Torpedo for “SUPER”

The financing provided allowance of two separate credits by BIF for each vessel to cover 20 and 80 per cent of the contract price. Twenty per cent of the contract price and pre-supply expenditure were financed by the Moscow Narodny Bank (London) against security of the USSR’s Ministry of Fisheries (short-term credit), the rest 80 per cent of the contract price was funded by Banco Hispano Americano (Madrid).

After construction was over (1992-1995) the vessels were granted on lease to Russian fishing enterprises on the bare-boat charter terms (with a right of subsequent redemption) according to a trilateral agreement between the JV, BIF and the Vladivostok Trawl and Refrigerated Cargo Fleets Base (VBTRF) and Dalmoreproduct. The VBTRF got twelve vessels while DMP only three.

In 1996 the twelve vessels of the VBTRF passed to the close corporation “Super” due to a trilateral agreement between BIF, VBTRF and “Super” because of financial difficulties and bare-boat charter disability.

In April 1991 the USSR’s Ministry of Fisheries cancelled a credit for about $ 10 million of the Moscow Narodny Bank out of the proceeds of Vnesheconombank’s credit. After liquidation of the USSR’s Ministry of Fisheries the security given by Banco Hispano Americano was reissued by the Russian Committee of Fisheries in April 1992. Then indebtedness to the Spanish bank was attributed to the RF’s foreign debt from mid-1993 within Paris Creditors’ Bank.

 

In 1989 the USSR’s Ministry of Fisheries on the instruction of the government developed a scheme of lending activities to renew the country’s fishing fleet by building boats in overseas shipyards against credits of foreign banks. On December 13, 1989 the Ministry of Fisheries issued order № 499 establishing the JV “Rybcomflot” under the direction of O. Simonov and V. Orlov to run these activities. The founders of the enterprise were: 60% — the All Union Self-Sustained Export Trading Company “Sovietsky Rybolovny Flot” (“Soviet Fishing Fleet”) (an entity of the former Ministry of Fisheries) and 40% — British offshore company “Falcon Shipping Company, Ltd” that belonged to the … Ministry of Fisheries (499 of 500 shares issued by “Falcon, Ltd” belong to the RF’s Ministry of State Property from July 19, 1993).

As you can see Rybcomflot’s activities were under complete control of state authorities for some time.

Although soon in the result of multiple manipulations to change the founders of the JV “Rybcomflot, Ltd”, its constitutors for January 1, 1994 became: 65.4% — “Rifer, Ltd” (100% — founded by V. Orlov and O. Simonov) and 34.6% — “Falcon” (99% — founded by the RF’s Ministry of State Property).

Consequently Rybcomflot’s activities are no longer controlled by state organs but by its former directors Mr. Simonov and Orlov, now residents of London, through “Rifer, Ltd”.

Beginning from the year 1989, Rybcomflot received credits for construction of 76 bare-boat charted vessels in amount of $15 billion through a net of offshore companies it had established under security of the ex-Ministry of Fisheries of the USSR. They received credits to purchase carries in the sum of $36 million as well. The JV “Rybcomflot” set up about 50 offshore companies being their sole owner.

 

On November 15, 1996 “Super” and BIF signed a time charter for leasing 12 super trawlers to the charterer (“Super”) from the owner (BIF) with a right of redemption and a schedule of payment, which is lacking now. Nevertheless “Super” from January 1, 1997 was regularly settling bare-boat charted bills ($17.133.728 entered to “Albatross’s” account, the BIF’s agent).

Having been informed of unfavorable situation in credit repayment, “Super” takes the initiative and puts forward a proposal to the State Fisheries Committee on direct payments to frozen account of the latter to make a reserve for future payments.

On May 24, 1999 “Super”, the State Fisheries Committee and “Far East Marine Services, LLC” (“Super’s” agent in Seattle, hereinafter FEM) signed agreement № 10. The agreement aimed at recovering money received in 1989 against security of the Russian government. “Super” was supposed to operate the vessels; while FEM was an agent and a guarantor of due payments in case of delay in payment by “Super”.

On June 4, FEM transfers $ 3,1 million as charter payment on accounts of the State Fisheries Committee according to instructions of the close corporation “Super”. On June 10, the Committee orders “Super” and FEM to take the necessary steps to prompt withdraw of the money compensated against charter payment and insurance indemnity for the lost trawler “Khikhon”. The companies were vested with authority stipulated by the current jus gentium on indispensable condition that the money would be transferred on the account of the Committee.

Actually agreement № 10 sanctioned money transfer directly to Russia without BIF. An article of the agreement provided institution of legal proceedings against its corporate partner, the BIF Company, on money payment to Moscow. “Super” eventually brought charges and forced the company to transmit $18 million from BIF’s account in London.

However on June 23, the English lawyers of “Super” announced that the company “Albatross” being BIF’s agent had … five dollars only. On July 2, “Super” received notification of the London Supreme Court of Justice that $17.133.728,85 on the account of the legal entity BIF were frozen. On the same day “Super” makes a request to confirm account number to transfer another sum in amount of $3,1 million but receives no response.

 

On July 3, “Super” received a copy of the State Fisheries Committee instruction № 170 dated June 29, 1999 from its vessel (!) “On handing vessels from the close corporation “Super” over to the public corporation “Dalmoreproduct Holding Co”. The original order had never been received by “Super”. On July 8, “Super” got radiogram № 1353 signed by the head of the State Fisheries Committee N. Yermakov — “due to instruction № 170 withdraw license for fisheries, operation license, withdraw license copies for fisheries, the close corporation “Super’s” ship-owner identity certificate and 11 vessels”.

“Super” in its turn sued them in Moscow. On July 19, the instruction of the Committee fell into abeyance by court’s decision basing upon piracy of the state organ that has no authority to take away industrial controls from one company and give them to another one without consideration.

The final decision was made on August 19, and BIF’s representatives were not going to be present at the trial to avoid direct accusation of their affiliate company where BIF has a controlling block of shares. According to Mr. David Gens, president of the Far East Maritime Agency (we have already mentioned it as “Super’s” agent in Seattle) the “Bergen” company ceded management in the close corporation “Super” to “Dalmoreproduct” that promptly went to Primorsky court to get a new package of resolutions concerning “Super”, held a meeting with shareholders on which director general was dismissed and new one — Yuri Didenko’s faithful companion-in-arms Anna Shilo — was appointed.

On August 19, lawyers of the new management of “Super” went to a Moscow court with a request to forget the story. The Far East Maritime Company in its turn brought a counter-claim against DMP and announced its intention to seize any of the eleven trawlers when calling at a foreign port. It’s interesting that suppliers in Seattle who spent at least $25 million for food, packing materials and other things ordered by Far East Maritime are still waiting for compensation of their expenses.

 

Since July 9, the close corporation “Super” has been defraying running costs as losses at $30.000 daily for each vessel ($330.000 in total). Besides lost profits due to downtime at $600-700 thousand daily. Consequently they had problems with tax payments and the currency regulation law.

Thus one of most stable Russian fishing companies which had run bare-boat vessels with a right of subsequent redemption was defeated. The company, which in contrast to Dalmoreproduct, had had no debts in tax payments and salaries before July 9. The company that resisted to policy of Bergen Industries and Fishing Corporation (BIF).

 

From the letter of director general of “Super” A. Semashko to the head of the State Fisheries Committee of Russia Mr. Yermakov:

“We leant with bitterness and confusion about your decision to sign instruction № 170 providing granting of eleven bare-boat chartered vessels belonging to “Super” on lease to “Dalmoreproduct”. This instruction is not only absurd and contradicts current legislation but it cannot solve all questions concerning the aforementioned actions.

You know perfectly well about financial situation in DMP at present. Do you really think then that the company being chronically bankrupt is able to cancel the credit on floating assets of the close corporation “Super” which amounted on 06.01.1999 to about $ 49 million? Do you believe that with colossal debts before foreign investors DMP will immediately allocate to cumulative accounts (its own or designated by you) after taking “Super’s” boats? The foreign investors though being DMP’s stockholders nevertheless cannot get their credits back. Some of them you know — Nippon Suisan Kaisha, Ltd., Hansung, Maruha Corporation, Morikava Shoidzi Kaisha, Mitsui Taito Seiko, Nipporos Corporation, Oil Alaskan Sea Foods DMP Management, “Dairim Corporation and others.

Of the entire lease fleet only 14 super-trawler-type-vessels are left in Russia from 1989, and it is exclusively “Super” that makes deductions for the eleven boats it operates. Lease costs exceeded $17 million for the year 1997-98. Pursuing its own and public aims as well, “Super” completed agreement № 10 with the State Fisheries Committee and transferred $3,1 million to the account designated by your office, moreover we reached an agreement on payment schedule for the future.

As far as your remember, on 10 June 1999 the State Fisheries Committee granted letter of attorney № 02-71/1526 to the close corporation “Super” that entitles it to take necessary steps to withdraw money from the Liberian company Bergen and its agencies on behalf of the State Fisheries Department.

There is no necessity to conduct any investigation of DMP’s economic and financial activities, as you know about their faults perfectly well. In contrast to “Super”, “Dalmoreproduct” has not made any deductions yet for its three leased super-trawler-type-vessels; it is mentioned in a letter to the JV “Rybcomflot” dated 01.26.99. Besides I should say even more, it was “Super” that stopped a vicious practice of capital’s outflow abroad via the convenient corporate network “Rybcomflot-Bergen”. Thanks to our agreement the system of vessel payment became transparent that guarantees money transfer stipulated in the agreement to accounts designated by the State Fisheries Committee.

The close corporation “Super” had violated no requirements of the Committee till order № 170, but what shall we do now? What happened to agreement № 10? Do you really think we can give up our boats to DMP? Nikolay Alexandrovich, we intend to appeal against this decision in court and in case of necessity not only there”.

… Alas, but these words resulted in no action.

A brief comment: it looks like true value of super trawlers lies in their eligibility to fish in the Sea of Okhotsk, a region abounding in Alaska pollock — a stock for American convenience food…