Earlier this year, the Parkham Women’s Institute in the south of England invited Colin Darch to speak about piracy. To get into the spirit of things, the ladies came equipped with eye patches, parrots, cutlasses, shiver-me-timbers accents, and all the usual pirate paraphernalia. Mr Darch came to talk about being hijacked off Somalia and held hostage for 47 days. But whether the word “piracy” conjures up visions of Somali speedboats and AK47s or peg legs and the skull and crossbones, fish are probably pretty far down the list of things that spring to mind when somebody mentions pirates.
And yet, most of the “pirates” on the high seas today are involved in pirate fishing, or illegal, unreported and unregulated (IUU) fishing as it is known. As we said in the Insights book on fisheries While Stocks Last? these pirates are neither the vicious thugs portrayed by Robert Louis Stevenson nor the seductive rascals so beloved of Hollywood. All they have in common with the heroes of swashbuckling romances are ruthless, unscrupulous masters, and harsh and dangerous working conditions with more chance of getting killed than of getting rich. The International Transport Workers’ Federation gives numerous horrifying examples from fishers’ contracts. Chinese fishers from Yongchuan County in Sichuan province not only had to pay $470 to secure a place on a boat, they had to agree to have their appendix removed before going to sea and to pay $47 for the operation themselves. And remember, these are the ones who had a contract.
Fish piracy takes several forms. The “illegal” in IUU fishing is when vessels violate the laws of a fishery. “Unreported” is fishing that is undocumented or misreported to the relevant national authority or regional fisheries organisation. “Unregulated” fishing describes fishing by vessels without nationality, or vessels flying the flag of a country that isn’t a member of the regional organisation governing that fishing area or species. This is particularly attractive since many of the states offering flags of convenience are also tax havens. If you click on the unambiguously named www.flagsofconvenience.com, you’ll see how easy it is to move vessels from one register to another, even for a few months. The fact that some of the countries proposing flags are completely landlocked doesn’t seem to stop them having extensive fleets.
IUU fishing is also big business, but like any illegal activity it is hard to know exactly how much it is worth. According to some estimates, a quarter of the fish taken from the Antarctic fishing area could be IUU catches. The media regularly report scams involving millions of euros worth of fish, such as the six Scottish trawlermen convicted in 2010 of landing 15 million euros worth of illegal herring and mackerel over a three-year period.
Pirate fishing destroys the livelihood of other fishers and threatens the existence of fish species. Combating it is hard because the penalties for those caught are low compared with potential gains, and even catching them is difficult given the vast areas of ocean to be covered, the limited means of anti-piracy authorities, and the complicity of some states and customers, like the wholesalers those Scottish fishers sold their “black landings” to.
The method used in this case was “forensic accounting”, that revealed unexplained discrepancies between actual and declared incomes. Again, you probably never think of accountancy and tax inspectors when you think of the fight against piracy, but it’s a battle that’s been going on for centuries. Rudyard Kipling’s “Gentlemen” were being hunted down by King George’s tax men in the eighteenth century for smuggling brandy, tobacco and other illegal cargoes. Their modern counterparts are not just stealing fish, they’re also involved in people trafficking and drug running.
Tackling tax crime is one way of combating IUU and associated criminal activities. A report to the Third OECD Forum on Tax and Crime taking place in Istanbul on 7-8 November discusses the extent of the problem, the form it takes and what can be done about it. Offences include the evasion of import and export duties on fish and fish products transported across national borders; fraudulent claims for VAT repayments; failure to account for income tax on the profits from fishing activity; and evasion of income tax and social security contributions and false claims for social security benefits by fishers and their families.
The complexity of the fisheries sector and the number of participants means that a broad range of actions need to be taken at various levels, ranging from technical training for local tax people to international cooperation such as sharing of information. Such recommendations may sound vague, but in preparing the report, the discussions between specialists from tax administrations, customs administrations, fisheries authorities and law enforcement “already yielded significant benefits through the sharing of experiences and analyses, highlighting further areas for research and, in a number of cases, leading to specific international co-operation in tackling actual cases of tax crime and illegal, unreported and unregulated fishing”.
The authors give concrete examples. For instance a large cash withdrawal made from a bank to pay a cash bonus to the crew of a fishing vessel was analysed by tax officials using the money laundering model found in the 2009 OECD Money Laundering Awareness Handbook for Tax Examiners and Tax Auditors (the very name strikes fear into the heart of the most ruthless pirate). The case also involved the sale of a fishing quota, which was illegal in itself. The sale was made via a company registered in an offshore jurisdiction through a bank account in an onshore financial centre. This led to a “multilateral tax compliance action” being undertaken by three countries, which demonstrated that each of the three had a different picture of the facts underlying the case. By working together, each country was able to apply its laws based on a clear understanding of the real transaction.
And if you’re wondering what happened after that misunderstanding at the Women’s Institute, the BBC has more.