KIRIBATI NEW FLAG OF CONVENIENCE SHIP REGISTRY;

1. (C) Ship owners looking for a flag of convenience can now
hoist the colors of the tiny Pacific island nation of
Kiribati, which amended its maritime shipping act in June
2006 to allow creation of a foreign ship registry.
Singapore-based Sovereign Ventures Limited is the agent, as
it is for Tuvalu and, reportedly a host of other nations.
Sovereign is also involved in oil and gas exploration in
North Korea. Kiribati officials first mentioned the new
ship-registration law to us last summer in the context of
news accounts reporting a collision earlier in the year
between U.S. and Kiribati-flagged ships in the Persian Gulf.
Kiribati was certain none of its ships could be in the Gulf
because the previous law allowed very limited registration.
At the time we noted how false-flagging and other concerns
would surely increase with an off-shore registry. When
embassy Poloff recently visited Kiribati, the Solicitor
General acknowledged awareness of international concerns, but
he claimed a need to generate foreign exchange had outweighed
his and others' opposition. End summary.

Joining the crowd


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2. (C) The Kiribati parliament amended the country's 1983
"Merchant Shipping Act" in June 2006 to allow creation of an
open registry of foreign vessels. Under the prior law, only
Kiribati citizens or domestic companies could register
vessels in Kiribati, and according to government officials
all Kiribati-flagged vessels previously operated only within
Kiribati waters or, at most, sailed between Kiribati and
Pacific neighbors such as Fiji. The creation of the new
registry was driven solely by the desire to tap a new source
of foreign cash, according to Kiribati Solicitor General
David Lambourne. Currently, three other Pacific Island
nations have open registries: Tuvalu, Vanuatu and the Cook
Islands. Tuvalu claims to have earned more than 300,000
dollars Australian (USD 235,000) in 2006 from its ship
registry, run by Sovereign Ventures of Singapore. Worldwide,
more than fifty countries are said to operate open registries.



3. (C) In August 2006, prior to the actual creation of its
open registry, the Government of Kiribati asked the USG for
information about an apparent case of false flagging.
Following a collision with the USS McCampbell in the Persian
Gulf in March 2006, a vessel named the Rokya I claimed to be
registered in Kiribati. According to Lambourne, there was no
such vessel registered in Kiribati, nor was it possible, in
his view, that any vessel registered in Kiribati at that
time, under the 1983 Merchant Shipping Act, could be in the
Persian Gulf. The Kiribati government expressed its grave
concern. In that context, Kiribati officials informed
Embassy Suva of the new open-registration law. We sought
guidance from Washington and then conveyed USG views about
the difficulties open-registration could create. During a
recent visit to Kiribati, PolOff supplemented the
conversation, relaying to Lambourne and the Foreign Ministry
advice received from the U.S. Navy on how Kiribati could
avoid accusations of false flagging, only to be informed that
Kiribati had gone ahead and implemented the off-shore
registry.

In Questionable Company


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4. (C) Lambourne said his government has handed over
operation of the new registry to the same Singapore company,
Sovereign Ventures, that Tuvalu uses. An Internet search of
Sovereign Ventures shows the company has close and
long-standing ties to North Korea. According to Sovereign's
www.maritimechain.com website, the company also manages

SUVA 00000169 002 OF 002


registries for Tuvalu, Kiribati, Mongolia, Panama, Belize,
Dominica, Honduras and "many more worldwide." Sovereign is
part of the Korasia group of companies, which administered
the Cambodia shipping register until an incident in 2002 in
which the French Navy seized a Cambodian-flagged vessel
smuggling cocaine.



5. (C) Captain John Hogan, head of the Suva-based Regional
Maritime Program of the Secretariat of the Pacific Community,
said the SPC tried to warn the Kiribati government away from
the deal with Sovereign Ventures, whose owners he described
as "pretty cunning." Hogan said Lambourne and others had
also tried to block the deal, but the Kiribati Transportation
Minister pushed it through. Hogan accused the minister of
having accepted around the world airline tickets and other
gratuities from Sovereign during negotiations. Hogan said
similar inducements were made to Tuvalu. The Tuvalu
Transport Minister recently returned from an all-expense-paid
visit to Singapore, funded by Sovereign, and announced that
the company has agreed to fund a Tuvaluan registrar and a
clerk assistant at the Sovereign office in Singapore as well
as Tuvalu's attendance at the biannual meetings of the
International Maritime Organization. (Note: The clerk is
reportedly a former politician's niece.)

Comment


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6. (C) Kiribati and Tuvalu have sidled into the clutches of a
company and an industry that appear unlikely to benefit the
Pacific region or the world. The two countries' addition to
the roll of those proffering flags of convenience, including
potentially to terrorists, will not be a plus in U.S.
relations. The Embassy will keep the subject on its
bilateral agendas. It may be useful for the U.S. Coast Guard
and other U.S. law enforcement and military authorities weigh
in with their Kiribati and Tuvalu counterparts as well
whenever the opportunity arises. The April visit of a Coast
Guard cutter to the Kiribati capital Tarawa could be an ideal
moment to reiterate USG concerns. End comment.
DINGER