Tuesday, March 10, 2015

Dismissal of Senior Shipping Executives at Container Terminal Group Leaves Questions Unanswered

Lack of a Statement Leads to Speculation About Possible Corruption
Shipping News Feature

DENMARK – INDIA – A veil has been drawn by APM Terminals, the port and container handling subsidiary of the Maersk Group, over the sudden departure last month of three of the companies leading executives. CFO Christian Møller Laursen, CCO and Business Director, Martin Gaard Christiansen, and Head of Global projects, Michael Lund Hansen were allegedly dismissed with immediate effect for ‘breaching company guidelines’.

The company’s refusal to give any sort of statement has led to speculation over the cause of the dismissals, with most opinion centring on two situations in India, both of which hint at corruption of one sort or another. APM is of course one of the leading companies in the world when it comes to port development but with the plethora of scandals which have engulfed the shipping trades* in the past few years, seeing billions levied in antitrust fines, any company is likely to be a little circumspect when it comes to discussing internal problems of this sort, let alone Maersk which has always sought, and usually managed, to preserve a good public relations face.

The rumours centre on a possible proposed takeover of the Kattupalli International Container Terminal (KICT) into which the owners Larsen & Toubro (L&T) had pumped substantial funds before last year cancelling the existing management contract with International Container Terminal Services (ICTS) of the Philippines, apparently by mutual consent. Problems with Customs procedures at the time compared with ports like Chennai had seen TEU numbers slump to an all-time low by mid-2014, and it was known APM were front runners to take over a facility with a proposed 1.2 million TEU annual throughput, in a bid to strengthen the company’s presence in the region.

Kattupalli was developed by L&T Ports as both a shipyard and container terminal, but when a possible sale was under discussion, local Tamil Nadu government officials declared in January that such a division of assets would be illegal, calling the separation of the two elements, container terminal and shipyard, ‘a back-door entry for [overseas] firms’ and emphasising the port infrastructure was indivisible, something which would make little sense to anyone familiar with the trade.

Two thousand kilometres to the north there have been allegations that all is not well with APM’s redevelopment of the facility at Pipanav north of Mumbai, of which the company owns a substantial part. According to local press, competitors of the development company which won the port expansion contract allege that tender procedures were not followed with the winning bid as much as $15 million more expensive than that of others.

Critics point out that the winning bidder, Man Infraconstruction, has on its board of directors’ one Dinesh Lal, formerly employed by both Maersk India and Maersk subsidiary Safmarine India, along with other numerous roles he has held in the industry.

The facts of the matter may well not ever be known unless things are serious enough to warrant criminal proceedings. What is for sure however is that many people will now be keeping an eye on container terminal development in the subcontinent and waiting, perhaps fruitlessly, for a comment from APM or Maersk.

* simply type cartel into the News Search box at the head of the page to see just how many.

Photo: Kattapulli Container Berth.