Published: January 18, 2024

By: Artisonal

EXECUTIVE SUMMARY

Forced labour in the fisheries sector is increasingly recognised as a human rights crisis. In 2021 alone, 128,000 fishers were trapped in forced labour aboard fishing vessels, often whilst in the high seas where workers are isolated, conditions are hazardous and there is little regulatory oversight, though this figure “likely significantly understates the full extent of the problem”, according to the International Labour Organization (ILO).

Forced labour is defined by the ILO as “all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily.” The ILO provides a framework of 11 forced labour risk indicators that also apply to the fishing sector. This includes physical violence, debt-bonded labour, and abusive working and living conditions.

In 2021 alone, 128,000 fishers were trapped in forced labour aboard fishing vessels, often whilst in the high seas

Labour exploitation is particularly widespread aboard distant water fishing fleets from many countries that have not ratified these key labour protection agreements, that is, commercial fishing vessels that operate outside a nation’s 200-mile exclusive economic zone (EEZ), whether on the high seas or in another nation’s EEZ. It is estimated that between 57,000 to 100,000 individuals work on these vessels in the high seas, many of whom may have been forced labour victims.

However, beneficial ownership information is rarely, if ever requested, by most countries when registering vessels or requesting fishing licences, meaning that those ultimately responsible for the abuses are not detected and punished. Making matters worse, they often use complex, cross-jurisdictional corporate structures to mask their ownership, ranging from using shell companies to setting up joint ventures which may be spread around the world.

This report sheds light on the main companies behind force labour violations, carrying out the largest ownership analysis of these incidents in commercial fleets to date.

Despite these challenges, this report sheds light on the main companies behind force labour violations, carrying out the largest ownership analysis of these incidents in commercial fleets to date. To achieve this, we built a database of nearly 500 commercial fishing vessels accused of forced labour between January 2010 and May 2023, one of the largest in the world, and compared it with another dataset of over 1,000 vessels accused of illegal, unreported and unregulated (IUU) fishing, five times more than the IUU unified list from regional fisheries management organisations for that same period. We also used S&P Lloyd’s Global IHS Markit, Orbis Moody’s and local ownership registries to identify as far as possible the legal and beneficial owners of these vessels. Due to lack of verification of declared beneficial owners in these databases, we state that we found natural persons identified as shareholders rather than beneficial owners due to the concern of identified shareholders being actually nominees, i.e. acting on behalf of others and thus not being the real beneficial owners.

Key findings

1. Natural persons were identified as shareholders for only one-fifth of vessels accused of forced labour. This may include either beneficial owners or natural persons acting as shareholders on behalf of others and holding business roles in hundreds of other companies. This in turn reflects the financial secrecy surrounding this industry and gaps in beneficial ownership registries more widely. Meanwhile, we were able to identify the legal owners of nearly half of the vessels accused of forced labour, even though many of them are shell companies based in secrecy jurisdictions.

   
   

2. More than a third of vessels accused of forced labour for which location data was available operated in Asia, followed by Africa (21 percent), Europe (14 percent) and Latin America and the Caribbean (LAC) region (11 percent). Interestingly, 45 percent of accused vessels were found in just five countries: Indonesia, Ireland, Uruguay, Somalia and Thailand.

   
   

3. A quarter of accused vessels were flagged to China, whilst 18 percent carried flags of convenience, which have lax controls, financial secrecy and low or non-existent taxes. In terms of regions, 54 percent of commercial vessels accused of forced labour for which flag data was available were flagged to Asian countries, 15 percent flew European flags led by Ireland, Russia and Spain, 14.5 percent were flagged to LAC countries led by Panama and Belize, and 10 percent were flagged to Africa.

   
   

4. Top 10 companies own 1 in 9 vessels accused of forced labour. Of these, six are from China, two from South Korea and one from Russia, with some linked to secrecy jurisdictions. China’s Zhejiang Hairong Ocean Fisheries Co. Ltd. tops the ranking followed by Pingtan Marine Enterprise Ltd. which is partly owned by the Chinese government and was sanctioned by the US in December 2022 and delisted from the NASDAQ stock exchange.05 Another company appearing in the ranking is the China National Overseas Fisheries Corporation Ltd. (CNFC) which is owned by the Chinese government. Both Pingtan and CNFC also feature in the top 10 companies involved in IUU fishing.

   
   

5. 22.5 percent of commercial fishing vessels accused of forced labour are owned by European companies. Spain tops this list with 12 vessels representing 5 percent of the total for which legal information is available, followed by Russia (7 vessels) and the UK (6 vessels), making it one of the top 5 countries of companies owning vessels accused of forced labour.

   
   

6. Russia’s Pescatlant Ltd. is the top European company accused of forced labour, headquartered in St. Petersburg and using the Spanish port of Las Palmas as its base. All of the company’s accused vessels were owned via subsidiaries based in Belize, a jurisdiction which does not require companies to report beneficial ownership information to the government.