Frontline World

SPAIN - The Lawless Sea, January 2004


Related Features THE STORY
Synopsis of "The Lawless Sea"

HIDING BEHIND THE FLAG
Interactive Atlas

INTERVIEW WITH MARK SCHAPIRO
Troubled Waters

THE PAPER TRAIL
The Case of the Prestige

LINKS & RESOURCES
Regulation, the Environment, Labor

MAP

REACT TO THIS STORY

   

Hiding Behind The Flag
Intro Belize Bahamas Panama Tonga Liberia

LIBERIA: Ruling the Waves From Virginia

Walk along the docks of any port and notice the abundance of ships that display, in bold white letters on the stern, the appellation "Monrovia." That city is the capital of the West African nation of Liberia, which has been left, after 10 years of brutal civil war, with a barely functioning government. Yet a third of the world's shipping tonnage carries the Liberian flag, some 1,900 vessels; most of those ships, as well as numerous ships flying the flags of nations other than Liberia, can trace their ownership back to a Liberian-registered front company. The Liberian registry was created in 1948, primarily as a means to offer U.S.-based ship owners a way to crew their vessels without being subject to U.S. labor and wage regulations and U.S. taxation. Today the body overseeing the Liberian flag is not the government of Liberia, but a private business based in Vienna, Virginia -- the Liberian International Ship and Corporate Registry (LISCR). The Liberian government charters LISCR to handle its shipping business; LISCR remits 35 to 40 percent of its profits back to the Liberian government. Indeed, LISCR, according to the United Nations, became one of the primary sources of hard currency for Liberia's former president, Charles Taylor, who is now in exile in Nigeria and under U.N. indictment as a war criminal.

In addition to offering its flag, LISCR also offers a corporate registry -- an office in Monrovia where thousands of ship owners can legally incorporate their ships. But according to U.N. inspectors who visited 80 Broad Street in the fall of 2003, the corporate registry office contains little furniture and has been looted of all workable office equipment. Nevertheless, thousands of ship owners choose to establish the legal identity of their ships there -- because it provides them with anonymity and insulation from financial accountability.

Perks of the Flag

The Liberian registry reduced registration fees in 2000. Tonnage tax, for example, declined 75 percent, to US$ .10 per ton. The registry now advertises itself as "one of the least costly alternatives for vessel registration." Registering a ship in Liberia costs between US$2,500 and US$11,900, depending on the size of the vessel. These initial registration fees are followed by a yearly tonnage tax and a flat rate charge of US$3,800 for ships larger than 14,000 tons. There are no requirements to disclose details as to the "beneficial ownership" of a vessel; this makes it possible for owners to use front companies to limit both their liability and their responsibility should something go wrong on board one of their ships. The registry is based in Virginia, but has offices worldwide, in New York, London, Zurich, Piraeus, Hong Kong, Tokyo and Monrovia.

What the Regulators Say

Liberian ships have low detention ratings in the United States and Europe, meaning that Liberian ships rarely face serious inspection problems that keep them grounded in port. However, no Liberian ships were identified on a special U.S. Coast Guard list in 2003 as particularly well managed and exhibiting a commitment to safety.

A MEMBER OF THE FLEET: THE SEA BEIRUT -- STILL TOXIC

In December 1999, the 27-year-old cargo ship Sea Beirut, flying the Liberian flag, broke down off the coast of France and was towed into Dunkirk harbor for repairs. According to Greenpeace press reports, an assessment of the ship, requested by Dunkirk port authorities, uncovered the presence of asbestos on board. The Liberian-registered owner chose to abandon the ship rather than pay 400,000 euros to rid the vessel of its asbestos problem.

In April 2002, the Sea Beirut was auctioned to a Turkish shipbreaking company and towed to Istanbul to be broken up and sold for scrap. The Turkish government was not informed of the presence of asbestos on board the vessel. Turkish authorities demanded that the Sea Beirut be returned to France.

Thus far, France has refused to take the ship back and argues that the ship is the responsibility of Liberia, as the ship's flag country, or Belgium, as the country where the ship carried out its final commercial operation. According to the shipping newspaper Lloyd's List, the Sea Beirut remains at a shipbreaking center in Aliaga, Turkey, waiting to be returned to France.

• Introduction
Belize: Where Have All the Fish Pirates Gone?
Bahamas: Cruising a Sea of Labor Complaints
Panama: Home of "Convenience"
Tonga: Closed for Security Concerns
• Liberia: Ruling the Waves From Virginia

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