A Greenpeace photo of Benny No. 87 (background) transferring tuna
to the Hatsukari in the Atlantic
The owners of a Government concession company which sells Cambodian ship registration
to foreign vessels have lashed out at assertions that it provides Cambodian registration
to foreign vessels involved in illegal activities.
The Cambodian Shipping Corporation (CSC), owned by prominent members of Funcinpec
and a North Korean diplomat, was criticized recently by Greenpeace International
for providing Cambodian "flags of convenience" (FOC ) to foreign ships
involved in illegal fishing off the coast of Angola in May.
Khek Sakara, Chairman of the Cambodian Shipping Corporation (CSC) who along with
his mother Princess Bopha Devi and his father Khek Vandy own majority shares in the
company, rejected suggestions that CSC operations were improper or illegal.
"Many countries provide ship-flagging services; it's a common practice done
by developed countries including France," Sakara said.
According to both the CSC and the Ministry of Public Works' Maritime Marine Department,
there are between 100 and 150 foreign-owned vessels flying the Cambodian flag and
another 40 to 50 ships buying Cambodian registration each month.
According to shipping experts, FOCs are a legal "sleight of hand" that
allows ship owners to register their vessels in different countries generally to
avoid taxes and labor regulations of their home countries.
"Flags of Convenience (FOC) are all about diffusing responsibility, spreading
liability for any potential problems as widely as possible," explained a Phnom
Penh-based cargo-shipping specialist. "Shipping owners also use FOC in order
to cut costs, by registering their ships under nationalities with cheaper licenses
that allow the use of non-union crews."
Cambodia's entry into the international FOC market began in 1994, when the Government
granted concession rights to market Cambodian ship registration to the Phnom Penh-based
Cambodia Ship Registry (CSR) and its Singapore-based agent the Cambodia Shipping
According to CSC documents shown to the Post by former CSC chairman Khek Vandy, 16
percent of CSC's shares were bought and are controlled by Rim In Ryong, who Vandy
describes as "a Phnom Penh-based North Korean diplomat".
Vandy was uncertain whether Ryong was still at the North Korean Embassy in Phnom
Sakara told the Post that the North Korean connection to CSC was not unreasonable
in light of the long-standing international embargo on trade with the isolated Stalinist
state and "North Korea's very close relationship to King Sihanouk".
Sakara added that the number of North Korean ships flagged by CSC had shrunk from
a high of 30 several years ago to a low of "five or six" in 2000.
The potential impact of Cambodia joining the ranks of FOC nations such as Liberia,
Belize, Honduras and Panama has been raised by SRP National Assembly member Son Chhay.
"If there's a problem, the ship owner is ultimately responsible, but Cambodia's
reputation is at stake," Chhay said. "Is such a risk worth the $1000 a
month the ships pay?"
Sakara rejected the criticisms from Greenpeace International and Son Chhay.
"People don't believe that we can do business up to international standards
in Cambodia," said Sakara.
"The fact is that our company is very strictly controlled and must abide by
Singaporean shipping rules, the regulations of the International Maritime Organization
and [ship insurer] Lloyds of London."
According to Sakara, CSC fully complies with the administrative procedures to register
foreign-owned ships, but cautions that the behavior of Cambodian-flagged ships after
they leave port - such as the vessels identified by Greenpeace International - are
not CSC's legal concern.
"We're responsible for the administrative process ... the commercial activities
of [Cambodian-flagged ships] are beyond our control," he explained.
Sakara said CSC policy required any Cambodian-flagged ships reportedly involved in
illegal activity to have its Cambodian registration immediately revoked.
"The ship Benny 87 [reported by Greenpeace International to be involved in illegal
fishing off Angola in May] had its registration canceled immediately after we were
informed," Sakara said. "We can't say we don't have problems - its impossible
for any business not to have problems - but everything we do is done legally."
While CSC registration activities are subject to international standards of scrutiny,
the transparency of the financial arrangements between the company and the Cambodian
Government are somewhat murkier.
"Where does the money go [paid by the CSC to the Government]?" Chhay asks.
"I'm not blaming [CSC], it's more a question of our Government's responsibility
to look into this issue more carefully."
According to Sakara, the concession agreement between CSC and the Cambodian Government
allocates a percentage of revenue to both the Ministries of Public Works and Transport
as well as the Ministry of Post and Telecommunication.
"Whether those ministries forward that money to the Ministry of Finance as required
is another matter," Sakara said.
The Minister of Post and Telecommunication, So Khun, confirmed that his Ministry
received the US$100 application fee and $300 annual licensing fee paid for each ship
registered by CSC, and showed the Post detailed records of payments from CSC dating
from September 1994.
Over at the Ministry of Public Works and Transport, however, the fate of the 15 percent
of CSC revenue and an additional 10 per cent "facilitation fee" Sakara
said CSC pays the ministry was uncertain.
And though Ministry of Public Works and Transport Secretary General Ahmad Yahya confirmed
that CSC made regular payments of 15 percent of company revenue to a "special
ministry account", he claimed to be unaware of the 10 percent "facilitation
Yahya said his ministry's accounting and supervision of the CSC revenue collected
had left much to be desired.
"Until now, there has been no auditing [of CSC payments to the Ministry of Public
Works and Transport]," Yahya said. "Because CSC uses our national flag,
we have to be careful and watch them all the time, but until now we have done nothing."
Yahya failed to provide details of the CSC money as promised by Post deadline.
A written Post request to the Minister of Finance, Keat Chhon, for clarification
of CSC payments also went unanswered.
The participation of the North Korean diplomat as a CSC shareholder has raised eyebrows
among the diplomatic community.
A Phnom Penh-based diplomatic source with a specialized knowledge of North Korean
affairs attributed Ryong's involvement with CSC as "a financial necessity"
for the North Korean Embassy in Phnom Penh.
"The North Korean Government doesn't provide any funding for their embassies
to manage," the source explained.
"My assessment is the [CSC investment] was based on a need to make quick money."
Just how that "quick money" might have been derived was suggested by Sandro
Calvani, the head of the UN's Drug Control Program in Asia during a conference on
drug suppression in February.
"North Korean ships are heavily involved in drug trafficking," Calvani
said, adding that North Korea's isolation and refusal to join international drug
fighting treaties made it a "natural haven" for drug trafficking.
Diplomatic sources confirmed that North Korea had been identified "a long time
ago" as using Cambodia as a base to traffic both opium from Laos as well as
illegal wildlife products such as ivory and rhino horn.
However, the source was unaware of any role played by CSC-flagged Korean ships in
Sakara expressed skepticism at the suggestion that Cambodian-flagged North Korean
ships were involved in illegal activities.
"I don't think they [North Korean ships] are involved in anything illegal ...
most of the trade done by North Korean ships is with Japan, which is not a 'drug
country' and has some of the world's strictest [import/export] controls."
Ministry of Public Works and Transport Secretary General Ahmad Yahya was more philosophical
about the suggestion that Cambodian-flagged North Korean ships might be involved
in illegal activities.
"I don't know and we don't want to go deeper and deeper [into CSC's operations],"
he said. "We don't know or care who owns the ship or whether they're doing white
or black business ... it's not our concern."