Global investment group in toxic ship row

by Stephen Hurrell. Published Thu 13 Aug 2009 16:56
The Margaret Hill is currently detained in Southampton

A global investment group is at the centre of a toxic ship row after the UK Environment Agency barred a tanker ship from leaving port on suspicion it was to be illegally dismantled.

Staff at the London offices of US-based Fortress Investment Group were served with a ‘stop notice’ preventing them from moving the 50,700-tonne vessel Margaret Hill, following a tip-off to officials.

According to navigation logs, the liquid natural gas tanker was due to leave Southampton last Friday for a supposed 125-mile journey along the coast to Portland.

But officials at the Environment Agency say they stepped in to prevent the vessel leaving after receiving information that suggested the ship, which they believe contains hazardous materials such as asbestos, was destined for India following a multi-million pound deal to be dismantled for scrap.

The ship is considered to be valuable because it contains large amounts of nickel and an estimated 520 tonnes of bunker, low-grade oil. Local sources say the vessel was acquired last year for £5 million but its scrap value on the recycled metals market is estimated at around £17.2 million.

Fortress Investment Group is regarded as one of the world’s leading hedge funds and Forbes names all three founders in its billionaires’ club. Former American Vice Presidential candidate John Edwards is a senior advisor and former Fanny Mae CEO, Daniel H Mudd, who was ousted in the US government takeover of the mortgage-finance giant, currently heads the operation.

This is the first time these powers have been implemented by the Environment Agency to prevent a ship from leaving a UK port.

Under international law, a waste ship sent abroad from England and Wales for dismantling must first obtain permission from the Environment Agency and its equivalent regulators in the proposed destination country.

Waste ships containing hazardous materials can only be dismantled at properly authorised dismantling facilities in either the EU or an Organisation for Economic Co-operation and Development (OECD) country. They cannot be sent to dismantling facilities in countries outside the EU or OECD such as India or Bangladesh.

A spokesman for the Environment Agency said a temporary stop had been issued to prevent any potential contravention of the rules on waste exports as no application for export had been submitted.

Liz Parkes, Head of Waste and Resource Management at the Environment Agency, said: “Prompt investigation carried out by Environment Agency officers using the intelligence provided by the Maritime and Coastguard Agency has ensured that this ship does not leave the UK until we are clear about what is happening to it.

“We are continuing our discussions with those involved, including the finance company who recently took possession of the ship, to establish what is happening to it and to make them aware of the procedures that must be followed if they intend the ship to be exported for recycling.

“There are rules in place to ensure waste ships do not end up in developing countries, and cause damage to people and the environment. The Environment Agency will only give permission for a waste ship to be exported if it is going to an authorised recycling site in a country that wants to accept it and has necessary agreements in place.”

James Champness, Head of Operations at the Port of Southampton, said the Environment Agency stop notice meant he was unable to provide a pilot that would enable the vessel to leave its moorings.

It is believed the Margaret Hill was brought to the attention of the Environment Agency when NGO Platform on Shipbreaking sent a letter to the Department for Environment, Food and Rural Affairs (Defra) asking a stop order to be placed on the ship.

“They must hold the ship, ascertain the destination and survey it to assess the amounts of asbestos, PCBs and other hazardous substances it is likely to contain,” said Ingvild Jenssen, Executive Director of Platform on Shipbreaking. “According to European and UK law, all hazardous materials must be removed from the ship before it can be allowed to be exported to South Asia.”

Platform on Shipbreaking believes the ship has been sold for scrap to be dismantled in South Asia. In the letter to Defra, they reported that they suspected the ship had tonnes of asbestos on board.

However, a spokesperson for the Maritime and Coastguard Agency said today that the Environment Agency is dealing with the ship and Shipbreaking has not shown any proof of toxic materials on board.

Allan Graveson, Senior National Secretary for the maritime trade union Nautilus, said stopping the ship was the right decision.

“We now have some first class recycling facilities in the UK, where ships can be dismantled with no risk to workers, the public or the environment,” he added. “The shipping industry should be making use of them.”

Fortress Investment Group declined several opportunities to comment.

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