports, continue to strike in protest to pension reforms. A friend of mine has already taken a 55% haircut on his pension and fears more.

I love Greece and I love its shipping industry and maritime traditions. But I can’t help but feel that something’s gotta give. When working-class Greeks are struggling to afford food and paying 23% in VAT, how can the nation’s shipping industry retain its preferential tax status and keep a clear conscience?

In October 2010, Christine Lagarde handed to Greek officials a list of around 2,000 individuals and corporations – among them Nikolas Tsakos and TEN – that held bank accounts at the Geneva branch of HSBC as of that year. The ‘Lagarde List’ aimed to help tax authorities tackle potential evaders of tax (although it’s unclear if those listed had in fact done so).

The list serves to illustrate just how many Greeks are stashing their money abroad in tax havens, due to mistrust of the domestic banking system and for tax purposes too. I wonder how much more could shipping contribute to Greece’s GDP if its cash flows and those of its principals were more stringently policed?

In opening the Posidonia event, Greece’s prime minister Alexis Tsipras beseeched shipping figures to help “reconstruct” the industry’s relationship with the state, “while safeguarding the prosperity of the Greek economy and society against the continuing storms of the world”.

If Greece’s economy is caught in a storm, when will its shipping community start handing out umbrellas?

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.


  1. Dear author.
    Before we talk about a change in the Greek tax regime,it would be really interesting to see what is the tonnage tax regime in other EU countries such as Germany or U.K, and find the inconsistency .
    I think they have more or less the same system based on a lump sum tax on
    tonnage. Also, is really this change to the favour of Greek people or someone else
    will benefit ? What would be the impact on shipping related jobs in Pireaus from the
    almost certain relocation of the shipping companies ? I suggest you to dig deeper on this subject.

    1. Hi Thomas, thanks for your comment.

      I think you’re right, it definitely requires more examination – but that would be a whole other article! I’ll do my best to get something together soon.

      1. Dear Holly,

        well written. Thanks very much. Fuel for thought, to say the least.

        In respect to Thomas’ remark to examine tonnage tax laws of other countries such as Germany, permit to correct the negative view on the tonnage tax system by commenting, that GERMANY HAS A RICH BASKET OF VARIOUS TAXES PAYABLE, also and even by shipmanagement companies operating under tonnage tax.

        German Tonnage Tax is only applicable on a profit, that comes untaxed as such, with a small tax calculated on the size of the vessel – payable regardless whether there is a profit or a loss. Payable REGARDLESS !… When have profits last be seen?

        German Shipmanagers always stand at risk to loose the questionable advantage, as the threat to abolish the Tonnage tax system requires Owners to hoist the german flag again, facing absurd wage additionals not payable by any other country in the world.

        Is a review of the Greek Tonnage Tax system creating a relocation of the greek shipping companies? If yes, it would prove the whole point made in your article, by Juncker, Lagarde and alike

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