The Panama Papers: part three

The Panama Papers: part three

“Ginny!” said Mr Weasley, flabbergasted. “Haven’t I taught you anything? What have I always told you? Never trust anything that can think for itself if you can’t see where it keeps its brain?”

(JK Rowling –Harry Potter and the Chamber of Secrets)

In 21st century international business, this becomes, “Never trust anything that operates commercially, if you can’t see who controls it, and where it gets its money from!”


The buzzword is ‘transparency’, except when it comes to merchant shipping, where everyone is perfectly happy to entrust billions of dollars’ worth of cargo to, to finance, to insure and to pay millions in freight to, unknown individuals hiding behind offshore shell companies, who get their money from – where, exactly? There are plenty of rumours about shipowning companies, even very high profile ones, with alleged links to organised crime and to reprehensible regimes, but they are no more than rumours, because everyone in this industry is so busy covering their tracks that nobody can prove or disprove the rumours.

If you think that the insurers and the bankers, at least, must surely know who they deal with, you haven’t been in the room with an insurance broker talking to an underwriter, or a finance banker pitching a syndication.

Transparency is the word of the age, and transparent is just what merchant shipping is not. It’s all perfectly legal – it surely must be, as it was all put together by highly paid lawyers. What it isn’t is transparent. It is all deliberately made as opaque as can be.

We, the people ‘in the business’, ‘get round’ this deliberate obfuscation that we all love so much, by a system of nods and winks. We ‘know’ that the MV Saucy Sue, owners Compania Naviera Sieve, SA, is ‘really’” owned by Fred Papadopoulos, of 221B, Akti Miaouli.  She probably isn’t – she’s probably owned by his mother-in-law and some cousins in the motor trade, but, by convention, we never look beyond what used to be called the managing owner. We ‘know’ and being ‘in the know’ makes us feel better about ourselves, somehow. We don’t really know, we just choose to believe what we are told. We do this because if we really had to take all these offshore shell companies at face value, or rather, at faceless value, we wouldn’t do business with them.

Much of this deliberate obfuscation serves no useful purpose, and we do it simply out of lazy habit. Does anyone really think that the one-ship company will protect anyone from a serious lawsuit, these days?

I have offered a potted history of the development of the ‘offshore’ tax ‘havens’ as they developed along with, and as part of, the flags of convenience. Today we have an international shipping industry doubling in capacity, but sadly not in profitability, every 15 years, but one which is almost invisible to the general public, who have no understanding of it, or sympathy with it, because the industry goes out of its way to try to hide.

That general public has grown much larger, as the peoples of Asia and Africa have joined up, gone on line, and joined in.

In the United States, the improbable figure of Donald Trump bestrides a wave of lower middle class outrage, in Britain, similar people demand “Brexit”, wrongly blaming the European Union for the web of regulations that they feel they are enmeshed in. In Greece, similar people vote for Syriza, in Sweden, in Japan, in Germany, in Italy, in France, in Spain and elsewhere there are other ‘populist’ movements. What they have in common, be they Left or Right, is that they are indeed populist – headed by charismatic figures offering a quick fix to people who have seen their standards of living decline, which is not at all what they expected. It didn’t happen to their parents.

Across the developing economies of Asia and Africa, we see people getting better off – and very rapidly becoming disenchanted with the thieving ways which their own elites seek to hide behind the very same offshore corporate structures.

What ties all this together is – merchant shipping. But how much sympathy can we expect any of the billions of people who now make up the global public to have with the obscurantist, devious, little traditions of our industry?

It all looks so 20th century…


Access The Panama Papers part one here and part two here.

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  1. Hans-Peter Becker
    April 8, 2016 at 1:16 pm

    Thanks for writing this series of articles. Unfortunately I have to assume that the “global public” will not pay a single bit of attention to this frightening scenario, as long as they get their consumables at a next to zero price to their shops and the cited “honorable ship owners” take a second look at where their funds are coming from.
    But, let’s stay optimistic..

    1. Andrew Craig-Bennett
      April 8, 2016 at 4:16 pm

      Hans-Peter – there is one group of people who are subject to pressure from the general public and who are involved in every transaction – the Banks…

      If the banks are scared away from ship finance and scared into only handling remittances for people whom they really know, there might be a new dawn for our industry – but that will only happen if the banks really get scared…

  2. Gopal Sethi
    April 8, 2016 at 2:53 pm

    Andrew – Congratulations on a very well-written series which provides an excellent insight into the transformation of merchant shipping over the years. You have tied it up very well with the catch phrase “Panama Papers” to speak about FOC’s. You have used a key word “transparency” in your article and I wonder what is your take on the “UK Bribery Act” and how successful has the act been when it comes to merchant shipping!

    1. Andrew Craig-Bennett
      April 8, 2016 at 3:57 pm

      Gopal – it seems that the UK Bribery Act has been effective in parts.

      Dealing first with petty corruption – the sort of everyday bribery of officials that the Chinese and the Vietnamese call “tea money”, there do seem to have been some sucesses.

      The reports that I receive come from the ships that I have some responsibility for and from my own son who is a cadet on a bulker in another company. The Suez Canal does seem to have been almost completely transformed, to the point where we may have to exclude it from “Marlboro Country” , but Russian Port State Control officials are apparently completely unreconstructed.

      When we move onto major corruption, I doubt if much has changed. People are often insufficiently aware that a contract obtained through corrupt practices is voidable.

  3. Captain C. Allport FNI
    April 8, 2016 at 3:56 pm

    Andrew, Brilliant!

    I take it you have read Barrie Youde’s subject ode on Shipsnostalgia today?

    1. Andrew Craig-Bennett
      April 8, 2016 at 4:11 pm

      I have now – thanks Chris! Kipling’s “Mary Gloster” for the modern age…

      1. Andrew Craig-Bennett
        April 8, 2016 at 4:53 pm

        Barrie has kindly given me permission to post his ode here:


        Give your savings a suntan. Send every penny offshore.
        It’s all transparently legal. It’s wholly allowed by the law.
        That’s why our leaders all do it. To set an example, d’you see?
        Avoidance of tax? Let’s poo-poo it. It all appears legal to me.

        It’s why we haven’t a ship now. It’s why they’re all built overseas.
        It’s why every ship-operator may largely do as he might please:
        While here in Great Britain we need ‘em. We haven’t a clue who they are.
        Our families, we have to feed ‘em. And we should relax at the bar.

        It’s your round, old chap – yes, by all means. Let’s have a repeat of the Bolly.
        Do common folk know what it all means? That we have just squandered the lolly?
        That nothing is in the Exchequer? That all of it’s gone down the grid?
        Old Lady Threadneedle? D’you check her? D’you think we should print a few quid?

        This island we live on, as Britons – just how does our food now all get here?
        Sixty million of humanoid fit-ons. Survival? Is all now to let, here?
        Land-prices are rising, they tell me. It follows that so is the rent.
        I wonder which airline will sell me a seat to where savings are sent?

        Upon a tropical island, I’m told that most things could be worse,
        Except that the fly-by-night whyland will lack any doctor or nurse.
        Should we open a bottle of Bolly? Or figure out where we are at?
        Which option is right? Which is folly? There’s only one answer to that!


  4. sorrel
    April 8, 2016 at 4:02 pm

    Thank you Andrew for these Part 1 / 2 / 3…
    This is inspiring me the following annoucement brokers can send to their various principals.
    Dear charterers, Dear owners,

    Today usual dialog between charterers brokers and charterers is:

    -Charterers: “thanks for your indication, it’s bit too expensive, but please enlight me, who are the owners?”

    -chrtrs brokers: “Money, I think we can get bit better (wog as brokers only), who are the owners? I don’t know,

    I have been on equasis but the name does not ring my bell, but rest assured we got the indication from a very reliable source (as brokers only)”

    And by saying so the brokers is bit ashamed, indeed he was expecting this question, he was doing his outmost to check info available on the ship / chanel /owners / managers but trully only understandable info he obtained was where is the ship and if she’s been detained lately or not. He’s been looking for vsl’s tpc but could find anything related to this.

    Thanks to your Panama Paper part 3 we, the brokers, will be able to proudly reply to constant Charters’ question without being ashamed. I DON’T KNOW and YOU NEITHER” the dialog between charterers’ brokers and charterers will be:

    -Charterers: “thanks for your indication, it’s bit too expensive, but please enlight me, who are the owners?”
    -chrtrs brokers: “Money, I think we can get bit better (wog as brokers only), who are the owners? I don’t know, and surely you neither. If you believe what’s written in Equasis, sorry to say but you’re bit naïve. The ship I have is BINGon the dates, BANGon the specs, BOOM on the freight, let’s fix her.

    And same will apply between brokers and owners, when Owners asking for Charterers’ background

    Dialog was
    Owners: -“thanks for the cargo proposal, it’s not exactly what I’m after, but because it’s you, I’ll run some estimate and give you a rate, but don’t expect any formal indication from my side without getting a full background of the charterers. As you know, I never work charterers which I have never heard about without having a clear background first”.

    brokers: -“Charterers background, I don’t have. We are direct with them,we fixed quite few cargoes with them lately and so far nobody had anything to complain about Charterers’ performance. But I got your point, let me check what I can bring you”.

    Now, thanks to ANDREW CRAIG-BENNETT the brokers will dare to reply to owners something like:
    “charterers background? are you kidding me? we don’t even know who this ship is belonging to. We don’t even have a clear picture on who’s behind, who are the owners and the managers… anything we know, is that the ship has a Panamian flag, owners bank account is in Liberia and I’m talking to a guy located in Copenhagen /Paris/ Geneva/ Milano/ Athens/ Istanbul (wherever in fact, except Panama and Liberia ofc)….So, don’t bother about charterers background, give me a rate and let’s fix this ship with this cargo”.

    Rest is litterature and mathematics, I’m looking forward as brokers for next time owners asking me for charterers background or charterers asking me who are the owners.
    Have a nice week-end.

    From a Brokers, Working in a little shop, registered in the local Chamber of Commerce with no subsdiaries nowhere, I sware.

  5. Andrew Craig-Bennett
    April 8, 2016 at 4:13 pm

    Sorrel – I love it!

    1. sorrel
      April 8, 2016 at 5:06 pm

      likewise, I loved reading your 3 parts