Licensed fishing vessels unmasked as illegal Chinese fronts
A three-month investigation based on interviews with dozens of fishing experts, company records and financial documents revealed an opaque web of Chinese control and ownership of numerous industrial fishing vessels operating in Ghanaian waters. in violation of local laws.
The Environmental Justice Foundation (EJF), an NGO that monitors economic and environmental abuses, has blamed the depletion of Ghana’s fish stocks on overfishing by Chinese trawlers who use Ghanaian front companies to obtain fishing licenses. “Any further decline will be catastrophic and have huge socio-economic costs,” warned Steve Trent, chief executive of EJF.
The foundation estimates that 90% of the fishing vessels operating in Ghana’s territorial waters are indeed owned by Chinese companies.
The investigation revealed that China’s Shandong Zhonglu Oceanic Fisheries Company set up three front companies holding five fishing licenses acquired from Ghana’s Ministry of Fisheries and Aquaculture. These opaque ownership deals have drastically reduced Ghana’s fish stocks, draining the economy of around $50 million a year.
The investigation highlighted the failure of government officials in Ghana to take meaningful action to address violations of the law.
In June 2021, the European Union issued a warning to Ghana for what it described as the country’s failure to impose “effective sanctions on vessels engaging in or supporting illegal, unregulated and unregulated fishing activities“. declared”.
Years of calls for reform by civil society actors, academics and the EU have yielded very little results, according to Francis Adam, president of the Central Region Fishermen’s Association. “The current minister and former officials have not shown enough commitment to deal with Chinese involvement in the fishing industry and the impact on local fishermen,” Adam said.
Fisheries Minister Hawa Koomson, who is responsible for fisheries protection in Ghana, did not respond to several letters from investigators requesting information or comment on the findings of this investigation.
A hidden Chinese fleet?
Shandong Zhonglu Oceanic Fisheries Company is a listed Chinese company which disclosed in its 2014 annual report that it uses a “special purpose vehicle” to exercise control over a number of companies registered in Ghana.
The company, headed by Lu Lianxing, a member of the Chinese Communist Party, has its main establishment in Qingdao, in China’s Shandong province.
In its 2019 annual report, the company revealed that it has a 100% stake in the following companies in Ghana: Laif Fisheries Company, Zhong Gha Foods Company and Africa Star Fisheries. He also described these companies as “significant foreign operating entities”.
A review of Ghana’s licensed fishing vessels in 2021 found that three of the Shandong-owned companies were granted licenses to operate five tuna vessels in the country.
They are listed as follows:
LAIF Fisheries, which is also owned and controlled by Shandong, is registered and owned by two entities in Ghana: Industrial Finance (Africa) House and Shandong Zhonglu Hiayan Ocean.
Despite several requests for comment by email and telephone, neither Shandong nor its subsidiaries in Ghana responded.
The investigation also showed that the Ghana Fisheries Ministry granted fishing licenses to the companies listed below last year, despite there being no evidence in the company registry that they were registered.
The Senior State Attorney at the Registrar’s Office, Afua Sarpong, explained that, “Any evidence of company registration documents held by these companies may be brought to the attention of the Registrar General for authentication.”
Fishery expert Trent said Section 47 of the Ghana Fisheries Act states that at least 50 percent beneficial ownership or control of tuna fishing vessels must be held by the Ghanaian government, a citizen of Ghana or a Ghanaian public company, and have its principal place of business. business in Ghana.
He added: “Given that the vessels appear to be operating under the flag of Ghana, if they are listed as suspected to be majority beneficially owned by Chinese state/commercial actors…either the vessels have not declared their beneficial ownership, that is, the Department of Fisheries and Aquaculture Development violated the Fisheries Act by granting the vessels permission (to operate).
“The new Companies Act 2019 clarifies the definition of a beneficial owner, making it clear that the way Chinese fishing companies are using Ghanaian front companies is illegal,” he said.
A spokeswoman for the Ghana Industrial Trawlers Association, Kate Ansah, argued that trawler owners in Ghana were entering into “hire-purchase agreements with Chinese owners”. However, she insisted that tuna companies registered in Ghana should be allowed to enter into partnerships.
Fisheries expert and director of coastal governance NGO Hen Mpoano, Kofi Agbogah, said Ghanaian subsidiaries acquire licenses directly from the Fisheries Ministry “through opaque and bogus arrangements”, while vessels are “driven (operated) by Chinese owners”. “It’s illegal,” he added.
Loss of income
The lack of transparency that allows Chinese companies to set up opaque corporate structures and go through Ghanaian fronts to obtain fishing licenses would rob Ghana of $23.7 million a year in tax revenue.
Illegal fishing linked to opaque ownership structures is also having a severe impact on Ghana’s ‘small pelagic’ fish populations, as sardinella numbers are already on the brink of collapse – with catches dropping by 80% over the past 20 years.
Adam commented that he had worked in the fishing industry for over three decades, but “the last decade has been the most difficult due to the dramatic reduction in our catch following the influx of foreign vessels “.
The World Bank has estimated that the incomes of artisanal fishers in West Africa have fallen by 40% over the past decade, plunging thousands of fishers and their dependents into abject poverty. This raises important questions about why officials in Ghana’s Ministry of Fisheries and Aquaculture have failed to take urgent action to address the perpetrators and beneficiaries of these illegal practices.
The World Bank has also expressed concern about the “weak commitment of the Ghanaian government to reduce the fishing capacity of the industrial segment (in favor of small-scale artisanal fishers)”, as agreed under a 2012 moratorium. The Bank noted that the government is “heavily influenced by forces within the industry segment” and reiterated that “foreign vessels allowed to register in Ghana under beneficial ownership agreements are not investigated” .
In the past, the Ghanaian government has taken a soft stance on alleged violations of the law by Chinese companies, in what is seen as a compromise for Chinese development aid.
In 2019, the government dropped charges against a well-known Chinese national, Aisha Huang, who openly engaged in illegal mining in the country, and opted to deport her.
A senior government minister, Yaw Osafo Maafo, explained that Huang had not faced the full rigors of the law due to the huge Chinese investments in the country.
State investment data shows that the number of Chinese projects and investments in Ghana has accelerated rapidly over the past two decades. China is currently Ghana’s main source of foreign direct investment, as well as its main trade and infrastructure finance partner.
Michael Addaney, a Ghanaian researcher and senior lecturer in the Department of Planning and Sustainability at the University of Energy and Natural Resources, remarked: “While China claims to prioritize environmental sustainability in Africa, extractive projects initiated by its private sector do not align with this stated objective”.
These projects, he argued, “serve China’s broader interests and often create environmental consequences and problematic debt.”
Trent complained that in a country where nearly 25% of the population lives below the poverty line, “Ghana’s precious fishery resources are being sold for negligible profit to foreign operators in violation of the law.
“The Minister must immediately address the problem of overcapacity in Ghanaian waters, in line with scientific advice, to counter the collapse, or near collapse, of fish populations in the country. A red card (EU import ban) for the country is a realistic prospect if Ghana is deemed to be making insufficient progress.