Ship Agency : Tuesday 3rd October

09.10 - 09.40 Julia Mavropoulos - ITIM

presented by Julia Mavropoulos, Claims Director

Background

There will always be refugees fleeing war, famine, or religious, racial or political persecution. Those of us born in countries where human rights are respected, and a decent life free from hunger and persecution is a basic right, are fortunate. These rights are something we all take for granted, and no-one can blame those less fortunate for trying to achieve them. Not all migrants are fleeing from injustice, however, or only from that injustice which has half the world with too much and the other half with too little. I refer to the economic migrant.

Hardly a day goes by without reference in the press to economic migrants and the various methods they use to obtain entry into the industrial west. Europe is awash with illegal immigrants and many more are waiting on the borders. North America faces similar problems. According to a 1997 study by the US Immigration and Nationalisation Service, there are 5.5 million illegal aliens living in the USA, and this figure increases by 275,000 each year. The International Organisation for Migration puts the number of illegal migrants each year at 4 million.

Throughout the 18th and 19th centuries, up to the beginning of the First World War, there was a constant flow of economic migrants - unskilled and poor people - primarily from Europe, to the new worlds of the Americas and Australasia. The first half of the 20th Century saw the influx of unskilled and poor migrants to European countries from their former colonies in the Far East, the Indian sub-continent, the Caribbean and Africa. The primary reason for these migrants uprooting themselves from everything familiar and taking to the seas in great numbers has always been economic - the dream of a better life for themselves and their families.

The inscription on the base of the Statue of Liberty says "Give me your tired, your huddled masses, yearning to breathe free". That was then — although unskilled and poor migrants still take to the seas in great numbers, today only the well off and skilled need apply - everyone would like the huddled masses to stay at home.

The slamming of doors to the industrial West has led migrants desperate for a better life to seek other ways to achieve their dream. In the past decade the problem has escalated as trafficking in human beings has become big business, attracting organised criminal gangs. In a ten day period in 1999 there were seven separate stowaway incidents involving 300 Chinese nationals arriving at US and Canadian ports in open top containers. A typical incident involved 13 migrants who had spent two weeks in a steel, canvass-topped 40 foot container with a mattress, bottled water, waste buckets, and rotting food. Where was the container? It was in the middle of a container stow in a ship crossing the Pacific. It took 50 container movements to get to it. The unfortunate shipping line who had booked a container in good faith, was fined US$250,000. In contrast the charge per head for smuggling the 300 migrants was likely to be US$30-50,000, and the smugglers’ total earnings could therefore have been as much as US$15,000,000. In a recent incident which shocked the world, 58 young Chinese nationals were transported from Europe to the United Kingdom in an airtight reefer container on the hottest day of the year. When the container arrived in the UK, 56 of the 58 people had suffocated.

Not all economic migrants use such drastic and dangerous methods to stow away on ships. The majority of stowaways do it the easy way by climbing up the ship’s gangway or ropes and concealing themselves on the ship, and some economic migrants sign on as crew members, and desert the ship when they arrive at a place they want to live. Stowaways and deserting crew create a major problem for shipowners and their insurers. The International Group of P&I Clubs spends approximately US$10,000,000 each year on fines and costs relating to illegal migrants. The actual cost to shipping is believed to be in the region of US$20,000,000 per annum.

The problem for ship agents

What has been described is an enormous problem, both in terms of human suffering and in financial cost, but it is a problem for governments and shipowners, not ship agents. However, ship agents are not immune. They may be legally liable under their country's immigration laws, or they may become the innocent victim of migrant smugglers.

Legal liability of ship agents

What is not always appreciated is that ship agents in many jurisdictions face the same liabilities as shipowners when deserting crew or stowaways illegally enter the country in ships under their agency. ITIC insures the liabilities of its ship agent Members for immigration fines, and the costs of maintaining and repatriating illegal immigrants, and has therefore investigated the legal position in numerous countries. Although ITIC has to date found that agents have a joint and several liability with the shipowner under local immigration law in 34 countries, the agents in most of these countries do not have problems. The reasons for this are twofold. Some countries are not targets for illegal immigrants, and in other countries the law exists but is not enforced. In ITIC's experience, the three countries where ship agents have major problems with immigration fines and costs are Canada, the United States of America and the United Kingdom. These countries are all prime targets for illegal migrants and all have laws which make the ship agent jointly responsible with the shipowner for fines and costs relating to illegal immigrants.

Canada

The Canadian Immigration Act and Regulations provide that "the transportation company [defined as a person or group of persons including any agent thereof transporting persons by vehicle] is required to convey that person to the country from which that person came, or to such other country as the Minister may approve". The "transportation company" is liable to pay all removal costs in respect of that person.

In practice if deserters or stowaways leave a ship at a Canadian port, a security deposit has to be paid to the Enforcement Office of the Citizenship and Immigration Canada. This deposit can be for an unlimited amount at the discretion of the immigration officer and the latest information is that the deposit has recently increased to C$20,000 (US$13,500). C$3,200 of this amount is regarded as an "administration" fee and is non returnable. The balance is refundable if the deserter or stowaway is granted landed immigration status, or the Canadian immigration authorities are provided with acceptable proof that the person is no longer resident in Canada. The problem for ship agents in Canada mainly relates to deserting crew. Crews are normally permitted to land, and therefore do not become illegal immigrants until the ship has sailed without them. Although the Canadian immigration authorities have the power to detain the ship pending the provision of security by the shipowner, in practice the ship is allowed to sail and the authorities look to the agent for payment of the security deposit.

U.S.A.

Section 241 (d) of The Illegal Immigration Reform and Immigrant Responsibility Act of 1996 provides that "the person providing transportation [defined as the owner, agent, master, etc. of a vessel bringing an alien to the United States] shall take the alien to the foreign country to which the alien is ordered removed and shall pay the transportation costs". Section 8 provides for the imposition of a fine of US$3,000 on the owner (and his agent) who "fail in their duty to prevent the landing of unauthorised aliens".

In a recent incident a ship agent in New Orleans was charged with fines totalling US$24,000 because 8 crew had deserted a ship at a US port. However, the crew had not deserted at New Orleans, but at Boston, where another agent had been appointed. The reason why the New Orleans agent was held responsible was that they were the "entry" agent at the ship's first port of call in the United States. The Club has appointed lawyers to lodge an appeal, and is also attempting to get the owner to pay, but it seems that the INS are within their rights to impose such an unjust fine.

In late 1999, 132 Chinese stowaways were found on board the PRINCE NICOLAS at Savannah by the US immigration authorities. The PRINCE NICOLAS was bareboat-chartered by a Chinese company and manned by a Chinese crew. The stowaways were in a 50 foot square secret compartment in the forepeak tank, which was fitted with bunks, ventilation, toilet facilities, lighting, etc. Compared to the containerised stowaways, these gentlemen were in five star accommodation and must certainly have paid up to US$50,000 each (which would net the smugglers a cool US$6.6 million). The fines and repatriation costs for these stowaways will be in excess of US$1,000,000. In this case the ship was seized, and the shipowner subsequently put up the necessary security. However if you think of the same situation, and substitute a ship which has no P&I cover (or an owner who has prejudiced his P&I cover), an owner who has no funds and who abandons the ship and its crew, you can see that the possibility for a multi-million dollar claim by immigration authorities against a ship agent is only too real.

United Kingdom

The Immigration (Carriers’ Liability) Act 1971 provides that where a person lands in the United Kingdom without proper documentation, or where he enters lawfully for a limited time as a member of the crew of a ship, but then remains beyond the time allowed "......an immigration officer may give the owners or agents directions requiring them to make arrangements for his removal from the United Kingdom". The Act goes on to provide that "the owners or agents shall be liable to pay the Secretary of State on demand any expenses incurred by the latter in respect of the custody, accommodation or maintenance of that person". The Immigration (Carriers’ Liability) Act 1987 was rushed through the UK Parliament in response to the problems caused by hundreds of Tamil refugees from Sri Lanka arriving without visas and seeking political asylum in the UK. Section 1 of the Act provides that "the owners or agents of the ship shall be liable to pay the Secretary of State on demand the sum of GBP1,000" . In 1991 the fine was increased to GBP2,000. The Asylum and Immigration Bill which came into force in April 2000 empowers HM Immigration to impose similar fines on hauliers who bring back stowaways in their trucks or trailers, or even to confiscate their vehicles.

The UK appears to be unusual amongst the countries of the European Union in its attitude to ship agents. Although the immigration laws of both Ireland and Greece place the responsibility for illegal immigrants on the ship agent as well as the ship owner, in practice they do not enforce these rights against ship agents. As far as we can gather, the immigration laws of the other Member states place liability on the ship owner, but not on the ship agent, unless of course the agent is implicated in the entry of the illegal immigrant.

The affect on the ship agent

Placing joint and several liability on ship agents for stowaways and deserters is an example of government passing its responsibilities to the commercial sector in a totally unfair and unreasonable manner. The agent has no control over who arrives on his principals' ships, nor have we ever heard of an instance where an agent was involved in smuggling illegal immigrants. The problem for ship agents is, of course, nothing like on the same scale as the problem ship owners face, but it is still costly and time consuming. The Club receives at least two notifications each month from ship agents, who are facing the possibility of fines and repatriation costs for stowaways and deserters.

Given the choice of pursuing a shipowner registered in Liberia or a ship managed from Singapore, or a local company, it is inevitable that the immigration authorities will look to the local agent. The immigration authorities leave it to the ship agent to trace the shipowner, if he can. If illegal immigrants apply for political asylum, they could stay for months (and sometimes years). The general rule is that if they are deported, the costs of their maintenance become payable, but if political asylum is granted they are not. The main problem for ship agents is that the liability to the immigration authorities is usually without a time limit, and illegal immigrants are frequently apprehended by the authorities years after the ship and its owner have disappeared.

If deserters or stowaways are caught before the ship sails, then it is possible to either obtain funds from the shipowner to cover the fine and costs, or a letter of guarantee from the shipowner's P&I Club. However, the ship agent cannot normally compel the shipowner or his insurers to provide security if deserting crew or stowaways have illegally entered the country but have not been caught. It is difficult to get the courts to allow the arrest of a ship for the provision of security for something which has not happened, and which may never happen. If you are faced with this situation you should consult the Club immediately.

Liabilities under bond to immigration authorities

Where the ship agent is not liable under the law, he sometimes makes himself liable in an effort to be of assistance to his principal. Although in Germany the ship agent is not jointly and severally liable for fines and costs relating to illegal migrants, the German immigration authorities will only accept a security bond signed by a German company. If a German ship agent signs the bond he becomes liable.

In one case which involved a ship which had arrived in India for scrapping, the Indian immigration authorities detained the master for five months because a stowaway had been found on the ship. In order to secure the release of the master, the agent provided a security bond under which he agreed to pay for the upkeep of the stowaway (who had asked for political asylum) and for his repatriation costs. The beneficial owner of the ship, when it became apparent that the stowaway would not be leaving India in the foreseeable future and that his maintenance costs would continue, decided to wash his hands of the stowaway, leaving the agent to pay his living costs. Two years later he is still living at the agent's expense.

Members should consult the Club before they sign anything which commits them to pay out on behalf of illegal immigrants, so that we can ensure appropriate counter-security (such as a bank guarantee or an appropriately worded letter of guarantee from the shipowner's P&I Club) is obtained.

Migrant smugglers targeting ship agents

As can be seen from the foregoing, many immigration laws already militate against ship agents, but there is a continuing situation which causes even more problems. This involves various companies around the world who try to introduce illegal immigrants into a country posing as crew members, using innocent and unsuspecting ship agents.

The "crew joining" scam first came to the Club's notice in the mid 1980s when several agents in northern European ports were contacted by the "new owners" of ships. The usual story was that the ownership of the ships had recently changed, and the new owner was sending his own crew to take over the ship. The ship agents arranged for their letters to be used to obtain entry visas, travel, accommodation, etc. for the new owner's 20-30 third world crew. Once the ship agent had collected the "crew" from the airport and delivered them to their hotel, the crew disappeared, leaving the agent to foot their bills. The "ships" never existed and therefore never arrived. The costs paid by ship agents included fines from the immigration authorities, and repatriation costs if the illegal immigrants were apprehended.

Now it is increasing difficult to gain direct entry into Europe and North America, and "crew" are sent to an intermediate port, from where they would be sent on to join the "ship" which had been "diverted" to a port in Europe or North America. The Club have been notified of cases which involve agents in every continent and agents all over the world need to be vigilant.

One particularly troublesome smuggler (who we know as "the "Captain") has sent telexes (using the same telex number of 211698 USTC GR) appointing ship agents for ships which did not exist on more than 20 occasions that we know of between 1993 and 2000.

In December 1996 "Capt. Argiris" of "Atlantic Shipping Piraeus" asked an agent at Aqaba to deal with 15 crew who were joining the m.v. "ANJU". In February 1997 "Capt. Dimitris" of "Suwanta Shipping, Piraeus" asked an agent in Amman to deal with 15 crew who were joining the m.v. "SUWANTA 1". In 1999 in Lisbon the name was "Capt. Dinos" and the ship was called "SOMA". When ITIC warned the Portuguese ship agent the "Captain" contacted a ship agent in Copenhagen, who was immediately alerted to the fact that all was not well because a ship of the draft given would not have been able to enter the Sound from the south for passage to Copenhagen. All these seemingly Greek seafaring gentlemen are the pseudonyms of a fraudster engaged in the business of relocating illegal immigrants using ship agents. ITIC publicised the Captain's activities, methods, telex number, etc. and we saw a temporary halt to the reports. However, in July 2000 two agents in France were contacted by "Captain Ahmed" of Tristar Shiping & Trading of Piraeus, asking them to act for a crew replacement for the m.v. "JULIA I". The agent was immediately alerted because Captain Ahmed had misspelt "Shipping". A typical incident involving the "Captain" left an agent to pay hotel and repatriation costs of US$26,000 for nine "crew" who had been abandoned in Djibouti.

We must assume that these documented incidents are the tip of the iceberg. The "Captain" touts for business repeatedly in the same places, and in order for people to pay him their life savings to relocate them, he must succeed more often than not. His aim is to smuggle migrants, not to cause loss to ship agents - although this is often the result. The "Captain" is by no means a sophisticated fraudster. He used the same telex number for years. Publicity from ITIC and BIMCO has caused him to abandon the telex and Greek pseudonyms, but he is now using cellphone numbers and badly presented and spelled documentation. How can this fraudster carry on doing business for so long? The problem is getting the police in any country interested in stopping him. The fraud crosses national boundaries. The authorities in Greece cannot become involved in a fraud that happened in the Middle East, unless someone who has suffered a loss is willing to swear out a complaint. Most agents just want to forget the incident and get on with something which earns them some money.

The "Captain" is not the only operator in this field. A ship agent in France received a communication from a rig operator asking him to handle the call of a rig in French waters en route from the Baltic to Equatorial Guinea. The purpose of the call, as you will have guessed, was to pick up 10 "rig workers" from African countries. The agent, as requested, sent letters of invitation to the French consulate at Douala to allow the "rig workers" to fly to France. Luckily the French consulate "smelled a rat" and the visas were not issued. One year later the same agent was contacted by another organiser of "rig workers" from Africa, asking him to arrange visas. He promptly notified ITIC.

In April 2000, a ship agent in Ireland received a communication from "Alliance Shipping Lines Ltd" of Chittagong Bangladesh, asking them to attend their ship the "SUNFLOWER 1" for bunkering and crew changes at Dublin, before proceeding to a British port. The Irish ship agent was suspicious, and reported the matter to ITIC. The Club ascertained that the Canadian Immigration Authorities had issued a letter warning that "Alliance Shipping Lines Ltd" had been involved in arranging bogus crew changes at Vancouver and, on checking the status of the "SUNFLOWER 1", it was discovered that the ship had been scrapped in January 2000. In August 2000, the same people, now calling themselves "Orient Shipping Lines Ltd" contacted an ITIC Member in New Zealand asking him to attend to a bunkering and crew change call of a ship for which they had no name, but had all the particulars/dimensions. The ship's particulars were identical to those provided for the SUNFLOWER 1, which enabled ITIC to confirm that the fraudster had struck again.

The ship agent who acts for a non-existent ship or owner is in a worse position than he would be if he was merely liable under his country's immigration law. He becomes personally liable under any contract he enters into in the name of that non-existent principal, and is likely to be fined by the immigration authorities. In a case reported by BIMCO in 1994, a ship agent in Antwerp received instructions from "Delta Marine Management" of Piraeus to arrange for 11 crew to join the "KATERINA II". The ship and the owner did not exist and the crew disappeared. Whilst there is no provision under Belgian immigration law for the ship agent to be jointly and severally liable with the shipowner for immigration fines and repatriation costs, the agent was the party responsible for introducing these 11 illegal immigrants into Belgium and was held to be responsible by the Belgian authorities. We do not know how much the fines and costs amounted to in 1994, but today the fine for each illegal immigrant in Belgium is B.Fcs 150,000 (US$3,650) and in addition a bank guarantee for B.Fcs 200,000 (US$4,900) has to be lodged in respect of costs. Both the fine and the security for costs become due even if the illegal immigrant has disappeared. The ship agent would be looking at a liability today of almost US$100,000 for 11 illegal immigrants.

Forging agents' stationery

In order to obtain visas for illegal immigrants to travel, the fraudsters need a letter from the ship agent confirming that the "crew" are joining a particular ship. Some fraudsters, probably because ship agents are becoming more cautious and suspicious, find it easier to forge the agent's stationery. Today, it is increasingly easy for anyone with access to a scanner to forge any document. In September 1999 fake crew members en route to Canada were stopped at Charles de Gaulle and Dorval airports and were found to be carrying forged letters on the headed paper of reputable Canadian ship agents. In March 2000, a French ship agent was contacted by the French consulate in Cairo, enquiring whether he had written a letter asking for visas to be provided to 10 Egyptian seaman due to join a ship called the "ATON" at Brest. Ship agents can therefore unwittingly become involved in visa fraud. If it is brought to the ship agent's notice that his country's embassies abroad have been approached by seamen seeking visas, using forged letters purporting to be on the ship agent's headed notepaper, he should immediately notify all relevant parties of the intended fraud. Such notification should be in writing and the notified parties should include immigration authorities and the embassies in the country where the fraud was initiated. If the immigration authorities subsequently discover that the ship agent was aware that their letterhead was being used in this manner, a failure to notify the relevant authorities could be viewed as implied authorisation of the use of the letterhead, or even complicity in the fraud.

Conclusion

Nothing can stop the tide of stowaways and deserters, but ship agents can take steps to limit their own exposure. The Club's advice to its ship agent Members is to view every request which involves the arrival of third world crews with the utmost suspicion. In the rush to get new business, the ship agent should not forget that there is no point doing a job when all he is left with are costs. No insurance can reimburse the agent for the time and trouble wasted in dealing with the problems that illegal immigrants can cause. Most of the incidents which are described in this talk are fairly amateurish but. as large profits can be made from economic migrants, we must assume that fraudsters will become more ingenious and sophisticated as time goes on.

Protective steps

What can the ship agent do to make sure that he does not get caught?

Deserters and stowaways

Fraudulent crew changes

• TREAT EVERY REQUEST FOR CREW CHANGES WITH SUSPICION
• CHECK

standing and reputation of all unknown principals

• SCRUTINISE instruction

does it have a cellphone number? is there no address? is the name of company misspelt?

check with industry reference sources.

as mentioned in this article, the fraudsters sometimes use a genuine ship name.

fraudsters sometimes use the name of genuine owners. Get the name and

• WARN other ship agents through your local ship agents’ association

• NOTIFY AUTHORITIES IMMEDIATELY

if your company stationery is being faked by fraudsters

CONTACT ITIC FOR ASISTANCE