Dead in the Water by Campbell and Chellel
A breathless account of yet another behind the scenes industry that shapes out world. The journalists have written a superb story of their investigation with brilliant pen portraits of all involved and a thriller-esque pace and plot development. One of the best books I've ever read.
Notes from the book are as follows:
Didn't know that most coasts or ports operated private salvage companies that jump at the chance at Maritime recovery in exchange for a share of the loot.
Didn't know that independent maritime surveyors existed around the world to review maritime problems on behalf of the insurers.
Didn't know that Lloyd's of London was merely an exchange - with thousands of brokers shopping around thousands of insurers looking for people to underwrite a % of their projects insurance - finding a group of them they write their names under one another on the sheet and say what % of the insurance they're willing to fund. Therefore they're called underwriters.
Together those thay agree to form a syndicate - a temporary structure of those involved in the financing of the insurance policy.
Plimsolls! I had no idea. Plimsoll was a Liberal MP that campaigned for better protection for sailors (1 in 5 died each year on unseaworthy boats put to see by greedy owners). He succesed in passing a Merchant Shipping Avt 1876 which required all cargo ships to have a like painted on them showing the maximum load in the Waterline they could take.
When a Liverpool based company began making runner soled shoes for the beach they painted a line around the top to showe the level where if they water went above then the wearer would get wet fit.
This is fascinating;
In any case, the modern structure of Lloyd’s makes tackling fraud an even lower priority than it was in earlier years. 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 theory, Names bore unlimited liability for losses: if claims were large enough, they could be forced to give up everything they owned. But in practice, premiums usually exceeded claims by a comfortable margin, and Names received excellent returns. The group included British dukes, baronets, members of the landed gentry, banking scions such as the Rothschilds, and commercial dynasties including the Guinness family. The Lloyd’s market was, in effect, an invitation-only investment club for preserving wealth and privilege. From the 1960s, a series of scandals and expensive natural disasters led to a liquidity crisis among the syndicates. To raise more funds, Lloyd’s eased its membership requirements, welcoming the not-so-blue-blooded as Names, including sports stars, musicians—notably, the members of Pink Floyd—and thousands of dentists, doctors, and small-town stockbrokers. But it still wasn’t enough to feed the world’s growing appetite for insurance, not just for ships, but for planes, nuclear power stations, and spacecraft. So in 1994, the leadership of Lloyd’s allowed companies to serve as Names for the first time. The arrival of American and Swiss conglomerates vastly increased the capital available for syndicates to write insurance policies. It also changed the fundamental nature of the place. Underwriters used to answer to a list of wealthy individuals, often from the same social circles, who’d bought into what were supposed to be safe investments. Now they dealt with giant corporate entities, which took out their own insurance policies from reinsurers. Losses were passed on, again and again, in a cycle of transactions so complex that it could be impossible to know who was left holding the bill. Court defeats and risk-averse corporate legal departments made managers in the new Lloyd’s so queasy about alleging fraud, and so terrified of the potential consequences, that they essentially stopped using the word. Instead, the market adopted lawyerly euphemisms: “material non-disclosure” or “misrepresentation.” Scuttling became “willful casting away.” Claims departments, responsible for investigating fraud, were underfunded and understaffed, because big corporations have a habit of neglecting teams that don’t bring in any money. Today, no one knows how many ships are scuttled. Vessels get in trouble all the time. Very few accidents are fully investigated. Even when a sinking looks deliberate, Lloyd’s syndicates have understandable reasons not to challenge a claim, since the odds are stacked against them in court. It’s also bad for business to sue your biggest customers. Shipowners could just as easily get their insurance someplace else, where they might find less combative partners. So rather than fighting fraud, the underwriters normally settle, offering 50 percent of a ship’s value or less, citing “difficulties” in assessing the claim. By some estimates, maritime crime costs the global economy several billion dollars a year, although the real figure is likely much higher, since so many cases are never reported. 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?"
The History of Greek Shipping:
Iliopoulos received his summons at his office in Piraeus, opposite the ferry terminal where he’d built much of his fortune. Centered on a hook-shaped peninsula extending southwest from central Athens, the city of 160,000 is the undisputed center of Greece’s shipping industry. Along its densely packed commercial blocks are the offices of virtually every one of the country’s maritime tycoons. 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-fiveyear explosion in international trade than almost anyone else. No geopolitical or macroeconomic event—not the fall of the Soviet Union, the rise of China, or the emergence of COVID-19—has thrown them off course for long. Not even their country’s recent financial collapse, which drove unemployment to nearly 28 percent and threatened to split the Eurozone, diminished their power. At the nadir of the crisis, with Greece’s government desperate to raise revenue to fend off creditors, the shipowners of Piraeus fought successfully to retain an astonishingly favorable set of fiscal advantages, some of them written into the Greek constitution. To this day they are largely exempt from corporate taxes. There’s no single explanation for how a small group of businesspeople from a country of 11 million citizens, with no other globally competitive industries, came to exert such outsize power over seaborne commerce. Geography plays a role, of course. Spread across some two hundred inhabited islands, in an archipelago stretching five hundred miles from Corfu to Rhodes, Greeks have depended since antiquity on marine transport. Some of the longer-lived Hellenic shipping dynasties got their start with short runs in the Aegean and Mediterranean, shifting gradually into longer, transoceanic journeys. A history of emigration is also a factor. Ethnically Greek communities have existed since the nineteenth century or earlier in countries like Egypt and Ukraine, predating the more recent waves of arrivals in New York, London, and other world cities. Those widely dispersed populations provided a ready commercial network in key ports, linked by blood, language, and culture to the business community at home. 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 wellorganized Communist insurgency, and the severe poverty of large parts of the population, the Greek government managed to find the resources to guarantee the 1947 purchase of one hundred Liberties by a group of local businessmen—an early example of the influence of shipping concerns over the country’s politics. The vessels were awkwardly designed and sometimes of dubious quality, but they had the crucial attribute of being cheap, and therefore easy to pay off. With so many ships available, Greeks soon carved out strong positions in what’s known as tramp shipping—running vessels with no fixed schedules, willing to transport whatever cargo they can find—just in time to be enriched by the booming postwar economy. Much of the trade they exploited was in oil. As cars became mass-market conveniences in Europe and North America, crude went from the periphery of the shipping business to its very center. In an earlier era, ships collected their cargoes in industrial cities—Liverpool, Philadelphia, Montreal. In the new automobile age, the most important loading ports would include places like Mina Al Ahmadi, in Kuwait, and Ras Tanura, on the edge of Saudi Arabia’s seemingly limitless oil fields. Sixty percent of the growth in maritime trade between 1948 and 1973 was in “liquid cargo,” overwhelmingly petroleum and products related to it. Moving larger quantities of 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, arguably deserve more credit than anyone for the development of the supertanker, which transformed the energy business after its introduction in the 1950s. Contemporaries and bitter rivals, Niarchos and Onassis competed to build the fanciest yachts and to wed the most beautiful women (one of whom, the maritime heiress Tina Livanos, they both ultimately married). They vied to dominate the tanker trade, commissioning larger and larger ships that would dramatically cut the cost of carrying each barrel between continents. The two men also played a significant role in creating the legal framework that supports and dictates the rules of modern shipping. Their ideas weren’t entirely new. Greek maritime families had long known that obscuring responsibility for what happened in their business could be convenient. In a rare memoir of life inside the industry, the shipping heir Elias Kulukundis described how his family firm, R&K, “had an office in Bermuda which was nominally the head office of the company. Decisions were supposedly taken there and transmitted to R&K in London.” The London office was meant to act only as an “agent,” though in reality the decisions were made there and “telephoned to the Bermuda office, which created a paper trail by sending back a telex” with the same instruction it had just received. Such small-bore juggling was useful enough in shedding legal and financial burdens. But Niarchos and Onassis had much grander ideas than working up a bit of misleading paperwork. 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. The very first vessel to be registered under Liberia’s flag was the World Peace, a Niarchos-owned tanker that entered the nominal jurisdiction of that West African state in 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. As with their other innovations, this one was quickly adopted by the rest of the Piraeus shipping fraternity. By 1959, over half the “Liberian” merchant fleet was owned by Greeks, who also piled into the Panamanian registry. 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.
Basically - they bought up the liberty boats, made a killing tramping as the world economy rebuilt - then they innovated bigger and bigger oil tankers - then they innovated registering in places like Liberia.