The Australia Maritime Safety Authority (AMSA) has issued a six-month ban on a Singapore-controlled tanker linked to Oaktree Capital Management due to multiple breaches of the Maritime Labour Convention (MLC).
The ban against the AG Shipping and Energy-controlled 105,000-dwt LR2-type product tanker AG Neptune (built 2013) was issued on 23 July, right after a Federal Court of Australia judge lifted an arrest order on the vessel that had been issued in early May.
The AG Neptune is barred from calling at any Australian port for a six-month period.
AMSA said it had inspected the ship in the Port of Gladstone on 17 June 2022 after receiving a complaint regarding the underpayment of seafarers and other welfare issues.
The ship, which was already under arrest because of an ongoing dispute over an allegedly contaminated cargo of diesel fuel, was detained as a result of that inspection, which unearthed multiple breaches of the MLC.
AMSA said it found evidence the employment agreement with 21 seafarers on board the ship had not been met and the crew members were collectively owed approximately AUD 123,000 ($85,800).
AMSA’s executive director of operations Michael Drake said the seafarers on board the AG Neptune were repeatedly not paid at regular intervals and two crew members had expired seafarer employment agreements.
Other issues highlighted included evidence that the food and drinking water were not of appropriate quality, quantity and nutritional value for seafarers, and a seafarer not provided with adequate medical care after being injured onboard.
Court documents list AG Neptune Ltd as the vessel’s bareboat charter, and OCM Capital Flyer its registered owner. Both entities appeared before the court on behalf of the ship.
S&P Global’s International Ships Register (previously part of IHS Markit) and VesselsValue list Oaktree as the beneficial owner of the ship, with AG Shipping as its operator.
TradeWinds understands that Oaktree financed AG Shipping’s acquisition of the tanker in 2018.
Contaminated cargo
The AG Neptune’s Australian troubles began shortly after it arrived at the port of Newcastle on 10 April with 62,000 metric tonnes of diesel fuel procured in Taiwan by Viva Energy Australia, a company that claims on its website to supply “a quarter of the fuel that Australians need to reach their destination”.
Viva Energy alleged that the diesel fuel was within specification when it was loaded onto the AG Neptune in Kaohsiung during March, but upon arrival at Newcastle the cargo in all tanks was found to be contaminated, which caused losses and damages of approximately $41m.
Why neither AG Shipping nor their insurers and/or P&I club West of England were either unable or unwilling to put up the security demanded by Viva Energy is unclear. Market sources following the case said they believed the security amount was deemed excessive.
In May the Federal Court judge Justice Angus Stewart ordered the plaintiffs and defendants into mediation to settle the security issue. This part of the dispute appears to have been resolved as the ship was released from arrest on 23 July, although the cargo claim itself continues.
The MLC breaches were also rectified during this period and the detention order lifted prior to the issuing of the ban.
The AG Neptune departed Gladstone on 24 July, heading for Singapore.
AMSA regularly bans vessels found to be in breach of the MLC or with multiple safety defects. Bans have been issued against 23 ships since the beginning of 2015.
The bans can range from three to 36 months depending on the severity of the breaches and the number of prior detentions. If deemed necessary, some vessels are also subject to increased reporting and inspection obligations for extended periods after the initial ban is lifted.
“Australia has zero tolerance for the underpayment of crew. This type of behaviour is unethical and in contravention to the MLC. The international conventions that protect seafarers’ rights are very clear,” Drake said.
“Ships visiting Australian ports are on notice that if we find deliberate underpaying of crew they can expect penalties.”
TradeWinds was unable to reach AG Shipping by phone. The company’s listed address in Singapore is that of a corporate services company.
