Cambodia does not validate ships that register under its flag
Chim
Flags that hide the dirty truth
By Robert Neff
Many small countries in the world have resorted to unorthodox methods
of obtaining much-needed currency. Although these methods may be
legal, they often assist unscrupulous individuals and governments in
conducting illegal activities. One popular method of obtaining cash is
through flags of convenience (FOC). Countries, even land-locked ones,
register other nations' ships under their flag for a price.
It is a profitable industry that has no shortage of customers.
Shipowners choose to register their ships under a foreign flag for a
number of reasons, including tax advantages, cheap non-union crews,
the ships' conditions fail to meet the standards of the owner's
country, political reasons, or to facilitate illegal activities.
Because many of these ships often exchange flags and even their names,
it is difficult to trace them, thus providing the anonymity they need
to conduct their illegal operations. According to a statement by David
Cockroft, general secretary of the International Transport Workers'
Federation (ITF): "Arms smuggling, the ability to conceal large sums
of money, trafficking in goods and people and other illegal activities
can also thrive in the unregulated havens which the flag of
convenience system provides."
Flying the Cambodian flag
One of the most notorious FOC countries was Cambodia. In 1994,
Cambodia established its own ship registry - Cambodian Shipping
Corporation (CSC), based in Singapore - and began immediately flagging
ships of other nations.
Although its beginnings were modest (only 16 foreign ships registered
with Cambodia during the first year) the CSC rapidly expanded.
According to CSC, prior to its closing in 2002, the number of ships
registered with the company was between 400 and 600, but according to
US investigators and Cambodian officials the number was probably twice
that.
CSC offered basically what many other FOC countries offered: registry
for any ship, no questions asked, under its (Cambodia's) flag for a
low price. But, unlike other FOC countries, it offered to do the
entire process online and within 24 hours. Despite Cambodia's relative
lag in Internet technology, its operation in Singapore enabled CSC to
pioneer online registration.
As more and more foreign ships registered with CSC, it soon became
apparent that a large number of the ships were involved in illegal
activities. Cigarette smuggling operations were discovered near Crete
and Albania; during the oil embargo of Iraq, oil was smuggled out of
that country; human trafficking and prostitution operations were
discovered near Japan and Crete, and, of course, drug trafficking.
All of these activities were cause for concern and drew condemnation,
but there was one more criminal activity that concerned many nations
even more: allegations that many of the ships were running arms.
"Cambodia is one of the highest-risk flags. It is particularly murky
and has got to be one of the first choices if you are running arms," a
spokesman for ITF said.
When asked about CSC's alleged illegal operations, Ahamd Yahya of the
Cambodian Ministry of Public Works and Transport was reported to have
told Fairplay: "We don't know or care who owns the ships or whether
they're doing 'white' or 'black' business ... it is not our
concern." (Fairplay, October 12, 2000.)
Unsafe ships
In addition to illicit activities, the condition of the ships
themselves was a concern. According to an article in the Guardian of
London, by 2002 the company had about 450 registered ships, and out of
this number 25 had suffered shipwrecks/strandings, 41 collisions, nine
fires and 45 arrests. Nine Cambodian-registered ships were deemed
severely hazardous and banned from entering European ports.
By the summer of 2002, many of the leading shipping organizations were
calling for action to be taken against CSC. A spokesman for ITF
condemned CSC and Lloyds shipping intelligence service wrote in an
opinion piece: "The world should join us in demanding that Cambodia
shut down this sleazy and pestilent offshore registration. How many
more people have to die in incidents involving Cambodian-flagged
vessels, or its ships detained for illegal activities, before
something is actually done about it?"
The North Korean connection
American and South Korean interests in CSC were aroused when it was
observed that a large number of North Korean ships, at least a dozen
according to Michael Richardson, journalist and author of A Time Bomb
for Global Trade, were registered with CSC and flying the Cambodian
flag.
It is no secret that the Cambodian royal family had, and still
maintains, a close relationship with the North Korean regime. King
Norodom Sihamoni has often spoken of the Kim regime in a favorable
manner. Kim Il-sung provided him with asylum during the turbulent
years of Cambodia's past and even built him an extensive 60-room
palace outside Pyongyang. When the royal family returned to Cambodia
it was accompanied by North Korean diplomats and bodyguards.
North Korea's involvement in Cambodia's flag of convenience operation
was suspected after an investigation revealed that one of the primary
partners in CSC was Lim In-yong, a senior North Korean diplomat who
had served in Cambodia for many years. His role with CSC was described
as being that of "a private citizen, [and] not as a representative of
the North Korean government". Whether his role was purely that of an
individual or of a more sinister nature is unclear. But the United
States and several other countries became increasingly suspicious of
North Korea and the company's motives.
Among several charges of illegal operations by North Korean ships, one
was drug smuggling. When it was suggested in the media that Cambodian-
registered North Korean ships may have been involved in drug
smuggling, CSC denied any knowledge.
Incidents of drug smuggling involving ships from other nations flagged
by the company were apparent. In 2002, the Greek-owned, but Cambodian-
registered Winner was seized by French forces and discovered to be
smuggling a large amount of cocaine. Interestingly enough, Hun Sen,
the prime minister of Cambodia, gave his permission to the French
government to board the ship - an indication that he did not support
CSC. A short time later he revoked CSC's authority to grant registry
to foreign ships.
Perhaps the most infamous North Korean drug smuggling operation took
place in 2003. The North Korean freighter Pong-su began its journey
from North Korea under its own flag, but on arriving in Singapore
changed its registration and reflagged under Tuvulu. It then proceeded
to Australia where it was discovered trying to smuggle in a large
amount of heroin, and was eventually seized after it tried to resist
Australian authorities. Although this incident did not involve a
Cambodian-flagged ship, it does give some credence to speculation that
North Korea had smuggled drugs using CSC-flagged ships.
Weapons smuggling
While North Korea's attempts to gain badly needed hard currency by
smuggling drugs and tobacco were of some concern to the United States,
more important were allegations that North Korea was smuggling and
selling advanced weapons technology to other nations.
"Of most concern to the US and indeed to South Korea was the clear
evidence that North Korean freighters flying the Cambodian flag or on
the Cambodian register were moving ballistic missiles to clients in
the Middle East and Africa," noted journalist Richardson.
Perhaps the best-known of these Cambodian-registered North Korean
ships was the Song Sang. In November 2002, a freighter believed to be
carrying weapons departed a North Korean port and was tracked by
American satellites and American naval ships. In December, as it made
its way through the Indian Ocean, it was stopped by American and
Spanish naval forces and inspected.
The United States justified its actions by claiming that it was flying
no flag and thus was considered a pirate ship. According to Richard
Boucher, the State Department's spokesman, "At first we couldn't
verify the nationality of the ship because the ship's name and the
indications on the hull and the funnel were obscured. It was flying no
flag."
On investigation it was found that the ship was the So San, which
claimed to have Cambodian registry. The So San's manifest stated it
was transporting cement to Yemen, but an examination revealed 15 Scud
missiles with 15 conventional warheads, 23 tanks of nitric acid rocket
propellant and 85 drums of unidentified chemicals all hidden beneath
the bags of cement.
It is believed that the North Koreans tried to disguise the ship (Song
Sang) by painting over the last two letters in the first name and the
final letter in the second name (So San) to help prevent
identification. The ship was eventually allowed to continue on its
course after it was determined that it had broken no laws.
World criticism
Following the World Trade Center and other terrorist attacks, world
opinion began to force the Cambodian government to reconsider its
policy of allowing CSC to flag ships at will. The Cambodian government
felt compelled to take action before one of the ships under its flag
was found guilty of terrorist activity.
"We are victims because the company recklessly allows ships to use the
Cambodian flag without proper inspection or control," said Hor
Namhong, the foreign minister, adding: "The company will be audited by
the government."
In July 2002, bowing to international criticism over concern for
"Cambodia's maritime safety record", the Cambodian government revoked
CSC's authority to grant registrations, giving that authority to the
Ministry of Public Works and Transportation. Ironically, it was this
ministry that had just two years earlier declared disinterest into the
alleged illegal activities of ships registered under its flag.
The Ministry of Public Works and Transportation was only in control of
the registry for about six months before the Cambodian government
granted the authority to register and flag ships to a new company,
International Ship Registry of Cambodia, and its representatives in
Busan, South Korea. According to e-mail correspondence from the
company's managing director, Charles Bach, to New York Times reporter
Keith Bradsher, there are no longer any North Korean ships registered
under the Cambodian flag.
But Marcus Hand, the Asian editor for Lloyd's List, explained how
difficult it is to know for certain who owns what ship because so many
of them are owned by different companies registered throughout the
world and only the North Koreans themselves know how many ships they
own and what flag they fly.
Not only does North Korea purchase flags of convenience, it also sells
them for nearly three times the normal asking price. According to ITF
in 2006, out of 408 North Korean-flagged ships, only 187 of them were
actually owned by North Korea; the rest were owned by other nations
including Cambodia, Tonga, Comoros and Sao Tome and Principe - nations
that are infamous for their own flags of convenience.
Prior to the United Nations Security Council's resolution following
North Korea's nuclear test in October 2006, some of the ships
registered to North Korea may have done so to avoid inspection while
they carried out illegal activities.
There is some question as to the number of ships that were owned by
United States-based companies and registered and flagged under North
Korea. According to the American Central Intelligence Agency's Fact
Book, there were three, but Bill Gertz, in an article published with
The Washington Times (June 8, 2006), listed nine ships owned by
foreign companies, such as Egypt and Syria, based in Delaware, United
States. One of these ships was discovered in March 2006 engaged in
smuggling migrants off the coast of Europe. Under sanctions that went
into effect in May 2006, the companies were required to cancel their
registrations with North Korea and seek new registrations with other
countries.
The new threat
With the CSC no longer able to grant registrations and Cambodia and
South Korea's progressively warmer relationship, North Korea has been
forced to look elsewhere to register its ships. According to The
Straits Times, at least 40 nations in the world engage in flags of
convenience; many of them willing to flag North Korean ships for a
price. North Korea does business with several of them, but a
surprising replacement for Cambodia has apparently been found -
Mongolia, a land-locked nation.
However, following North Korea's nuclear test in October of last year,
Mongolia's Ship Registry has urged ships under its flag to abide by
the United Nations resolution against North Korea. It is unclear what
effect this has had on North Korean ships registered with Mongolia.
In addition to the North Korean threat of nuclear weapons, it has been
speculated that North Korea may have the ability to launch modified
missiles from its submarines and cargo ships. North Korean-flagged
ships would be more susceptible to being stopped and searched by
United Nations forces, but ships under FOC might pass unnoticed
through surveillance and pose a significant threat to the enemies of
the Pyongyang government and to the reputations of the governments
which flagged them.
Robert Neff is a former columnist with the Korea Times. He is
currently doing research for several books dealing with early Korean-
Western relations from 1880-1910 and also on the Western gold mines in
Korea (1882-1939). He has been based in Korea for about 20 years -
first with the military and now as an independent researcher.
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