A financially stretched shipowner stands accused of deliberately sinking his own ship to benefit from the insurance proceeds.

Ahmet Ali Agaoglu was found to have ordered the scuttling of the 27,209-dwt geared bulker, Atlantik Confidence (built 2006), in early 2013 in the Gulf of Aden, while carrying steel products.

The hull was insured for $22m but had a market value of $6.5m, with London High Court judge, Justice Teare, suggesting this was the motive, as it would greatly ease the financial difficulties of Agaoglu’s companies.

Agaoglu was the sole shareholder and director of Atlantik Denizcilik ve Sanayi AS, a Turkish company that in 2013 controlled a fleet of six owned and operated vessels and managed a further eight for third parties.

Kairos Shipping, a one vessel company that was the legal owner of the Atlantik Confidence, used the greater part of the $22m insurance proceeds to discharge debts to Netherlands based Credit Europe Bank (CEB), with other other funds being transferred to other Atlantik group companies.

The judge said that considering the financial position of Kairos and the other Atlantik companies in 2013, the untruthful evidence of Agaoglu and other failings, there was a powerful case for inferring that the motive for scuttling the Atlantik Confidence was easing his companies’ financial difficulties.

The events leading up to the loss of the vessel began with a fire in the unmanned engine room but shortly afterwards the vessel developed a list and the master and crew abandoned ship. The vessel continued to take on water for four days before sinking in deep water.

The loss of the Atlantik Confidence has already been the subject of extensive litigation about the right of an shipowner to limit liability.

The recent litigation arose from Kairos Shipping suing the Standard Club, as the protection and indemnity insurer of the Atlantik Confidence over limitation issues.

But cargo interests, led by Turkey’s Enka construction group, which owned the steel products to be used to build a new airport terminal at Muscat on the vessel, were also key parties, along with Axa Insurance with a subrogated interest in the cargo claim.

The judge found that Kairos had lost the right to limit as a result of the owner’s complicity in the loss of the Atlantik Confidence.

At the end of a more than 50,000 word judgment Justice Teare concluded: “The vessel was deliberately sunk by the master and chief engineer at the request of Mr Agaoglu, the alter ego of the Owners.

"In those circumstances the loss of the cargo resulted from his personal act, committed with the intent to cause such loss. The loss of the cargo was the natural consequence of his act as he must have appreciated.

"There can be no doubt that he intended the cargo to be lost just as much as he intended the vessel to be lost. It follows that the owners’ claim for a limitation decree must be dismissed.”