Tag: corporate

Sterling’s response regarding the chartered ships was a lie: a quick look into Maersk’s addendum to the charter contract is enough to understand that. First, Maersk explicitly asked the German owner through a clause in the contract to ensure the immediate demolition of the vessels in order to get them off the market. Second, Maersk demanded in another clause that the vessels had to be sold for the highest price available on the scrap market – without any consideration of environmental or social standards. With the latter clause, Maersk put pressure on the ship fund to sell the 14 vessels for a minimum price of 447 USD per ton, a price that corresponded at the time to the prices offered in South Asian beaching yards. No facility operating under safe and sound conditions would have been able to pay such a high price. Moreover, the contract between Maersk and MPC states that if MPC were to sell the vessels for a lower price, Maersk would have to pay the difference. And, crucially, if MPC managed to sell for a higher price, it was under an obligation to pay Maersk the difference in profit earned. The MPC case is likely not an isolated one. The Platform found that Maersk had sold another three older ships to Greek owner Danaos and immediately chartered them back on a long-term basis. Also these three vessels ended up in beaching yards.

After Maersk’s business tactics were revealed in the Danish press, the shipping line has received strong criticism for its unsustainable shipbreaking practices from Danish Parliamentarians, leading Danish environmental organisations, and its own investors.

Danwatch’s investigations at Maersk’s Shree Ram yard in Alang have shown severe shortcomings related to fundamental labour rights, environmental safeguards and basic health and safety standards. Maersk’s support of the beaching yards in Alang stalls any development in India to move ship recycling to modern industrial platforms. Such a transition was already supported by the Government of Gujarat and investors in the 1990s when the Pipavav dry dock was built in order to bring the Indian ship recycling industry to an acceptable level. However, the shipping industry’s profits on the beaches of Alang have consolidated the beaching yards’ monopoly in India, while innovative new businesses from India have been stifled.

The case has recently been high up on the agenda of Danish media [2], prompting both policy makers and investors of Maersk, including Nordea, and pension funds PFA and KLP, to react. Whilst Maersk claims that they sold the vessel for further operational use, they have so far been unwilling to reveal which company from the oil and gas sector bought the vessel and claimed to be able to operate it. Taking the current market conditions into account, it was highly unlikely that Maersk was able to find a new owner for the North Sea Producer within the oil and gas sector.

The North Sea Producer was owned and operated by UK-based North Sea Production Company, a joint venture between Danish Maersk and Brazilian oil & gas company Odebrecht, with 50% ownership each. Having operated in the North Sea as an FPSO [3], the vessel is likely to contain large amounts of residues that are contaminated by NORM and sulphur in addition to the various other hazardous materials in its structure and tanks. The Bangladesh shipbreaking yards are not equipped with any infrastructure that could safely remove and dispose of such toxic wastes. The North Sea Producer was allowed into Bangladesh based on a fake certificate stating that the tanker did not contain any hazardous materials. The import of end-of-life ships containing hazardous waste into Bangladesh is banned, but circumvented with such false documents.

In late April, local newspapers wrote about the sale of the North Sea Producer. The North Sea Production Company was quoted as still being the owner and soon to strike a deal of which the details were confidential. Later, the newspapers stated to have been informed that the FPSO would be reused at the Tin Can Island Port in Nigeria. However, when the ship left Teesport, UK, on 17 May it sailed straight to Bangladesh, with only a few fuel stops for the tug boat Terasea Hawk on its way. Its first stop was in Namibia – way beyond the stated destination in Nigeria.

A Saint Kitts and Nevis-based postbox company, Conquistador Shipping Corporation, [3] became the new registered owner of the ship during its last voyage. Contracts for the vessel with Janata Steel shipbreaking yard were signed with the help of a Chittagong-based agent. It is likely that GMS is behind Conquistador Shipping Corporation which is used for last voyage ship registration. GMS has been involved in similar cases before, such as in 2012 when they used anonymous post box companies in Panama and the end-of-life flag of Belize to illegally export two French ferries, SeaFrance’s Cézanne and Renoir, from France to India.

In the coming years a high number of vessels, including semi-submersible platforms, used by the oil and gas sector operating in the North Sea will be decommissioned. Some of these structures have already ended up on the South Asian beaches for breaking under conditions that are both dangerous and polluting.

Maersk defends its U-turn from state-of-the-art facilities in China towards the beaches in India with the argument that it will assist the Alang yards to improve their standard. As a matter of fact, Maersk has not invested in any infrastructure in the Alang shipbreaking yards - they have even been warned that such investments might be a dead-end and too costly compared to using available docks or slip-ways. When asked, the company is consequently not able to put a number to its investments in Alang. All that Maersk has done is to write up a standard on paper and to employ staff in Alang to supervise its implementation. The Danwatch investigation has shown that Maersk’s yard, Shree Ram, is unable to live up to that standard and that Maersk’s presence at the yard has not helped to rectify the situation.

The NGO Shipbreaking Platform has been calling on Maersk to return to truly sustainable ship recycling and to invest in a model facility off the beach that is able to recycle its estimated 75-100 end-of-life ships under the high standards for environmental protection and occupational health and safety that have been deemed necessary under European law. Only then would Maersk be able to pride itself with supporting decent jobs in the ship recycling sector.

The Platform and the Clean Shipping Coalition have strongly criticised Maersk for its U-turn from state-of-the-art ship recycling back to the beaching yards in India [1]. Over many months, the Platform has shared its concerns with the shipping line. The Platform’s detailed critique of the Maersk “Responsible Ship Recycling Standard” highlights why the Standard is far too weak to ensure the health and safety of workers and to provide safeguards against pollution.

Not only have NGOs warned Maersk of the serious risks, the shipping line itself commissioned a report on the pitfalls of breaking ships in the intertidal zone. Danish consultancy Litehauz highlighted severe pollution risks and the lack of solutions on the Alang beaches. The report clearly states that huge investments to build adequate infrastructure would be necessary in Alang, and questions the commercial viability of investing in beaching yards, especially because some of the problems are likely to be impossible to solve in the intertidal zone. Despite the warnings, Maersk chose to ignore the concerns of environmental and human rights experts.

Danish experts with whom the journalists have shared their documentation were shocked to see the serious risks for workers’ health and safety as well as the grave environmental impact of Maersk’s practices in Alang. Had this happened in Denmark, the yard would have been closed on the spot, they say. The UN Special Rapporteur on Toxics and Human Rights, Baskut Tuncak, also emphasises that the beaching method by its nature does not allow for environmentally sound practices.

Only last December Shree Ram received a Statement of Compliance with the Hong Kong Convention from the Japanese classification society ClassNK. Such statements have been used by industry stakeholders to claim vast improvements in Alang and that the beaching method is able to provide acceptable levels of environmental protection. Shree Ram is supposed to be one of the “best” yards in Alang. The Danwatch revelations clearly show the wide discrepancy between the industry’s greenwashed presentation of Alang and the factual conditions in the yards. ClassNK did not want to comment on the breaches found by the journalists, but has earlier stated that their certification of four Alang yards is only based on procedural checks, not performance.

Members of the Danish Parliament, led by Pia Olsen Dyhr, former Minister of Trade and Transport, now request the Environment Minister to respond to whether Maersk has put pressure on the Danish government to promote the Alang beaching yards at the European level. Beaching is banned in Denmark and the rest of the EU. A new Regulation at the EU level asks the European Commission to publish a list of acceptable ship recycling facilities globally. Shree Ram is known to have applied to be on that list, but is not expected to be approved. The findings of the investigations by Danwatch and Politiken render this impossible.

While Maersk has invited international and Danish journalists to a tour of the Alang shipbreaking yards this week, environmental and human rights experts deplore the lack of transparency and the unwillingness to share information on the environmental and social impacts of breaking the Wyoming and Georgia at Shree Ram shipbreaking yard in Alang.

Strange déjà vu? Earlier this year, the Platform was also uninvited by the European Community of Shipowners’ Associations (ECSA) when they organised a two-day visit to Alang for selected EU Member State representatives and national ship owners’ associations [2]. Neither NGOs nor trade unions were allowed to join the visit. The Platform strongly criticised ECSA’s report from the visit for turning a blind eye on the problems of beaching [3].

Maersk had promised to carry out supposedly independent research on the social and working conditions in the shipbreaking yards of Alang. However, apart from dismissing the independent researchers it had originally contacted, there is no indication whether this research will now be independent or indeed be carried out at all.

The damaging environmental impacts of breaking ships in the intertidal zone of a beach are well known: slag, toxic paint particles and debris including metal scrap and plastics are released into the environment when the ship is torched. Large metal pieces are simply dropped onto the sand or into the sea. Alarming levels of air, water and soil contamination at beaching yards have clearly been documented [4]. Moreover, shipbreaking is a heavy industry with a high risk of accidents. The lack of a proper hospital in Alang has, however, not stopped Maersk from selling their ships to Shree Ram.

For the sake of the extra profits made by selling their ships to yards that have not invested in proper infrastructure, Maersk is now actively promoting the beaching method – a method that is banned in Europe, the US and China. Until recently, Maersk itself loudly denounced the beaching method for its poor standards and lack of innovation, now it threatens to flag out from the Danish registry if the EU does not give in and accept beaching yards, a move that has been strongly criticised by the Clean Shipping Coalition [5].