Can Besev, CEO, Suzun Marine Fuels. Image Credit: Suzun Marine Fuels. Image Credit: Suzun Marine Fuels

The European Union recently adopted the 20th sanctions package against Russian products, and the United Nations passed Resolution 2819, which extends sanctions on Libyan products. The Office of Foreign Assets Control (OFAC) is constantly making new additions as Americans use sanctions as part of their arsenal of foreign policy tools.

As an industry participant reporting from the ground, I can clearly say that, as far as the bunker industry is concerned, all these sanctions are largely ineffective because there is little enforcement, if any.

It leads to unfair competition, where those who are willing can offer bunker prices that are 100 dollars or more cheaper than those who choose to follow the rules. In my experience, there is no shortage of buyers, from premium to little known, that either do not question how such low prices are possible, or simply don’t care enough just as long as the price is right.

If I, with my credit and compliance hat on, before the war can see from satellite imagery that a UAE bunker supplier’s barge is alongside a National Iranian Tanker Company (NITC) tanker, clearly carrying out a ship-to-ship transfer (STS) and returning to supply bunkers to an American-operated vessel via a European bunker trader, then surely the intelligence agencies can also see that.

They too would certainly also be aware of the 'two-tier market' and its participants, but very rarely, if ever, is any action taken to enforce their own regulations.

They also completely buy the story that a distant, landlocked Asian country with its own gasoil deficit is exporting shiploads of diesel into the Mediterranean.

Obviously, nobody is even looking at a map and wondering how the logistics would work, or how it is possible to sell at the levels we are offered every week by clandestine vendors.

In terms of cargo supply, there is an even higher level than this: the 'stolen from illicit operations' category. These are simply the leftovers gained through means such as smuggling products on board vessels. They are also available on the market at very attractive prices, “trimmed from the smugglers” in a chain of illicitness.

The working conditions of seafarers on these vessels are atrocious, but that is another subject entirely.

There are even dedicated bunker supply operations on the high seas for these products, and anyone in the industry can access them if they wish; no secret code is required. Some of these don’t even bother switching off their AIS transponders, so any interested enforcement body can see what a barge is doing in international waters. But apparently they are not that curious.

But if you follow the molecule, it can end up in the tanks of legitimate-looking buyers via legitimate-looking sellers. To some, it seems only price matters. And if authorities are not willing to look beyond the surface, why would it not?

Let's suppose that governments and intelligence agencies are so out of touch with what is really happening on the ground that a concerned, law-abiding citizen would like to inform them. What would they do? In the USA, you can submit a tip to FinCEN (the Financial Crimes Enforcement Network), and in the UK, there is the OFSI (the Office of Financial Sanctions Implementation). However, the first thing these two organisations ask for is your name and surname, as this information is mandatory. It’s as if anyone would just love to be named in something involving the most notorious criminal networks. In the EU, you can report anonymously via the EU Sanctions Whistleblower Tool.

The United Nations itself admits this. Even though these measures to supposedly stop illicit activities have been in place since 2014, according to its own reports, fuel smuggling from Libya has not only continued, but has also become more sophisticated. It has evolved from a sideline to a well-organised business involving armed groups, traders, politicians and international facilitators. Ece Goksedef from Lloyd's List recently wrote an enlightening article on this, in which she stated that around 27 million litres a day are estimated to be siphoned off. Add the volumes from Russia and other countries, and we are talking about well over 100 million litres a day. Trace this volume and see where it surfaces to discover the inconvenient truth.

It's all very well to make up laws and rules, but they're of little value without proper implementation and enforcement. Adopting and announcing sanctions is easy and is always incomplete, because industry participants know exactly who is doing what, but the bureaucrats deciding who to slap sanctions on are living in a distant bubble.

They include the very obvious ones, but miss a large part of the picture where it would actually matter. I am sure that everyone reading this would agree that there are hundreds, if not thousands, of companies in bunkering, oil and shipping that one would expect to see on a sanctions list, yet they are still getting away with millions of dollars, and they are part of our everyday life in one way or another.

In effect, enforcement is effectively left to banks whose compliance departments can always say “no”, but that has a significant cost of conformance. Therefore, in effect where the real villains are reaping great benefits, others doing honest and safe business are penalised the most, because they also have to deal with unfair competition from non-conformists.

For sanctions checks, there are many systems that are practically copies of each other to varying degrees, and which mostly rely on the easily manipulated or deactivated Automatic Identification System (AIS), which was originally designed for Safety of Life at Sea (SOLAS) purposes.

While this is effective enough for tracking law-abiding marine traffic, it is increasingly ineffective for tracking illicit activities such as avoiding sanctions, illegally transferring goods, and making false insurance or commercial claims, to name a few.

One of the chief problems of contemporary compliance is that it only considers the superficial information available, while the real targets are sophisticated evaders, using a great number of methods to hide or deceive. Therefore, checks are carried out on 'good companies/vessels', while a significant number of non-complying vessels and companies go undetected, leaving many decisions to conscience and moral compass.

Other than a few mostly state-owned Russian and Iranian companies, there are actually no sanctioned bunker companies. I find that hard to believe, but it is a fact. I am not sure if this is because the bunker industry is too insignificant or too significant to the great powers to be sanctioned as it keeps the global trade moving. Either way, the result is an uneven playing field, with those evading sanctions or rigging the system making immense gains.

As a market participant, maintaining a clean business with strict adherence to a code of conduct, from anti-bribery to sanctions and everything in between, is incredibly difficult.

We try to keep a clear conscience and create a business that we can proudly pass on to the next generation, free from any stain on our reputation.

We are not alone in this aim, but there are also those who call us 'fools' and encourage us to 'just think of the profits and the good life', but I always remember what one of my mentors, Jonathan McIlroy, told me: 'When the intentions are correct, the results often are too', and I hope he is right about that as he has been about almost everything he has ever taught me.