Government Sold National Ship Registry Rights

By Denise Hruby and Kuch Naren
The Cambodia Daily, November 29, 2013 

Cambodia has no control over Cambodian-flagged ships complicit in illegal activities on the high seas as the government sold the authority to register ocean-going vessels, under Cambodia’s national flag, to a company in South Korea for $6 million, a Council of Ministers official claimed Thursday.

On Tuesday, the European Commission (E.C.) announced that it would impose a ban on all seafood imports from Cambodia—the first such ban in the history of the European Union (E.U.)—as Cambodia had failed to address any of the issues raised by the E.U. over illegal fishing operations by vessels flying the Cambodian flag.

Despite an E.C. warning in 2012 demanding action, Cambodian-flagged vessels were still complicit in illegal fishing, the E.C. said in its decision to impose a ban on imports of Cambodian seafood.

The E.C. also said the Cambo­dian government had no means to monitor the activities of ships flying its national flag, nor did the government know how many ships were registered under the Cambodian flag.
“Cambodia has failed to discharge the duties incumbent upon it under international law as flag State in respect of cooperation and enforcement efforts,” the E.C. said.

“Cambodia failed to demonstrate that it fulfills the conditions of [the United Nations Con­ven­tion on the Law of the Sea] which stipulates that a flag State assumes jurisdiction under its internal law over each ship flying its flag and its masters, officers and crew in respect of administrative, technical and social matters of the ship,” the E.C. said in its ban decision.

“This fleet represents a significant fishing capacity not submitted to an effective monitoring system, which cannot permit Cambodia to fully ensure its flag State responsibilities,” the E.C. wrote.

Cambodia wrote to the E.C. in June claiming that it had stripped vessels of the right to fly a Cambodian flag, leaving some 84 vessels registered to the country in 2013.

Lloyd’s Register of Shipping, however, documented 144 Cambodian-flagged vessels as of 2013, while the World Register of Shipping, cited by the E.C., listed 150.

According to the U.K.-based Environmental Justice Foundation, 176 fishing vessels and 24 fishing factory ships were registered under the Cambodian na­tional flag in 2009—a registration process that takes just 24 hours, and can be done completely online.

Seng Lim Neou, a former secretary of state with the Council of Ministers, confirmed Thursday that he heads a Council of Ministers committee in charge of cooperating with the International Ship Registry of Cambodia (ISROC), a private company that purchased the rights to register foreign ships under the Cambodian flag.

Mr. Lim Neou admitted that Cambodian-flagged foreign ships were complicit in plundering the oceans, but he said the government now has no control over who flies the national flags. Mr. Lim Neou also claimed that only six ships worldwide are registered as Cambodian ships, a figure that flies in the face of the E.C. report.

“Sometimes, those Cambodian-flagged vessels occasionally fish in wrong places, but then they are arrested,” Mr. Lim Neou said.

“We are not able to control those fishing boats and ships since they fish in the open high seas, so how could we control them? We cannot afford to install long-distance monitoring systems,” he said.

According to Mr. Lim Neou, the government sold its authority to register vessels to ISROC, which is based in Busan, South Korea.

ISROC paid some $6 million to the government for the right to sell the Cambodian flag to vessels, starting in 2003 until now, Mr. Lim Neou said.

“The firm paid the government more than $6 million for less than a 10-year-long operation,” he said.

ISROC transferred the money from South Korea to the government though the National Bank of Cambodia, Mr. Lim Neou said.

While it was not known yesterday if the reported $6 million was a one-off lump sum payment or installments, the 2013 national budget does not have any entry for revenues earned from ship registrations.

Contacted yesterday by telephone, the local representative of ISROC, Chhuon Molyroth, said that she was not aware of the amount of money paid to the government by her company, but that Mr. Lim Neou received a monthly report of ship registrations.

“Normally, the office at the headquarters [in Busan] just makes a monthly report to the government of Cambodia that says, for example, in this month, we have registered 10 or 15 ships under Cambodian flag,” Ms. Molyroth said.

“If you meet the requirement to register [a ship], then it’s OK, we don’t have to tell the [Cambodian] government,” Ms. Molyroth added.

Until 2002, another private firm, Cambodian Shipping Corp. (CSC), based in Singapore, was in charge of registering vessels under the national flag, but lost its license after Cambodian-flagged vessels were involved in several high-profile incidents, including the smuggling of cocaine and missile technology from North Korea.

According to 2010 court documents, then-secretary of state for the Ministry of Commerce Khek Ravy received more than $16,000 per month from CSC, which was chaired by his brother, to a total of some $1.5 million over a period of several years.

With 200 vessels registered in 2009, Cambodia was the world’s third-largest supplier of a Flag of Convenience, which enable ship owners to avoid paying taxes or complying with international laws and regulations, according to the Environmental Justice Foundation.