Suspicions of Iran Sanctions Breach Cause Bank to Seize Tankers

Reports alleging that fuel tankers appeared to breach U.S. sanctions against Iran were cited in court filings by a bank as it sought to seize the ships, accusing the owners of loan default, Bloomberg reported.

The accusations, which led to the the temporary arrest of the vessels in Singapore late last month, come as the U.S. seeks to isolate the regime in Tehran by cutting off oil sales, a major source of revenue. They also underscore how traders and shippers suspected of violating sanctions can run afoul of their own lenders, not just governments.

Hanover-based Norddeutsche Landesbank-Girozentrale, known as NordLB, detailed its claim in documents filed last month in the High Court of Singapore seeking the arrest of the vessels, accusing their China-based owner of defaulting on a $30 million mortgage agreement, Bloomberg writes.

The German lender said in the filings it was notified June 25 by the London P&I Club, a ship owners’ association that provides protection and indemnity insurance, that coverage on the ships would be terminated. That came one day before Lloyd’s List, an industry news publication, reported that two of the ships — Gas Infinity and Gas Dignity — appeared to have transported Iranian liquefied petroleum gas in breach of U.S. sanctions, the bank said.

NordLB said it believes London P&I terminated coverage after being contacted by Lloyd’s to comment for the article. The London P&I club confirmed that it no longer insures Gas Infinity, but declined to comment further

The tankers, along with Sea Dragon, were used as collateral for a $30 million loan NordLB made in July 2018 to Silvana Limited, Sea Dragon Group and Sea Dolphin Co., with China’s Kunlun Holding Co. and Kunlun Shipping as guarantors, according to the affidavit. The companies have offices in Shanghai and Hong Kong.

Gas Infinity and Gas Dignity turned off their transponders, which usually publicly broadcast their locations, when approaching the Strait of Hormuz and then turned them on again several days later when they were laden with fuel, the bank said in the affidavit, citing the Lloyd’s article. The bank also cited a Bloomberg article describing similar activity by another LPG tanker owned by Kunlun Trading Co., a shareholder of the borrower.

While the bank only cited media reports for its suspicions the ships broke sanctions, it described the actions, as well as losing satisfactory insurance coverage, as “events of default” on the mortgage.

Gas Infinity was placed under sheriff’s arrest in Singapore on July 22 and Sea Dragon on July 24, according to information from the Supreme Court of Singapore. Both ships have since been released.

Be the first to comment

Leave a Reply

Your email address will not be published.