Mainly at the behest of a US government concerned about the possibility of Osama bin Laden’s followers doing something like turning a liquid propane tanker into a floating suicide bomb and setting it off in a major American port, the International Maritime Organization (IMO, a United Nations organization) passed a series of amendments to the 1974 Safety of Life at Sea (SOLAS) convention, and these amendments have become known as the International Ship and Port Facility Security Code (ISPS). Prior to these amendments SOLAS was principally concerned with the seaworthiness of vessels, but ISPS contemplates other threats like the hiring of terrorists onto ship crews and the smuggling of explosives and detonators onto vessels.
The debates over ISPS within the IMO were complex and heated. For example, the US government and the world’s maritime unions wanted ship registries to list the beneficial owners of vessels, in order to track down the reputed fleet of ships owned by al-Qaeda or the owners of vessels who skip out on debts owed to crews or suppliers; while maritime lawyers in Panama and Liberia took such requirements to be an attack on their nations’ corporate secrecy laws and many shipowners took them to be extra paperwork and costs imposed at the behest of organized labor.
These and many other issues were hashed out, the ISPS was adopted and the US government declared that as of this coming July, no ship that is not certified as compliant with the new rules will be allowed to call at an American port. (It will, however, be possible for uncertified ships to be inspected by the US Coast Guard as they approach US territorial waters and then proceed to their ports of destination --- a timely and costly process that shipowners would prefer to avoid.)
The certification process, within certain guidelines, was left to national ship registries, the largest of which is Panama’s. The main ISPS requirement is that each ship has to have a security plan that has been reviewed and approved by a recognized security organization, and that the ship must be inspected by such an organization to see if the plan is being implemented.
There are about a dozen recognized organizations that have for many years reviewed ships for seaworthiness, including Lloyds Register, the American Bureau of Shipping, the Italian Naval Registry and others. Virtually all IMO member countries have simply mandated these organizations to do ISPS reviews and inspections along with the traditional seaworthiness checks.
But not Panama. The Panama Maritime Authority (AMP) has selected three companies, of which only one, Florida-based Phoenix Vessel Services, is actually available for Panamanian-flag ships, to evaluate security plans. The inspections to show compliance with such plans may be done by one of the traditional recognized organizations. Panama is the only country with such a two-tier ISPS process, and one of the few that has put a part of it in the hands of a private monopoly. Initially, Phoenix began charging up to $3,000 per ship to review ISPS security plans, in addition to the AMP’s $250 charge for issuing the certificate. In other countries it’s costing about $750 to get a ship through the ISPS compliance certification process.
Shipowners and maritime lawyers complained about the monopoly and the price gouge, and Phoenix lowered its prices a bit. However, Panama’s ISPS certification still costs substantially more than the going rate in the rest of the world.
Attorney Eduardo Morgan, backed by the Panama Maritime Law Association, is now waging a campaign to make the AMP back down on its bifurcated review-inspection procedure and allow the traditional ship safety organizations to handle ISPS security plan reviews. It has become a public brawl with arguments about qualifications and insinuations of corruptions lying close beneath the surface.
AMP administrator Bertilda García --- whose principal qualification for her job is that she’s related to Augusto “Onassis” Garcia, Mireya Moscoso’s 1999 campaign treasurer, current Arnulfista candidate for legislator and publisher of La Estrella --- and the authority board of directors president Mirna Pittí --- whose principal qualification for her job is that she was the manager of Mireya Moscoso’s coffee plantation --- are arguing that Lloyds Register, the American Bureau of Shipping and the other traditional ship inspectors are not qualified to do ISPS security plan evaluations. Morgan --- whose clients include some of the safety organizations being squeezed out of business by the AMP --- and the Panama Maritime Law Association --- whose lawyer members generally have established business relationships with one or more of the traditional ship inspection services --- say that Phoenix is a small and little-known outfit with no special reputation that would support its monopoly on ship security plan reviews.
Morgan’s attack has sometimes been quite sarcastic. In an open letter to the AMP, he accused the AMP of making an unorthodox and erroneous interpretation of the ISPS code, to the effect that it “arrogates to itself the merit of having discovered Phoenix Management Services Group-USA, which surprisingly meets the requisites of the code.”
The context of Morgan's sarcasm is a Moscoso administration maritime policy whose twin pillars are nepotism and bribery, to the extent that hundreds of ships have abandoned the Panamanian flag.
The most notorious example is British labor leader David Cockroft’s purchase from Panama’s consulate in Manila --- headed by Juan Carlos Escalona, one of many Escalonas occupying top posts in the Moscoso administration --- of a Panamanian first mate’s certificate. Cockroft, who does not meet the qualifications for such a certification, paid $4,000 for the papers and then went public about it. A Panamanian first mate's certificate would, for example, allow its holder to be at the helm of a supertanker in US waters. As a result coast guards around the world have imposed time-consuming special inspections upon Panamanian-flag vessels and their crews, which have been costly to shippers whose cargoes have been thus delayed. In turn, such experiences have led some shipping companies to switch to other countries' registers. Thus any decision by the Mireyistas now running the AMP that deviates from international norms to the end of granting a monopoly to an obscure company will be presumed by some people to be an act of corruption.
But of course, the Mireyistas can point to the prior PRD administration’s grant of the AMP buoy and lighthouse maintenance contract to PECC, a company whose secret owners apparently include former President Ernesto Pérez Balladares, which got the contract from the national ports director at the time, Hugo Torrijos, who heads the PRD’s campaign committee this year. Add to that the allegiance of many of the AMP’s critics to the PRD and the admiralty lawyers’ business ties to Phoenix’s rivals and the Mireyistas are presumed by some people to have made the case that the criticism isn’t really about good government or a competitive cost structure for the Panamanian ship registry.
Eduardo Morgan and his supporters argue that the very future of the Panamanian ship registry is at stake. Most likely, however, the Phoenix monopoly will be abolished later this year when a new administration takes office. Meanwhile, most shipowners who use the Panamanian flag of convenience will find it more inconvenient to switch registries before July than to pay inflated fees to Mireya's designated company.
Also in this section:
Business & Economy Briefs
Controversy over ship security inspections
US government report on RP money laundering
EXPOCOMER 2004
The Panama News readership figures
