Sanctions in Venezuela trigger a battle for ‘looted’ oil freight

Sanctions in Venezuela trigger a battle for 'looted' oil freight

MIAMI (AP) – The oil tanker Alkimos, sailing under Malta, has been floating quietly off the Gulf coast of Texas for two months, unaffected by the high stakes legal battle in a federal courtroom following U.S. sanctions against Venezuela.

The commercial dispute, which has never been reported before, has the drama of a pirate movie: a precious cargo, clandestine sea maneuvers and accusations of robbery on the high seas.

It puts Evangelos Marinakis, one of Greece’s most powerful businessmen and owner of the most successful football club, Olympiakos, against a fellow Venezuelan shipping magnate, Wilmer Ruperti, who has a long history of helping the country’s socialist leaders.

The first round appears to favor Marinakis, whose Piraeus-based Capital Ship Management Corp. exploits the Alkimos. On Wednesday, federal marshals in Houston will auction the ship’s cargo: 100,266 barrels of high-octane gasoline estimated to be worth over $ 5 million. The auction responds to Judge Lynn Hughes’s order to seize the charge, which he said would likely have ended up in Venezuela, while the arbitration over a $ 1.7 million pledge continues.

“This clearly shows that sanctions work,” said Russ Dallen, who closely monitors maritime traffic as the head of Caracas Capital Markets, based in Miami. “But while this shipowner seems to have done the right thing, there are plenty of other unscrupulous cockroaches in the shipping industry that don’t hesitate to do business with Venezuela.”

The US has been trying to shut down fuel shipments to and from Venezuela for months, hoping to accelerate Nicolás Maduro’s fall by depriving him of the oil income that is the lifeblood of the socialist country. But so far, the biggest losers have been ordinary Venezuelans, who have to wait in line for days to refuel their cars due to a lack of domestically refined gasoline.

To date, the Trump administration has endorsed more than 50 ships found to be violating sanctions. This month, it added five Iranian captains to a list of people who are banned from doing business with the US after Maduro leaned on his fellow anti-American ally to supply gasoline that skittish commodities are less and less willing to supply Venezuela.

The Alkimos saga, composed of court documents reviewed by The Associated Press, started innocently enough. In late March, the China-built carrier, measuring 156 meters (480 feet), was docked in Panama when he was hired to supply the gasoline to Aruba.

But almost immediately, something seemed to be wrong.

The shipping instructions indicated that the cargo would be transferred at sea to another ship that had only visited Venezuelan ports in the past year. And the payment for the freight was paid through a third party, a company called Ultra Travel, which was reportedly based in Montenegro.

In addition, ES Euroshipping AG, the Swiss registered company that chartered the Alkimos, was owned by Ruperti, a businessman affiliated with the Venezuelan government.

In 2002, Ruperti chartered a fleet of Russian tankers to help President Hugo Chávez break a one-month strike with the state-run oil company PDVSA. Now he tried to save again.

In March, a separate Swiss company that he controls invoiced PDVSA for an advance of EUR 12 million, which he planned to purchase up to 250,000 barrels of the same 95-octane gasoline for which he hired the Alkimos to transport, according to a copy of the invoice obtained by the AP. To circumvent U.S. sanctions, the company opened a bank account in euros and rubles with Moscow-based Derzhava Bank.

The Alkimos tanker is owned by Brujo Finance Company, a company registered in the Marshall Islands. But the operator, whose name and company logo is painted on the ship, is Capital Ship Management, which operates a fleet of 54 tankers.

Capital Chairman Marinakis owns football clubs Olympiacos in Greece and Nottingham Forest in England.

In 2018, prosecutors opened a preliminary investigation against him for drug trafficking following the record seizure of 2.1 tons of heroin on one of his ships. He firmly denied the allegations and said it was an attempt by the left-wing government at the time to silence the dissent. In the past, he also faced match fixing costs, but was later acquitted.

Marinakis did not respond to a request for comment through his website and Capital.

While the arbitration between the two shipping magnates is likely to take months, U.S. officials see the case as a sign that sanctions against Venezuela are becoming increasingly effective.

In May, the United States Treasury and Coast Guard issued an advisory warning the maritime industry that such ship-to-ship shipments of the kind Alkimos were required to perform are often used to circumvent sanctions. While the report targets Iran, North Korea, and Syria, not Venezuela, it urges shippers to improve due diligence and penalize compliance practices to avoid violating U.S. regulations

“The global shipping community is no longer going to do business with Venezuela,” Elliott Abrams, the Trump administration’s special representative for Venezuela, told the AP. “The most renowned companies, including the largest Greek shipping companies, have been cooperative and have shown that they value their reputation and their global operations.”

In the case of the Alkimos, the owners suspected that something was wrong. So her lawyers at ES Euroshipping insisted on additional information, noting that the contract contained a “sanction clause” giving the shipowner “absolute discretion” to deny any trade that he believes exposes him or his crew to US sanctions.

‘For clarity. Owner will NOT participate in illegal trade, ”said an email sent by the ship broker on March 31.

Despite her doubts, the ship departed Panama on April 9 – days after the AP reported that Ruperti had gone to buy oil for what he would later describe as a “humanitarian work” that did not violate US sanctions.

“I am 100% sure that I am doing this legally and that I am following the rules and obligations,” he told the AP in an April interview. He declined to comment when he contacted him this week about the seized cargo.

On the way to Aruba it went back and forth – and the owners of the Alkimos became more suspicious. The meeting point with the other ship, the Beauty One, was located in the open sea – 50 miles (80 kilometers) west of Aruba off the northern coastline of Venezuela – rather than an area designated by the Aruban authorities for ship-to-ship fuel transportation. Furthermore, the supervisor of the risky procedure, ATM Marine Services, was unknown to the shipowners, without even a web page to identify it. No agents were appointed to coordinate with the Aruban authorities.

“URGENTLY on the above is requested. The case is the most serious, ‘wrote the broker of Alkimos shortly before the planned arrival on April 11 in Aruba.

Throughout the entire ordeal, tanker rates rose – something ES Euroshipping argues encouraged the shipping company to unload its cargo and move on to the next job. With the global economy halted due to the COVID crisis, an abundance of fuel was being produced. The giant oil carriers, which saw their daily rates rise 10-fold in some cases, were suddenly in demand as floating storage devices, even as crude prices collapsed.

After two installments for alternative travel orders had passed, the Alkimos turned around on April 26 and headed for Houston. But it first informed ES Euroshipping that it would seek a lien on the charge for $ 1.7 million to offset the losses, including $ 500,000 in compensation it would have adrift for so long.

ES Euroshipping states that Capital Ship Management and the shipowners have stolen the cargo and are seeking damages of $ 2.3 million. In the lawsuit, attorney Michael Volkov said that after much embarrassment by the shipowner, who declined to accept his commitments, Euroshipping had no sanction risk, giving alternative instructions – to take the cargo to the Bahamas and then to Trinidad first.

But Ruperti’s company claims that his instructions were nevertheless ignored, and accused the shipowner of leaving an illegal, 7-day trip to Houston to find a favorable jurisdiction to legalize his “theft” when there were many for the parties were closer ports – none of the US Nationals – to litigate their competitive breach of contract claims. It also accused Alkimos of fleeing Aruban waters without notifying the harbourmaster, leaving behind $ 11,500 in fines and fees for the unauthorized departure.

“Brujo is just a pirate who looted cargo at sea, fled the Aruban authorities without proper permission, diverted his ship to a port in this district, and then misled this court,” Volkov said on May 29.

Ruperti seems to have some powerful proprietary carriers. On May 1, Hans Hertell, a former U.S. ambassador to the Dominican Republic, wrote a letter to Ryan Patrick, the American attorney for the Southern District of Texas, urging the prosecutors to conduct a criminal investigation against shipowners.

“We were simply amazed to learn that shipowners had so brutally stolen and converted our customers’ freight this way,” the letter said.

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Contact AP’s global research team at Investigative@ap.org.

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Joshua Goodman on Twitter: www.twitter.com/APjoshgoodman

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