FOR IMMEDIATE RELEASE

(October 01, 2003)

MANDATORY DATA COLLECTION BY FLAG STATES IS BEST WAY TO LIFT VEIL OF SECRECY FROM SHIPPING INDUSTRY

A mandatory system of data collection by flag states is the best way to lift the veil of secrecy from the shipping industry without interfering with the normal process of ship sales, financing, insurance and legitimate commercial secrecy needs, Clay Maitland, managing partner of International Registries, Inc. (IRI), said at the Marine Log Conference on Maritime Legislation, Regulation and Policy in Washington, D.C. today (1 October 2003). IRI administers the Marshall Islands registry, and Mr. Maitland is a leading maritime lawyer and a representative to the IMO's Legal Committee.

He said that the Marshall Islands registry already required disclosure of the parent company that owned a vessel offered to it for registration or re-registration. "If we are dissatisfied with the information, we do not accept the ship." He said ship registries were the "insiders", because that was where mortgages and other financing documents became part of the public record, and where title of ownership was held. At the same time, he pointed out, commercial information would be protected.

"This information should be publicly available, and a mandatory flag state data collection system is the way to provide it. We hope that the Flag State Code and Audit Scheme currently being considered by the IMO will include global provisions for enforcing it."

He said the Erika and Prestige disasters, together with the requirements of the ISPS Code, had given the issue of ownership and operational information a new urgency. The collection of data about the ship and her owners, crew, lenders, charterers, underwriters, managers and shippers, lies at the core of maritime security. Port states or homeland security authorities will need detailed information on the identities of the operator and charterer, and particularly time and bareboat charterers.

There has been a large amount of political opportunism and scapegoating on display in the debate over transparency. "It is important to realize that secrecy is not necessarily a furtive, dishonest thing. It has a long history in shipping, having grown up with the need to limit the shipowner's liability. Secrecy has always been necessary in many highly competitive commercial environments."

He criticized the "one solution fits all" matrix proposed by the OECD as harmful to higher operational and safety standards. "Structural or legalistic solutions can easily be evaded by inventive and diligent lawyers and their clients." He said ships are built, bought and sold quickly, just like other manufactured items. A terrorist can buy a ship and use it - well before an ownership database is available. Also, the beneficial ownership of ships is no more opaque than that of other assets, like that of a hotel. "Nor should responsibility for ship accidents be limited to beneficial owners, but should be extended to those other stakeholders that facilitate or enable unsafe ships to ply the seas or perpetrate unlawful practices." He said the shipping industry should take a leaf out of the book of the aircraft industry. "After a crash, the focus is on the operator responsible for maintenance and crewing - not the leasing company that owns the plane."