'Flags' of Convenience, Spies and Bullsh*t
Flags / Corporations of convenience continue to grow. But the whole thing feels like a scam, the idea that small islands or failed states should have a role in maritime governance has run its course.
Tucked into the bustling corridor of America’s Capitol is the Liberian Registry, known as LISCR. In a non-descript office building under 20 miles from the CIA Headquarters sits the largest flag state of the maritime industry, reported to represent 15% of the world’s oceangoing fleet. The listed office of the ‘LISCR Trust Company’ in Liberia has a more humble / non-existent address, in an unmarked building next to a car dealership.
According to the Liberian Registry website
The Liberian non-resident Corporation is one of the oldest and most popular entity for setting up a commercial enterprise
The Articles of Incorporation, as filed with the Registrar of Corporations, the Liberian Ministry of Foreign Affairs, is the only document upon which the existence of the corporation is based
The office of the Liberian Ministry of Foreign Affairs directs you to the care/of LISCR, LLC, which is housed down the street from the Liberian Registry and has been the long-time address of the Republic of Liberia’s Bureau of Maritime Affairs.
This address is in another non-marked building across from a retirement community and next to a college, the building is listed for lease and was the former AOL HQ campus.
The Liberian Registry was created by the US State Department / United Nations following WW2. The tanker “World Peace” owned by Greek shipping tycoon Stavros Niarchos with a US oil company became the first vessel listed. Niarchos had his own history with the government, the 1978 Washington Post article described how Niarchos hired a CIA asset to undermine the contracts of rival Aristotle Onassis.
Eventually LISCR was acquired by American / Israeli businessman Yoram Cohen in 2000 and run by him until his passing in 2023. Yoram had built a large telecom business in Liberia and had an investment firm run by Israeli Airforce pilots. There was a wild story where the CEO of his telecom Company (and who later ran LISCR) allegedly hired an Israeli raised hacker to pry into their leading competitor, you can read about that here. The hacker went to jail, his employer did not.
In another 2013 article, Mr. Cohen’s company was referred to as ‘controversial’ after donating $120,000 to Bill and Hilary Clinton’s campaign manager Terry McAuliffe.
Testifying before congress in 2002 came another tense moment, a UN report had showed that a $1M payment from the Company to a “company tied to illegal arms dealing the previous year.”
Then-Rep. Duncan L. Hunter asked Cohen what he made of charges that money from the registry went, in Hunter’s words, “to maim people, to kill people, to be involved in arms transactions.”
“The way we look at the situation is that we work under a very, very difficult set of circumstances,” Cohen responded.
Liberian Registry is now run and controlled by his two sons Adam and Elan Cohen.
The history of the Liberian Registry has been volatile and the terms of the arrangement are unclear, but it was reported that the Liberian Government receives up to 2/3rds of the funds as stated in the now deleted article from the Liberian Observer.
So what is the point?
Should the owners of vessels be known? I am not sure. Perhaps we should live in a World where global governments do not have the ability to control the registration and control of private assets.
But it is time to drop the charade. These ‘flags of convenience’ are hardly monitored or controlled by Governments but rather private entities in odd working agreements. If ship owners and operators had a better track records, this wouldn’t be as large of an issue. However, ship owners are known to cut corners and operate unethically.
A recent example being the Rubymar, which was under the flag state of Belize, a small Caribbean nation better known for scuba diving and tiki bars than maritime operations. The vessel was sailed into the Red Sea and ultimately sank. The vessel was built in 1997, putting it at the very upper bounds of maritime safety and past the typical working age for a vessel of that category.
To date, I have not seen and heard of one article describing the beneficial owners, their intentions or track record in maintaining vessels. Even Wikipedia highlights the absurd ownership structure of the vessel.
The vessel was abandoned by the crew, drifted 40+ miles with the anchor down and destroyed sub-sea cables as well as polluting the waters with the fertilizer cargo. The vessel transited the area when the majority of Western owned vessels had diverted from the region.
The Liberian Registry has had their own incidents causing the loss of life of seafarers. A ship that was barred from sailing sank offshore Liberia, a Liberian flagged bulker sank off Japan, a MSC controlled Liberian flagged container ship was struck by a Houthi rocket in March, in an incident that showed the disregard for human life and any governance or oversite from their flag-state control.
Money and Secrecy Talks
Flag states are one of the largest advertisers and sponsors of Corporate maritime events.
At Tradewinds, where ‘social’ issues are hot topics, they rarely discuss any of the concerns of flag states, running mostly promotional articles about the entities and their growth. To my knowledge, no articles were written about flag-state controlled vessels that steamed into harms way in the Red Sea, when a vessel sinks, the articles do not focus on short-comings from flag state regimes.
It is time to call and spade a spade. The Liberian Registry (and other ‘flags’) is not a flag of convenience, it is corporate entity for the convenience of privacy and lack of accountability.
We can at least be transparent about it.