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Venezuela Sanctions Set Off Fight for ‘Plundered’ Oil Cargo

For two months, the Malta-flagged oil tanker Alkimos has been quietly floating off the Gulf Coast of Texas, undisturbed by the high-stakes legal fight playing out in a federal courtroom as a result of American sanctions on Venezuela.

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Marinakis did not respond to a request to comment made through his website and Capital.

While the arbitration between the two shipping magnates is likely to take months, U.S. officials see the case as a sign that sanctions on Venezuela are increasingly effective.

In May, the U.S. Departments of State and Treasury and the U.S. Coast Guard issued an advisory warning the maritime industry that such ship to ship transfers of the sort the Alkimos was being asked to perform are frequently used to evade sanctions. While the report focuses on Iran, North Korea and Syria—not Venezuela—it urges shippers to enhance due diligence and sanctions compliance practices to avoid running afoul of U.S. regulations

“The global shipping community is moving out of doing business with Venezuela,” Elliott Abrams, the Trump administration’s special representative for Venezuela, told the AP. “The most reputable firms, including the largest Greek shipping companies, have been cooperative and have shown that they value their reputations and their global businesses.”

In the case of the Alkimos, its owners suspected something was amiss. So its lawyers pressed ES Euroshipping for additional information, pointing out that the contract contained a “sanctions clause” giving the shipowner “absolute discretion” to refuse to carry out any trade that it deems exposes it, or its crew, to U.S. sanctions.

“Just to be clear in advance. Owner WILL NOT participate in any illegal trading,” according to an email sent March 31 by the shipowner’s broker.

Despite its misgivings, the ship departed Panama on April 9 — days after the AP reported that Ruperti had started purchasing oil in what he would later describe as a “humanitarian work” that didn’t violate the U.S. sanctions.

“I am 100% sure that I am doing this legally and that I am complying with the rules and obligations,” he told the AP in an April interview. He declined to comment when contacted this week about the seized cargo.

En route to Aruba, the back and forth continued—and the Alkimos’ owners grew more suspicious. The rendezvous point with the other ship, the Beauty One, was located in the open seas—50 miles west of Aruba off the northern coastline of Venezuela—rather than an area designated by Aruban authorities for ship-to-ship fuel transfers. Further, the supervisor of the risky procedure, ATM Marine Services, were unknown to the ship’s owners, without even a web page to identify it. No agents had been appointed to coordinate with Aruban authorities.

“URGENT responses to the above are requested. The matter is most serious,” the Alkimos’ broker wrote shortly before its schedule arrival off Aruba on April 11.

Throughout the ordeal, tanker rates were surging — something that ES Euroshipping contends was driving the shipowner’s rush to unload its cargo and move on to the next job. With the world economy shutting down due to the COVID crisis, there was a glut of fuel being produced. The mammoth oil carriers, which in some cases saw their daily rates jump 10-fold, were suddenly in demand as floating storage devices even as crude prices were crashing.

After two deadlines to provide alternate voyage orders passed, the Alkimos turned around on April 26 and headed to Houston. But it first advised ES Euroshipping that it would seek a lien on the cargo for $1.7 million to compensate for losses, including $500,000 in fees it racked up being adrift for so long.

ES Euroshipping contends Capital Ship Management and the ship’s owners stole the cargo and is seeking damages worth $2.3 million. In court filings, attorney Michael Volkov said that that after much stonewalling by the ship owner, which refused to accept its assurances there was no sanctions risk, Euroshipping did provide alternate instructions — to take the cargo first to the Bahamas and then Trinidad.

But Ruperti’s company claims its instruction were nonetheless ignored and accused the ship owner of setting off on an illegal, 7-day voyage to Houston to find a favorable jurisdiction to legalize its “theft” when much closer ports existed for the parties — none of the U.S. nationals — to litigate their competing breach of contract claims. It also accused Alkimos of fleeing Aruban waters without notifying the harbormaster, leaving behind $11,500 in fines and fees for the unauthorized departure.

“Brujo is but a pirate who plundered cargo at sea, fled the Aruban authorities without proper authorization, diverted its vessel to a port in this District, and then deceived this Court,” Volkov said in a May 29 filing.

Ruperti appears to have some powerful backers of his own. On May 1, Hans Hertell, a former U.S. Ambassador to the Dominican Republic, wrote a letter to Ryan Patrick, the U.S. attorney for the southern district of Texas, calling on prosecutors to open a criminal probe against the shipowners.

“We were simply astounded to learn that the Vessel Owners had so brazenly stolen and converted our clients’ cargo in this manner,” according to the letter.

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The story has been edited to correct details of a preliminary criminal investigation Greek prosecutors opened against ship owner Evangelos Marinakis. The investigation stemmed from the seizure of heroin aboard a vessel in Greece, but that vessel did not belong to Marinakis or any of his companies.

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Joshua Goodman on Twitter: www.twitter.com/APjoshgoodman

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