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February 20 - February 22, 2023
Even though it costs money to compensate owners for scuttled ships, the market has evolved to respond efficiently to marine accidents, even faked ones, by passing on the cost to someone else. When the number of casualties increases, through an outbreak of war or a spate of frauds, members raise premiums. Indeed, dangerous seas are more profitable, since they mean that customers are more likely to seek the protection of Lloyd’s in the first place.
The crew of one vessel were found to have booked local hotel rooms a month before a supposedly accidental explosion stranded them off the coast.
FERIT’s most significant finding was that the scuttling craze was linked to organized crime groups operating out of Taiwan, Hong Kong, and Singapore. They seemed to have access to shipwrecking specialists. A welding contractor, for example, was hired to cut four half-meter holes in a vessel’s hull and then seal them with metal panels that could be removed when the time came. A few of the culprits were jailed, but most disappeared before they could be captured.
The British rescuers fulfilled their obligation to aid fellow mariners, although they found it odd that there were no flames coming from the stricken tanker as it went down, only the faintest trail of smoke, and that the Salem’s fleeing sailors had found time to load its lifeboats with packed suitcases, sandwiches, and cigarettes.
The Greeks referred to him as “Saul,” the Hebrew name for
Paul the Apostle, who persecuted Christians before converting and joining their cause.
For most of its history, the money behind the market came from “Names,” the moniker given at Lloyd’s to private individuals who pooled their wealth into underwriting syndicates. In
The Lloyd’s market was, in effect, an invitation-only investment club for preserving wealth and privilege.
Once you know what scuttling looks like, and that it pays well with little chance of consequences, you start seeing it everywhere. Every tanker that runs aground; every freighter that goes down in a storm. Was it really an accident? Who can ever know for sure?
Veale pulled several hundred pages of documents from Liberia, where the tanker was flagged, as well as the Marshall Islands, where the shell company that officially owned it, Suez Fortune, was registered.
In a seemingly improbable coincidence, the same two salvage firms that attended to the Brillante Virtuoso had also tried to save the Elli. Poseidon Salvage, run by the gnarled diver Vassilios Vergos, was first on the scene from nearby
Aden after its grounding. Poseidon later was replaced by another Greek outfit, Five Oceans Salvage, just as it had been when the Brillante was hauled out of Yemeni waters. There were two other parallels. The Elli’s chief engineer was Nestor Tabares, the same Filipino sailor who’d bravely stayed aboard the Brillante after the other crewmen fled. And its owner was none other than Marios Iliopoulos.
Financial records showed that the companies he was involved with were interlinked with loans and cross-guarantees, making them “highly interdependent,”
absolute certainty, imperviousness to criticism, and a deep aversion to unpleasant conversations.
In a meeting at Lloyd’s to discuss the case, representatives of the NCA, the City of London Police, and Financial Conduct Authority—the UK’s main financial-market watchdog—stressed that insurers had a legal obligation to prevent fraud and money laundering, one they needed to ensure that they were honoring.
“There was no attack by Somali pirates,” they said in their new pleadings. In fact, they went on, “Any such attack on the vessel was staged with the involvement and connivance of the owner,” and members of the crew:
‘the game was not worth the candle’ ”—an obscure expression, coined before the advent of electricity, about avoiding card games with stakes lower than the expense of illuminating them.
The open exchange of documents between defendants and plaintiffs, a process known in English law as “disclosure,” is critical to the administration of justice. If it didn’t occur, decisive evidence might be hidden, and any court decision could be tainted by unfairness.
That, in turn, makes Piraeus the ship-owning capital of the world. Roughly 18 percent of the worldwide merchant fleet is Greek owned, a volume wildly out of proportion to the country’s overall economy, which is barely among the twenty largest in Europe. The marine assets controlled from Piraeus dwarf those held by Japan, with 11 percent of the total, and the US, with just 3 percent. Collectively, Greek shipowners have done better out of the seventy-five-year explosion in international trade than almost anyone else. No geopolitical or macroeconomic event—not the fall of the Soviet Union, the
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But the most important element of the story is nimble twentieth-century entrepreneurship. The Second World War devastated Greek shipping, destroying more than 70 percent of the country’s commercial fleet by the end of hostilities. But enterprising Greeks soon found a way to replace that lost tonnage: by acquiring surplus Liberty Ships produced for the Allied war effort, which were being sold off in large numbers. Despite the demands of fighting a well-organized Communist insurgency, and the severe poverty of large parts of the population, the Greek government managed to find the resources to
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Sixty percent of the growth in maritime trade between 1948 and 1973 was in “liquid cargo,” overwhelmingly petroleum and products related to it.
oil over longer distances required a huge increase in tanker capacity, which a pair of Greek operators were particularly eager to provide. Stavros Niarchos and Aristotle Onassis, the most prominent shipping tycoons of the postwar era,
They were among the earliest to grasp the potential of putting their ships and their money entirely beyond the reach of the countries where they lived and did business.
1949. He and Onassis quickly became some of the most enthusiastic users of so-called flags of convenience, which allowed them to escape the rules on maintenance, inspections, and sailors’ wages that prevailed in the Western world.
Other financial sleights of hand pioneered by Onassis in particular, like dividing the ownership and management of ships into separate companies domiciled in tax havens, became similarly commonplace. Once he had proved the concept, the basic appeal of such regulatory dodges was too attractive to resist: all of the profits, little of the accountability.
To operate commercially, merchant vessels require certificates from “classification societies,” private companies that inspect a ship’s condition and verify that its hull and machinery are in working
order.
Unlike in the US, British lawyers fall into two distinct camps: barristers and solicitors, with different skills and training. In the front row were the barristers, trial specialists whose job it would be to address the judge and question the witness. Behind
them sat the solicitors, who deal directly with clients and do most of the preparation for a case. The most senior solicitors sat immediately behind the barristers.
Switzerland had other advantages. As they explained to Theodorou, who feared being detained if he left Greece, its status as a non-EU country meant it was beyond the scope of a European Arrest Warrant. British police had no power there.
Theodorou claimed to have actually
bought some of the guns carried by the supposed pirates who boarded the Brillante, paying 1,500 euros for three Kalashnikov-style rifles in Aden before the attack.
Ships passing the Yemeni coast often needed to refuel. Coming into port for “bunkering,” as the process of refueling a merchant vessel is called, cost time and therefore money. That created an opening, Ba’alawi explained. Vessel managers would pay a premium to avoid the delay, and with a license from the local authorities and a small tanker, it was possible to buy oil from the refinery in Aden, then resell it at a markup five or ten miles offshore.
The company could also furnish security details, putting groups of armed Yemenis sourced by Nashwan onto a Poseidon tug called the Voukefalas—named, rather grandiosely, for the horse that Alexander the Great rode into battle—to escort passing ships.
“In the salvage business I don’t wait for things to happen,” he told his friend. “I make them happen.” Plakakis, who knew next to nothing about the workings of Lloyd’s or the salvage industry, was confused. How could a salvor know in advance about an accident?
He particularly loved fasoolia,
a spicy bean stew served for breakfast, and hadn’t had it since.
“There was no trust to report the case to the Greek authorities,” Plakakis said, because Iliopoulos was “a Greek oligarch,” with untold influence in Athens. “I was afraid about my life.”
“I do not consider that there is a plausible explanation of the events which befell Brillante Virtuoso which is consistent with an innocent explanation,” Teare said. And he had no doubt about who was responsible: “The orchestrator of these events was the owner of Brillante Virtuoso, Mr. Iliopoulos.”
Like the Brillante before them, the Columbus and the Magellan were dismantled by hand and stripped of recyclable material at Indian and Pakistani shipbreaking yards, some of the world’s most dangerous and polluted workplaces. Because of the human and environmental cost, it’s illegal for European companies to send vessels to either country to be broken down without first removing all potentially hazardous waste, but the rules are easily skirted by transferring ownership offshore.
Most of Iliopoulos’s vessels are registered for third-party liability insurance with something called the American Steamship Owners Mutual Protection and Indemnity Association. In plain English, the American Club, as it’s known, is a kind of global shipowners’ collective, pooling resources to cover the cost of damage caused by ships involved in accidents. There are limits to how much clubs like it
will pay out, though. For anything major, members of the American Club have to claim extra funds from a reinsurance policy bought through Lloyd’s.
Conner felt the clearest course to justice could be to use the UK’s laws on criminal proceeds, which allow the confiscation of money earned from illegal activities, to pursue the architects of the Brillante attack. Whether it was securing a simple fraud conviction, charging Iliopoulos with the deliberate destruction of a vessel, or freezing bank accounts and seizing ships, he believed there were things the British police should have done—and still could.
The Brillante, they say, is an open invitation to other crooks, just as the Salem was forty years ago. The lesson: maritime fraud is profitable, and even if you are unlucky enough to get caught, you’re unlikely to be prosecuted.
One of our attempts to reach Iliopoulos, however, did reveal something about how he operates—and how determined the shipping industry can be to obscure the connections between what goes on at sea and the men who profit from it.
