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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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