Mann: Full Response from DED On AGM Concerns

This news published by the Celtic League:

Mann: Full Response from DED On AGM Concerns

NEWS FROM THE CELTIC LEAGUE

The Minister for Economic Development Laurence Skelly has responded, in detail, to concerns raised by the Celtic League about the Manx Shipping and Aircraft registry following a resolution adopted at the League’s recent AGM held in Dublin (see link).

The DED response goes some considerable distance further than previous communications about what we would term the ‘Visea’ affair when it was alleged that Manx linked vessels were involved in arms trading in the Middle East.

The Celtic League is grateful to Minister Skelly for this response which is set out in full below:

“Mr J B Moffatt
Director of Information
Celtic League
3 Imman Stronnag
Peel
Isle of Man
1M5 1GP

Bernard Veen

Thank you for your letter of 30 April 2015 in regard to the resolution adopted by the Celtic League at its AGM in Dublin on 10/12 April 2015.

Firstly let me advise you of the position in regard to the Ship Registry, IRISL and international shipping and the specific incident to which you relate; the “Visea” and the alleged transfer of weapons from the vessel to another vessel.

I can confirm that said vessel, along with a number of other IRISL vessels were registered in the Island at the time of the alleged incident. At the time of the initial registration and throughout the period of their registration there were no sanctions in place which prevented the registration of these vessels. When international sanctions were put in place which precluded registration in the Isle of Man, all of the vessels were de-registered in order to comply with the sanctions.

Referring to the “Visea” specifically, initially named the “Iran Zanjan” the vessel registered in the Isle of Man on 18 December 2003 and immediately completed a process referred to as “demising out” by returning its operational registry to that of the Iran Register of Ships under a ‘bareboat’ registration arrangement. On 21 July 2008 the vessel changed its name to “Visea” and the Isle of Man Ship Registry were advised of this change by the PSO (Iranian Registry). On 26 November 2008 the demise registration was extended for a further 5 years.

From the date of registration, through to the final de-registration of the vessel from the register, the vessel was registered and regulated for operational purposes in Iran. At no time during this period was the vessel entitled to fly the Red Ensign nor be marked with Douglas as the port of registration.

I should now like to explain the concept of demise registration; this is a concept permitted by a significant number of ship registries and is practised for a number of reasons. Primarily it allows the owners to secure finance for a vessel in a stable jurisdiction, whilst allowing the operational side of ship registration and regulation to be carried out in another jurisdiction.

This was the case with the IRISL vessels, where the owners and the lenders (a German financial institution), requested the underlying register to be in the Isle of Man where title could be established and finance secured. This registry was ‘suspended’ and demise registry secured in Iran for operational reasons. The Isle of Man register currently has some 42 vessels that are “demised-in” i.e. the underlying registry is elsewhere and suspended whilst they are registered in Douglas and fly the Red Ensign. Conversely the Isle of Man has some 20 vessels “demised-out” to other jurisdictions where the underlying registry is the Isle of Man but suspended whilst the ships are registered elsewhere and fly the flag of other territories (Brazil, Venezuela etc.). This process is also referred to as parallel registration.

Regarding the alleged incident to which you refer and the allegation that the Isle of Man may have acted in breach of Security Council Resolution 1747. The Resolution requires all States to prohibit the procurement of arms and related material from Iran by their nationals, and to prohibit the use of their flag vessels and aircraft from transporting this material whether directly or indirectly.

At the time of the alleged incident in November 2009, the vessel was not under operational registration in the Isle of Man, was not entitled to fly its flag, nor be marked with Douglas as its port of registry, with this in mind it is difficult to see how the Island could, in this incidence, be in breach of the Resolution.

It is a matter of fact that States, including the Isle of Man, through its Ship Registry are not involved in the day to day commercial operation of each and every vessel flying its flag; and as cannot therefore influence or regulate the cargoes that every vessel is carrying. What we can do is require that vessels comply with international carriage requirements for cargoes and the international conventions governing safety and pollution prevention.

I should also advise that at the time of the alleged incident, the Ship Registry was subject to an investigation by the US Department of the Treasury under their Office of Foreign Assets Control and the US Embassy, looking into the IRISL vessels and specifically this incident. At the time the manner of registration of these vessels was discussed with the Treasury agents and no action was taken against the Ship Registry, whereas the owning companies were sanctioned.

The vessels were subsequently de-registered by the Ship Registry under powers provided in the Merchant Shipping Registration Act 1991 in order to maintain compliance with new sanctions applied in 2010 and to prevent any damage to the reputation of the Isle of Man.

This issue is not one of ship registration, but of sanctions and the breaking of those sanctions. The Ship Registry carries out due diligence on operators and owners wishing to register a vessel and officers from the Isle of Man customs and excise continue to scan the horizon and advise on sanctions. Thus I am of the belief that the processes within the Ship Registry are robust. When the IRISL ships were registered, there were no sanctions to prevent registration and it remained so until 2010.

Once registered, where the ship is flying the Red Ensign and registered in a port in the Isle of Man, the regulation of that ship is the responsibility of the Isle of Man Ship Registry. This relates to the compliance with international conventions enacted by our own merchant shipping legislation. Cargo carriage requirements are limited to international requirements for cargo carriage and stowage which relate to the ship’s particulars and design. It does not extend to the ship’s commercial activities and the types of cargoes carried to and from different ports or countries.

With reference to your final paragraph in relation to the Ukrainian former President, Victor Yanukovych and the alleged removal of aircraft from that country, I enclose herewith our letter dated 10 December 2014 in response to your letter dated 5th December 2014, in which we set out our responses to your specific questions on this matter. In short, we did work with the relevant authorities to investigate this matter and as a result we believe the allegations were baseless as the aircraft were not owned by Mr Yanukovych. Indeed, the Ukrainian authorities gave their consent for the aircraft to be registered on the Isle of Man prior to the change of registration and subsequently have made no claim upon those assets.

We thank you for your interest in thes (sic) matters and hope that the above explanation addresses your concerns.

Yours sincerely

Hon. Laurence Skelly MHK
Minister for Economic Development”

Footnote: The Ministers reply refers briefly to the ‘Yanukovych issue” and cites earlier correspondence on this matter. This can be found at this link.

J B Moffatt (Mr)
Director of Information
Celtic League

07/05/15

(Please note that replies to correspondence received by the League and posted on CL News are usually scanned hard copies. Obviously every effort is made to ensure the scanning process is accurate but sometimes errors do occur.)

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