Affiliated organization: Environmental Justice Foundation (EJF)
Type of publication: Report
Date of publication: 2018
Introduction
Illegal, unreported and unregulated (IUU) fishing, in a number of its manifestations, is increasingly recognised as a form of transnational organised crime. It is commonly associated with forgery, fraud, money laundering and other enabling crimes, as well as non-fisheries violations such as human trafficking and the drugs trade. IUU fishing is highly lucrative, resulting in billions of dollars of illicit financial flows every year.
Dismantling the networks behind these operations requires the recipients of profits to be identified and held to account. This is no easy task. IUU operations may span continents and oceans, involving players far removed from activities at sea.
Opaque corporate structures may conceal the identities of beneficiaries, allowing them to profit from illegal fishing with low risk of detection. Tracking financial flows and reaching behind corporate arrangements requires a high degree of cooperation across agencies, borders and disciplines.
Given these challenges, fisheries enforcement has traditionally targeted the registered owners and captains of fishing vessels. However, notorious IUU offenders can assign new individuals to these roles, continuing their operations and evading sanction.
Improving transparency of beneficial ownership5 in the fishing industry is a simple, cost effective mechanism to ensure that enforcement targets the true beneficiaries of illicit activities. This has been a focus in the extractive industries sector, as part of reforms implemented under the global Extractive Industries Transparency Initiative (EiTI).
Under Ghanaian law, foreigners are prohibited from engaging in joint ventures with respect to industrial trawl vessels, yet foreign interests, particularly from China, are extensive within the sector. As foreign interests are effectively prohibited, operators establish opaque corporate structures, concealing the true beneficial owner and shielding the foreign partner from scrutiny.
The result is a complete lack of transparency as to who is responsible for illegal actions, and who exerts control over, and who benefits from, the activities of Ghana’s industrial trawl fleet. This has created an enabling environment for illegal activities, and the systematic over-exploitation of marine fisheries resources.
The findings of this study have important implications for fisheries management and enforcement both within Ghana and in the wider region. Further research is required to unravel the networks behind these operations, which likely extend far beyond the West African coast. Recommendations are made for improving transparency in the context of the on-going reform of Ghana’s fisheries law framework.
Background
Marine fisheries are critical for the food security, income and employment of coastal populations across West Africa. An estimated 6.7 million people depend directly on fisheries for food and livelihoods, with fish accounting for over 50% of animal protein intake in countries such as Ghana and Sierra Leone. In the face of rising poverty, coastal populations in the region rely increasingly on fisheries for food and income.
Under Ghanaian law, foreigners are prohibited from engaging in joint ventures with respect to industrial trawl vessels, yet foreign interests, particularly from China, are extensive within the sector. As foreign interests are effectively prohibited, operators establish opaque corporate structures, concealing the true beneficial owner and shielding the foreign partner from scrutiny
However, illegal fishing is rife, resulting in the overexploitation of fish stocks and significant lost revenue to local economies. West Africa has some of the highest rates of IUU fishing in the world, accounting for around 37% of catches.
IUU losses to the West African economies of Mauritania, Senegal, The Gambia, Guinea Bissau, Guinea and Sierra Leone are estimated at around US$ 2.3 billion annually. Only a fraction of these losses (approximately US$ 13 million) are recovered each year through sanctions for fisheries-related offences.
In Ghana, over 2 million people rely, directly or indirectly, on marine fisheries for income and employment, with more than 200 coastal villages dependent on fisheries as their primary source of income. Ghana has one of the largest and most important small-scale fishing fleets in West Africa, accounting for 11% of total artisanal canoes in the region and employing around 80% of fishers in the country.
However, Ghana’s fisheries are in crisis. Decades of overexploitation by both the artisanal and industrial fleets have pushed stocks of some key species, such as sardinella, to the brink of collapse. Illegal and destructive fishing practices are widespread, causing irreparable damage to ecosystems and the marine environment. Incomes of Ghana’s artisanal fishers have dropped by as much as 40% in the last 10-15 years, and the country is now forced to import more than half of fish consumed.
In November 2013, Ghana received a warning (yellow card) from the European Commission, for failing to comply with fisheries management and monitoring obligations under international law. The yellow card prompted a number of new laws and initiatives, including the development of a fisheries management plan to improve sustainability of fisheries resources through measures such as closed seasons.
The national legal framework was also updated, increasing the sanctions for IUU fishing offences and improving controls over fishing vessels. Satisfied with the progress made, the European Commission lifted the yellow card in October 2015.
However, illegal fishing is rife, resulting in the overexploitation of fish stocks and significant lost revenue to local economies. West Africa has some of the highest rates of IUU fishing in the world, accounting for around 37% of catches. IUU losses to the West African economies of Mauritania, Senegal, The Gambia, Guinea Bissau, Guinea and Sierra Leone are estimated at around US$ 2.3 billion annually. Only a fraction of these losses (approximately US$ 13 million) are recovered each year through sanctions for fisheries-related offences
Yet, significant concerns remain. Since the yellow card was lifted, progress has stalled in several areas, in particular with regard to the over-capacity and illegal practices of the industrial trawl flee.
In recent years, industrial bottom trawlers operating in Ghana have engaged in one of the most destructive forms of illegal fishing locally referred to as “saiko”. Saiko involves the deliberate and systematic harvesting of juvenile fish and non-target species, such as sardinella and chub mackerel, for trans-shipment at sea to specially adapted canoes.
The practice is illegal under Ghanaian law, yet with low risk of arrest and sanction, it has been on the increase in recent years, accounting for an estimated 100,000 metric tonnes of illegal and unreported catches each year. The practice is fuelling the collapse of Ghana’s fisheries, with devastating implications for artisanal fishing communities.
Status of Ghana’s marine fisheries resources
The past decade has seen significant declines in Ghana’s marine fisheries resources, a trend observed across the region. A number of important stocks, such as sardinella, sea breams, groupers, snappers and cephalopods, are considered severely overfished, while others, such as chub mackerel and skipjacks, are considered fully exploited.
The status of small pelagic stocks is of particular concern due to their role in food security and livelihood provision, and as the key target of the artisanal fishery. According to recent assessments, Ghana’s small pelagic fishery could collapse within the next three to seven years in the absence of robust management interventions. Annual landings have declined to around 20,000 tonnes, in spite of increased fishing effort.
Ghana’s industrial trawl sector
The number of industrial trawlers operating in Ghana increased rapidly during the 1980s and 1990s, until the collapse of the balistes fishery in the mid-1990s. This event saw a sharp decline in reported catches from 50,000 tonnes in 1996 to around 20,000 tonnes per year between 1997 and 2007. In 1996, around 75 industrial trawlers were licensed to fish in Ghana. In spite of stagnating catch levels, this number continued to increase, peaking at 107 trawlers with active licences in 2014.
Ghana’s industrial trawl fishery targets bottom dwelling species such as groupers, cuttlefish, octopus and snappers. In 2014, Ghana’s trawl fleet reported total annual catches of 18,500 metric tonnes (MT), or 173 MT on average per vessel. This average is considerably lower than may be expected for vessels of the size and power in Ghana’s fleet registry. According to the 2011-2016 Fisheries and Aquaculture Sector Development Plan, a fleet of around 10 vessels in this class would be sufficient to harvest the reported landings. This is consistent with the findings of a study of bottom trawlers operating in West Africa, which calculated mean catches per vessel of 1256 tonnes per year.
Recognising the over-capacity in the industrial trawl sector, Ghana’s 2015-2019 National Fisheries Management Plan sets a target of achieving a 50% reduction in fishing days for the industrial trawl fleet over the first three years of the Plan’s implementation (scaled annually). The Plan sets out a number of measures to achieve this target, including:
- Establishment of a closed season for two months, increasing to four months by Year 3 (May-June or November-December to be determined).
- Cancellation of licences of repeat IUU offenders without an option to replace that vessel.
- Reduction of fleet size over a transitional period of three years.
Ownership in practice – Chinese interests in the trawl sector
In spite of the legal provisions prohibiting foreign interests in Ghana’s trawl sector, there is a high degree of Chinese involvement in practice.
Extent of Chinese involvement in the trawl sector Data on the extent of Chinese interests in Ghana’s trawl sector are not readily available. While the Ministry of Fisheries and Aquaculture Development (MoFAD) publishes a list of industrial trawlers licensed to fish in the Ghanaian EEZ, the list does not include information on beneficial ownership or foreign interests, only the name of the licence holder in Ghana. To note that, at the time of writing (August 2018), the licence list in Ghana has not been updated and is blank for the current licence period.
The majority of industrial trawl vessels operating in Ghana now carry unique vessel identifiers (UVIs) in the form of an International Maritime Organization (IMO) number46. This is a welcome development in terms of vessel monitoring and transparency, and means that details of trawl vessels, such as previous flag, shipyard, tonnage and owner, should be included in the IHS Maritime Sea-web database.
However, data held in the Sea-web database shed very little light on beneficial ownership or foreign interests in industrial trawl vessels registered in Ghana. For most vessels, the database only includes the name of the Ghanaian registered owner (licence holder) and accompanying PO box number for the company.
At present, there are about 150 large and medium-sized fishing vessels operating in the Ghanaian sea. Among them, nearly 100 fishing vessels from China are owned by more than 10 companies respectively, employing more than 600 people. Chinese-funded vessels cover about 95% of the market share in [Ghana’s] bottom trawl industry.”
This is confirmed by interview data gathered for a 2017 paper on Chinese interests in Ghana’s trawl sector, published in Marine Policy. The authors, Penney et al. (2017), found that: “multiple Chinese [distant water fishing] companies in jointarrangement trawling partnerships dominate [Ghana’s] industrial sector”, a phenomenon dating back 25-30 years according.
According to another source, the Chinese government provides support to the majority (if not all) trawlers currently operating in Ghana, in the form of fuel subsidies, loans and other funding for their operations.
These findings are consistent with data on the nationality of captains of the industrial trawl fleet. In 2015, Chinese nationals captained over 95% of trawlers with active licences to fish in Ghanaian waters (102 of 106 vessels), an observation strongly indicative of Chinese involvement in the vessel concerned.
At present, there are about 150 large and medium-sized fishing vessels operating in the Ghanaian sea. Among them, nearly 100 fishing vessels from China are owned by more than 10 companies respectively, employing more than 600 people. Chinese-funded vessels cover about 95% of the market share in [Ghana’s] bottom trawl industry
Types of arrangements between local and Chinese interests According to available information, Chinese companies commonly operate through Ghanaian “front” companies to import their vessels into the Ghanaian fleet register and obtain a licence to fish. On paper, interests are entirely Ghanaian, including the Board of Directors of the registered corporate owner.
The arrangements established may differ between companies and vessels, but in all cases are characterised by their opacity, shielding the foreign owner from external scrutiny. They may include hire purchase agreements, whereby the licence holder pays part of the purchase price of the vessel upfront, and the remaining amount in instalments over a designated period of time.
Destination of catches of industrial trawl vessels
According to a report prepared by the EU to inform implementation of the 2010 IUU Regulation, the main part of the catches from Ghana’s industrial trawl fleet are destined for China, while cephalopods are exported to the EU either with or without processing.
During the period 2010-2016, the EU imported around 2,600 tonnes of cephalopods from Ghana annually, primarily cuttlefish and octopus. The leading EU importers of cuttlefish and octopus from Ghana were Spain, Italy and Portugal, with average annual imports of 1,187 tonnes, 641 tonnes and 518 tonnes, respectively. Currently, 14 industrial trawlers flagged to Ghana are authorised to export catches to the EU market, although not all are on the most recent active licence list.
In addition, China’s list of authorised establishments for exports of fishery products to the EU appears to include a number of trawlers operating under the Ghanaian flag and owned by Rongcheng Marine Fishery Co. Ltd. Indeed, the presence of Chinese company Rongcheng Marine Fishery Co. Ltd. The company describes itself as one of the largest Chinese offshore fishing companies in Ghana.
Further investigation is warranted to ensure that the presence of Ghanaian-flagged vessels on the Chinese list of authorised establishments does not reflect fraud or mis-reporting of the origin of fisheries product exports to the EU.
Implications and the need for greater transparency in Ghana’s trawl sector
The opaque nature of ownership arrangements in Ghana’s industrial trawl sector has serious implications for the sustainable management of fisheries resources in Ghana’s waters and, indeed, in the wider region. At the fore, is the inability to determine the true beneficiaries of profits flowing from illicit activities in Ghana’s trawl sector, and to hold those individuals to account.
In addition, a lack of transparency surrounding Chinese joint ventures has been associated elsewhere with other non-fisheries related breaches, including mis-declaration of gross tonnage and tax evasion. Both issues have been observed in Ghana’s trawl sector and are discussed in turn below.
What is the impact of saiko?
Saiko activities are of particular concern due to their impact on stocks of small pelagics, the key target fishery of the canoe fleet. According to recent studies, frozen slabs of saiko fish contain a significant proportion of small pelagics. In 2012, annual landings of sardinella by the canoe fishery dropped to just over 17,000 metric tons, from a high of 120,000 metric tons 12 years earlier. Saiko catches often involve juvenile fish, further eroding the reproductive potential of the resource.
Saiko has devastating implications for artisanal fishing communities. Industrial trawlers compete directly with artisanal fishers for depleted small pelagic stocks. Having caught the fish meant for artisanal fishers, saiko operators sell these back to the same fishing communities for profit. Saiko also floods the market with cheap, poor quality fish, pushing down prices and incomes of artisanal fishers. The past 10-15 years have seen the average annual income per canoe drop by as much as 40%, compromising the socioeconomic development of Ghana’s coastal regions.
As saiko catches are not recorded in national catch statistics, fisheries managers are unable to calculate the overall pressure on Ghana’s fish stocks, making effective fisheries management practically impossible. This is inconsistent with Ghana’s coastal state obligations under UNCLOS, specifically to ensure, through conservation and management measures based on the best available science, that living resources in the Ghanaian EEZ are not endangered by over-exploitation.
Recommendations
EJF calls on the governments of China and Ghana to act on the following recommendations, to bring the activities of the industrial trawl fleet operating in Ghana into line with both national and international law.
To the government of China:
-Cooperate with the Ghanaian authorities to identify Chinese beneficial ownership in Ghana’s industrial trawl sector, and ensure that arrangements are organised in such a way as to comply with all relevant fisheries, company and tax laws.
-Carry out all necessary investigations into cases of illegal fishing by Chinese nationals in connection with industrial trawl vessels flying the flag of Ghana, with a particular focus on saiko activities, and impose deterrent sanctions to the extent provided under Chinese law.
–Investigate the possible inclusion of Ghanaian-flagged trawl vessels in the Chinese list of establishments authorised to export fisheries products to the EU and take appropriate action should misconduct be identified.
-Ensure that Chinese fishing companies for which the distant water fishing certificates have already been withdrawn are no longer operating vessels in West Africa under third country flags such as Ghana.
-Ensure government support in the form of subsidies, loans and other funds are not available to companies with a history of IUU fishing infringements.
-Adopt minimum transparency requirements for distant water fishing activities, including the publication of information on distant water fishing authorisations, companies operating overseas, and their areas of operation. 10. Complete, maintain and make publicly available a detailed list of all fishing vessels licensed to fish under the Chinese flag.
To the government of Ghana:
-Scrutinise, in detail, publishing the results, the ownership arrangements of all industrial trawl vessels currently operating in Ghana to ensure compliance with requirements regarding the nationality of beneficial owner(s) set out in the 2002 Fisheries Act, and that there is a genuine link between the owner and Ghana as the country of registration.
-Require, as part of all applications for a fishing licence, fishing authorisation or entry to the Ghanaian fleet register, submission of records on the destination of profits from fishing activities, and information on beneficial ownership and foreign interests in vessels, to support implementation of nationality requirements in the 2002 Fisheries Act.
-Ensure all suspected fisheries-related infringements by the industrial trawl fleet are subject to thorough investigation, and that deterrent sanctions are imposed where violations are confirmed, in accordance with minimum sanctions in the national law and regardless of whether cases are settled in or out of court.
-Investigate the discrepancies in vessel gross tonnage highlighted in this report, and ensure appropriate sanctions are imposed in the event infringements are detected.
-Immediately, reduce the number of fishing licences issued for industrial trawl vessels in line with best available scientific advice on the status of both small pelagic and demersal fish stocks.
-In the interests of transparent and accountable decisionmaking, make the following information publicly available:
- Licence fees paid for access to fisheries resources and conditions of access
- IUU fishing infringements and sanctions imposed/paid
- Numbers of fishing days allocated to each licensed vessel
- Total catches of all fishing sub-sectors, including by-catch
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