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A shipbreaking site in Chittagong, Bangladesh in April 2023. Alamy Stock Photo

Ships owned by Irish firm in finance deal sold and scrapped on beaches in India and Bangladesh

Dublin-based Trade Credebt has said it was “not directly involved” in the ships’ demolition.

TWO SHIPS THAT had been owned by an Irish investment company under a financing arrangement were scrapped on beaches in Bangladesh and India last year, a practice condemned by environmental organisations. 

Dublin-based Trade Credebt Limited has said that it was “not directly involved and nor does it participate in the commercial transaction of any ship’s demolition”.

It said other companies, to which it had leased the ships, purchased them before they were dismantled.

Nicola Mulinaris, spokesman for the NGO Shipbreaking Platform – a coalition of environmental, human rights and anti-asbestos campaigning organisations in Europe, the US and Asia – said it is common practice in the industry for ships to be sold at end-of-life to so-called “cash buyer” firms which specialise in trade in end-of-life vessels for scrapping and recycling.

Ships contain many hazardous substances which can include sewage, oil, plastic, asbestos and heavy metals such as lead and cadmium. These substances can be directly discharged to the sea, soil and air when old vessels are dismantled at inadequate facilities, polluting the environment and posing risks to workers’ health.

Up to the 1970s, most ships worldwide were scrapped in Europe and the United States, but as social and environmental protection laws became stricter in the west, the industry shifted to areas with weaker legal frameworks.

Of 443 ocean-going vessels scrapped last year, 292 were sent for “dirty and dangerous breaking” in India, Bangladesh and Pakistan, according to the NGO Shipbreaking Platform.

Trade Credebt bought the Thanos and Jarvis tugs, ships used to move offshore assets such as drill rigs, in late 2021. The Thanos arrived in Chittagong in Bangladesh in May 2022, while the Jarvis arrived in Alang in India in June 2022.

Shipping register records seen by The Journal indicate that the yard in Alang where the Jarvis was sent is compliant with the standards of the Hong Kong Convention, a 2009 UN agreement which sets standards for ship recycling. 

The shipping register records do not list the yard in Bangladesh where the Thanos was sent for dismantling.

The Hong Kong Convention’s standards are lower than those applying in the EU, in particular as the convention allows ships to be dismantled on tidal beaches, a practice described by the European Parliament in 2009 as “globally condemned as being incapable of delivering safety for workers and of providing adequate protection of the marine environment from ship-borne pollutants”.

Mulinaris said conditions in Bangladesh’s shipbreaking yards are typically worse than those in India, particularly as the country does not have facilities for dealing with the significant volumes of hazardous waste generated by shipbreaking. 

Ships sailing under an EU country’s flag cannot legally be scrapped in the shipbreaking yards of Chittagong and Alang, under the 2013 Ship Recycling Regulation. The 48 yards compliant with the regulation are located in the EU, the US, the UK – including at Harland & Wolff in Belfast – and in Turkey.

The Thanos and Jarvis were both registered in the Pacific island country of Vanuatu. That means it was legal for the ships to be scrapped in South Asian yards which do not have the same environmental and worker protection standards as EU-approved facilities. 

Companies respond

Star Matrix, a Hong Kong-based company which leased and purchased one of the ships, the Thanos, from Trade Credebt, said that while its origins were in cash buying for recycling it has not participated in recycling trades for at least 18 months.

It said it is now “actively involved in ownership and operations of large anchor handlers” (a type of vessel used to move offshore drilling equipment).

Trade Credebt said that while it was the outright owner of the ships, “from this 100% ownership, it then leases that same vessel to the disponent owner”. 

“It is the disponent owner that reflags, reactivates and repurposes the vessel with the consent of Trade Credebt,” the company said.

“Reflagging a vessel is a regular event in the shipping business and using port state authorities like Vanuatu, Marshall Islands, Liberia and other flags of convenience is decided by the ‘disponent owner’,” Trade Credebt said.

“Trade Credebt did not use the Vanuatu flag on its vessel for any reason.  The flag was chosen by the disponent owner as is their right under the Barecon lease agreement,” it added.

A Barecon agreement is a chartering arrangement in shipping whereby the charterer obtains possession and full control of the ship along with legal and financial responsibility for it.

“Trade Credebt is not directly involved and nor does it participate in the commercial transaction of any ship’s demolition. 

“Before the ship is demolished, Credebt sells the vessel to the disponent owner by ending its Barecon lease arrangement.  Where the new owner chooses to demolish the vessel results in no commercial or financial benefit to Credebt,” it said.

“In summary, Credebt provides finance for trade and shipping.  All of the staff, managers, directors and owners are responsible people with genuine concern for sound environmental, social and governance (ESG) practices. 

“Before we cho0se to finance and support any business, our ESG policy ensures we research NGO reports and other articles relating to any type of bad practice in that industry,” it said.

Trade Credebt formed Credebt Shipping, incorporated in the Marshall Islands, in 2021. Credebt Shipping began trading in January 2022, according to Trade Credebt’s financial return for 2021, filed in May 2022.

The directors of Trade Credebt are Patrick Reynolds and Stephen Mackarel. Mackarel was previously chief executive of Carphone Warehouse in Ireland and is now managing director of Workair, a cloud communications business.

Reynolds and Mackarel declined an opportunity to comment.

Trade Credebt’s 2021 financial results state that it had turnover of €209m and retained profit of €2.2m. 

Star Matrix said from the time it took over the Thanos, the tug did an “extensive amount of global towage and support jobs”, completing over 30,000 nautical miles over the course of two years.

Star Matrix said Trade Credebt was “a finance house that merely finances transactions for vessels and others products”.

“As means of a security they take ownership of the vessel but whilst doing so they immediately sign a Barecon Agreement with companies like ourselves until the finance amounts have been re-paid.

“Also it is very true, Credebt have no bearing on the sale, operations or decision-making as they only are limited to the finance and prior to handover back to us, they need their funds in complete,” Star Matrix said.

It added that the Vanuatu flag was not associated with ship recycling but was “used extensively by various shipowners around the world for offshore vessels”.  

The buyer of the Jarvis could not be contacted for comment.

Several European shipping companies have adopted policies of not allowing their old ships to end  up in South Asian shipbreaking yards. For example, German shipping company Hapag-Lloyd adopted a policy in May 2023 of only sending its ships to EU-approved yards.

Hapag-Lloyd’s policy states that it wants to “protect human life and the environment” and “minimise ecological impact”.