What Happens When Tycoons Abandon Their Giant Cargo Ships
What Happens When Tycoons Abandon Their Giant Cargo Ships
From the deck of their tanker, Captain Samig Nabiyev and his crew could see the smoke and fire rising over the Port of Beirut, 900 meters away. When the flaming warehouse exploded, the force of the blast knocked Nabiyev flat on his back.
“I thought I was finished,” said the 43-year-old Nabiyev, who’s worked on ships for almost 20 years. “We were all afraid for our lives.”
Nabiyev and the 11 other crew members weren’t supposed to be in Beirut on Aug. 4, the day of the disaster that killed around 200 people and wounded more than 6,000. Like the tons of ammonium nitrate that had eventually exploded in the port, they too had been abandoned by the owner of their ship, left to the discretion of local officials and insurers. No one on Nabiyev’s crew was hurt, but as they learned more about the explosion in the weeks to come, they recognized the same industry practices that had left them stranded for months.
Covid-19 has wrought havoc everywhere, but in the nominally regulated shipping industry it’s fueling a worrying practice: the abandonment of ships, cargo and seafarers with no way to get home. Dumping a vessel can create a nightmare of logistics, environmental hazard and human suffering, and yet owners — people at the core of an industry that touches almost everything in the supply chain — are rarely held to account. This year, cases of abandoned ships are up nearly 90% by even the most conservative accounting.
For people who work on land, this is unthinkable in the absurd — as if your employer went bankrupt and left you locked in a rapidly deteriorating office for the foreseeable future. But hundreds of seafarers like Nabiyev and his crew find themselves in exactly that situation, trapped aboard massive ships under the control of foreign ports. Some of the vessels could be sold for several million dollars, but the longer they sit, the further they fall into disrepair. With no one to take financial responsibility for maintenance or, eventually, safely dismantling a ship, some sit idle for years, clogging ports and threatening to leak fuel and waste. Some sink where they’re anchored.
“There are vulnerable laborers stuck on these ships, and there’s also a huge environmental risk,” said Ian Ralby, chief executive officer of I.R. Consilium, a maritime law and security consulting firm that works with the United Nations and governments. “There are larger issues here that if we aren’t watching today can blow up in the next decade.”
In most big, developed economies, when a business goes under, there are protections for workers, plus processes for dealing with stranded assets and jilted creditors. If necessary, authorities can step in. Those rules should apply to shipping companies, but the fragmented, global nature of the industry makes them nearly impossible to enforce. For example, a ship owner might live in one country, incorporate his company in another, and register his ship under the flag of a third. If he abandons it in a port that isn’t subject to global labor protections for seafarers, he’ll have the advantage of less oversight and, possibly, favorable legal outcomes.
“The decision by owners is not a chaotic one,” said Jan Engel de Boer, a senior legal officer dealing with abandonment at the International Maritime Organization. Some owners, he said, have become expert at working the system. “In many cases, it’s organized — the ship owners know what they can get out of it.”
The pandemic has, of course, made these problems worse. In addition to the seafarers working long past contract, caught between port restrictions and corporate cost management, the United Nations’ International Labour Organization counts more than 1,000 mariners who have been straight-up abandoned so far in 2020. Their ranks have more than doubled since last year. Cases, a proxy for ships affected, are up to 76 this year from 40, and the International Transport Workers’ Federation, the union that represents mariners, said there are more to come.
Still more never get reported at all. The MV Rhosus, the abandoned ship connected to the Beirut blast, never made it into the ILO database. Mohamed Arrachedi, the ITF network coordinator in charge of Arab countries and Iran, said he’s intervened in about 170 cases to help seafarers recover nearly $6 million in unpaid wages this year — up about 40% over 2019. If he can resolve cases quickly through direct negotiations with the ship owner, he doesn’t even report them to the ILO.
“The laws and regulations haven’t kept up with how modern and global shipping is now,” said Laura Carballo, head of maritime law and policy at World Maritime University in Malmo, Sweden. “The way shipping is set up makes these abuses possible.”
Nabiyev still isn’t sure how it all went so wrong. He’d been working at a government-owned shipping company in Azerbaijan for nearly 20 years when he got the job offer from Palmali Shipping, a Turkish company owned by the high-flying Azeri émigré Mübariz Mansimov Gurbanoglu. For six months, he’d earn $30,000 — more than six times the average per capita income, enough to move his wife and three daughters into their own apartment in the capital city of Baku.
“In Azerbaijan, everyone knows about Mansimov and how rich and famous he is,” said Nabiyev. “I thought it would be a good company to work for. It turns out it’s nothing like that.”
Shortly after he joined the ship last November, Nabiyev learned that some of the crew were already owed several months of wages. His paychecks never materialized either. The company told him that everyone would be paid at the end of their contracts — not the terms they’d agreed to. The captain and his crew felt there was nothing to be done, so they went on working, delivering sunflower oil from Aston Group, one of Russia’s biggest exporters, to ports in Europe and the Middle East. “The company made a lot of promises and we had to accept it,” he said of Palmali. “But they lied and lied.”
Back in Istanbul, Palmali was in serious trouble. Gurbanoglu had been close to President Recep Tayyip Erdogan’s family and allies. Not anymore. In March, he was arrested for allegedly supporting a movement to overthrow the government, an accusation he denies. He’s now on trial, with prosecutors seeking a 15-year prison term, and his arrest threw his businesses into chaos. Authorities in the U.K. froze some Palmali assets after one of its lenders took the company to court.
Palmali did not respond to repeated requests for comment by phone and email. The company attested to Gurbanoglu’s innocence in a June press release, adding that “the Group is continuing to trade and operate as it has done previously.” Representatives for Aston, based in Rostov-on-Don near Moscow and a regular charterer of the stranded Beirut vessel, the Captain Nagdaliyev, declined to comment. The Management and Operation of the Port of Beirut couldn’t be reached for comment.
Nabiyev didn’t realize they’d been abandoned until May, when the vessel came into Beirut and the usual refueling company demanded $250,000 to clear an outstanding balance. Palmali refused to pay, Nabiyev said; the company ordered him to unload the cargo, then stopped responding to emails or phone calls. What remains of Palmali has cut off communication with Nabiyev. The ILO is tracking at least five other Palmali vessels stranded in Italy and Istanbul. In total, sailors on the ships are owed $1.5 million and counting, according to the ILO. Some haven’t been paid in more than a year.
Without fuel, the tanker — one-and-a-half times the length of an American football field — has been moved to an out-of-the-way berth in the port. By September, the crew was running out of food and fresh drinking water. They appealed to the authorities in Malta, the ship’s flag state, to the Beirut port, and to the vessel’s three Russia-based insurers. Eventually, the ITF sent three deliveries of water, fresh meat, ramen noodles, potatoes and rice.
When the fuel ran out, so did the power and electricity. The crew stored the meat in the refrigerator of a ship anchored in the next berth. Twice a day, they cooked on a makeshift stove on the ship’s deck. They used water from the ship’s tank to shower, wash clothes and flush toilets. When it got too hot in their cabins, the crew slept on the deck on cardboard and blankets. After 40 days, the ITF arranged a fuel delivery to restore power on board.
“We are living like animals,” said Nabiyev. “We are all depressed. We are all stressed and have health problems. Some talk about killing themselves if we are stuck here longer.” One morning, Nabiyev said, he found a noose hanging on the deck.
Over the last few months, Lebanese port and marine authorities have allowed eight crew members to go home, but they insist that four remain with the ship to ensure its safety. It’s an order, not a request: the port is also a border, and seafarers can’t enter without valid immigration and travel documents. Even if a crew member was able to get off the ship, coronavirus travel restrictions and the cost of a ticket are obstacles. Without government approval and financial support, leaving isn’t an option, and the August port explosion has made everything more complicated.
“Everyone is more sensitive now when it comes to abandoned ships because no one now dares to make a decision,” said Riad Kobaissi, an investigative journalist for Beirut-based Al Jadeed TV. “For example, they wouldn’t dare unload cargo from an abandoned ship because the Rhosus had a ‘bomb’ in it — even if this one isn’t carrying harmful material. There is also a lot of bureaucracy that could delay any resolution.”
The problem of abandonment has become so commonplace that the IMO met recently to develop guidelines for flag and port states to deal with vessels and their crew. Those recommendations, though, aren’t expected to be finalized before 2022. As of now, the fates of abandoned mariners are left to the discretion of local port officials.
“We have done nothing wrong,” said Nabiyev. “We didn’t break the law. How can they hold us like prisoners?”
For shipping company owners and executives, the decision to abandon a ship, cargo and crew often comes down to basic math. When the company owes more than the vessel and cargo are worth, it might make financial sense to walk away, said Anil Devli, CEO of the Mumbai-based Indian National Shipowners’ Association.
Devli’s organization represents shipowners. He’s been working with Indian maritime authorities to deal with the abandonment of Indian seafarers, who make up the third-biggest population of mariners. New vessels, which can cost tens of millions of dollars, aren’t the ones that get abandoned, he said. The ships that get stranded tend to be at least 15 years old, worth $5 million or less and typically owned by small, privately held operators.
“The ship is likely old and can only be sold for scrap,” he said. “There may be a dispute over the cargo itself — maybe it’s carrying prohibited cargo and faces massive fines. They’re likely in debt. And they owe crew wages. It doesn’t pencil out for them, so it’s easier for the owner to just say, ‘Let’s forget about it’ and walk away.”
Some ports make this easier than others. Heavily trafficked by oil tankers, the Middle East, and the United Arab Emirates in particular, have emerged as popular places for owners to ditch their ships. The UAE port of Fujairah, one of the world’s three biggest refueling stations, is the top port to abandon ships in the last few years, in part because the UAE and its neighbors haven’t signed on to — and therefore, don’t enforce — the Maritime Labour Convention that protects seafarers rights, said World Maritime University’s Carballo.
Ports that more aggressively enforce international law see fewer cases of abandonment. Singapore, for example, actively monitors ships. Vessels aren’t allowed to hang out after they’ve finished their business. There’s a court dedicated to maritime violations, and ILO records show just three cases of abandonment there since 2018.
The UAE has no specialized court for maritime cases; ship owners know that creditors must be willing to engage in a protracted legal process in order to get a vessel seized and sold, said Adrian Chadwick, a lawyer at Hadef & Partners in Dubai. Some countries, for example, allow an abandoned ship to be sold to private buyers or auctioned through one round of bidding; the process in the UAE involves three rounds.
The Ministry of Energy and Infrastructure began collecting data on ships abandoned in UAE ports this year, and a proposed law that would speed the process of seizing and auctioning stranded ships is still wending its way through the government, according to the agency.
Wherever a ship is seized and put up for sale, the global pandemic has slowed the process. Quarantine requirements and travel restrictions have made it difficult for would-be buyers and appraisers to inspect ships, said Nassos Soulakis, a shipbroker at Intermodal Shipbrokers Co.
As for the crew, if the ship’s owner can’t provide for them and get them home, a number of organizations bear some responsibility, including the flag state under which the ship is registered and the port where it’s docked. The so-called protection and indemnity club — a mutual insurance association funded by shipowners — is liable for up to a maximum of four months of lost wages and is supposed to repatriate the sailors. In the case of the Captain Nagdaliyev in Beirut, the P&I club was able to repatriate eight members of the crew, but the port authorities, which can block transit for anyone without a visa, haven’t allowed the others to leave.
In 2013, Lebanese port authorities impounded the MV Rhosus, a ship owned by a Russian businessman. Port fees were unpaid, and inspectors found defects in the ship. Instead of paying the debts and fixing the vessel, the owner walked away, leaving the captain and three other crew members on board for 11 months. Eventually the captain sold some of the ship’s remaining fuel to hire lawyers, who won the crew’s release on compassionate grounds.
A year later, some 2,750 tons of ammonium nitrate were recovered from the ship and put into storage in a port warehouse. The decrepit ship stayed in port until it sank in 2018. On the afternoon of Aug. 4, a fire swept through the warehouse and the ammonium nitrate exploded, destroying the port. The city of Beirut sustained as much as $4.6 billion in physical damage.
Lebanon issued arrest warrants for the captain and owner of the ship two months ago. “Abandonment happens simply because it can be done, because the law permits this to happen,” said Devli. “There’s no deterrence. There’s no consequences, no punishment for the ship owners.”
Any time a vessel sits unattended and unmaintained for any reason, the consequences can be devastating. One ship, the FSO Safer, is deteriorating off the coast of Yemen. The civil war in that country has left it in limbo with roughly 1 million barrels of crude oil on board that could leak or explode. Another oil tanker in Trinidad and Tobago has been stranded in the Southern Caribbean sea by a Venezuelan state-owned company. If its 1.1 million barrels spill, it would create a disaster four times worse than the Exxon Valdez spill in Alaska in 1989.
Ahead of typhoon season in the South Pacific, a Spanish ship called the Celanova was abandoned in Manila Bay, leaving 15 seafarers and its cargo of combustible butadiene on board. The ship had a faulty anchor and chains, no rudder, and too little fuel to keep the petrochemical refrigerated and stable. After more than a month, the owner, Globalgas SA, agreed to transfer the cargo to another ship. It took another four months for the Philippine government to disembark the crew. The ship was refused berth in port for safety concerns and has since been sold, renamed and towed to the breakwater awaiting repair.
Worst-case scenario, Ralby said, “You end up with a situation where people will be onboard unable to get off the ship, sitting on worthless and potentially dangerous cargo. Desperate crew, combined with a massive environmental threat, is not a situation we want to find ourselves in.”
Even ships that aren’t oil tankers may carry thousands of tons of sludge-like fuel to power the vessels, enough to wreak havoc on a fragile marine ecosystem. In July, a Japanese cargo ship owned by Nagashiki Shipping Co. ran aground in Mauritius, leaking some 1,000 tons of fuel oil near a protected marine park. Experts say damage to the especially rich ecosystem, will last decades.
The blast in Beirut prompted ports around the world to wonder if they too had tons of improperly stored explosives on site. India discovered 740 tons of ammonium nitrate that had been sitting in a Chennai customs warehouse for five years. Senegal moved 3,000 tons of the same material out of a port near the densely populated capital of Dakar to mines in neighboring Mali. Egypt and the Philippines also discovered dangerous materials.
Meanwhile, the Beirut port has become embroiled in blame and scandal. Protests and allegations of corruption and mismanagement led to the resignation of the government. Earlier this month, a judge charged Lebanon’s caretaker Prime Minister Hassan Diab and three former ministers with negligence over the blast, while other officials have been arrested in connection with the explosion.
Nabiyev has repeatedly assured authorities that there’s nothing dangerous about their ship or the already unloaded cargo, no reason to keep him and his shipmates on board. Under the circumstances, though, no one wants to leave the vessel unmanned or pay for local watchkeepers to monitor the boat.
While the magnate Gurbanoglu stands trial, it’s unclear what will become of his companies and assets, including Palmali’s abandoned ships. In Beirut, Nabiyev estimated it would take more than $1 million to get the ship released, including about $300,000 in back pay, the fuel bill that triggered the ship’s detainment and other port fees.
The union has hired a lawyer who has successfully petitioned the Beirut courts to arrest the ship, a process similar to asset seizure or repossession, that would allow the crew to recover their lost wages. It still might take months before the ship is sold and the crew gets paid. This week they are petitioning the court to let Nabiyev and his shipmates go home.
The ship’s 27-year-old chief officer, Emin Abishov, was among the group released in mid-November. He lost nearly 20 pounds in almost seven months in port. He lost his appetite and couldn’t sleep most evenings from the stress. Reunited with his wife and their 11-month-old daughter in Azerbaijan’s capital city of Baku, he’s still haunted by his ordeal.
You wouldn’t wish such a situation on your worst enemy, said Abishov. “Every time I remember this explosion, then the sounds of explosives, I can not sleep the whole night.”
When he left the ship, he was owed 10 months of back wages — about $45,000. The ship’s insurer has paid him for four, its maximum liability. That money paid for an eye operation for his daughter and settled the overdue rent that accrued while he was away. And while he’d like to work with a non-profit or union to help other abandoned seafarers, his savings have run out, so he’s looking for another job on a ship. He said he thinks it will take a year before “the nerves come to rest.”
“This has been horrible for me and my family,” he said. “I have no words to explain. I’m home now, but I was in hell for seven months.”
–With assistance from Ann Koh, Claire Jiao, Dana Khraiche, Jack Wittels, Inci Ozbek and Anatoly Medetsky.
About the photo: Captain Nagadliyev vessel at the Port of Beirut.
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