Sock manufacturer's ghost fleet: Turkish companies allegedly enable Russian sanction evasion
Turkish companies allegedly enable evasion of Russian sanctions through "ghost ship fleets," transforming a sock manufacturer into a major player in global oil trade, Wall Street Journal reported on Friday.
An article titled “The Ghost Fleet Helping Russia Evade Sanctions and Pursue Its War in Ukraine” highlights the transformation of Beks Ship Management, a company originally engaged in sock and underwear production, into "one of the world's largest shipowners transporting Russian oil." The Wall Street Journal asserts that there are hundreds of ships owned by Turkish companies within Russia's ghost ship fleets.
“The firm, Beks Ship Management, has bought 37 ships since 2021, many of them aging oil tankers, spending more than half a billion dollars in a little over two years and increasing the value of its fleet 10-fold,” it said.
Companies like Beks play a critical role in Russia's efforts to maintain worldwide oil supply and finance its war in Ukraine, according to the journal.
The anti-corruption group "Global Witness," campaigning for tougher sanctions against Russia on behalf of Ukraine, analyzed shipping data and concluded that as of February this year, Beks had become the fourth-largest shipowner in Russian oil trade.
The company began as a side venture of Turkish textile mogul Ali Bekmezci, known for producing socks and underwear for Western brands like H&M. According to maritime data consultancy Veson Nautical, the company currently owns 41 ships worth $782.61 million, approximately ten times the value of its fleet in 2021.
The report points out that the fleet includes hundreds of ships owned by companies from around the world, primarily from Greece, India, the United Arab Emirates, and Turkey. These companies often operate outside conventional industry standards to evade Western sanctions, foregoing insurance from global networks such as P&I Clubs that cover around 90% of global commercial shipping. Some rely on a parallel Russian insurance system established since the war began.
WSJ suggests that Turkish companies, including Beks, are a cause for concern. It reveals that these companies have acquired at least 36 unsanctioned ships and highlights the lax enforcement of Turkey's sanctions against Russia, especially at a time when President Tayyip Erdogan is attempting to mend relations with the United States.
The article emphasizes the security threats posed by these aging ships and states that officials from the US and allied countries are currently working to tighten sanctions enforcement in nations like Turkey, which has increased trade with Russia, especially during the conflict in Ukraine.
US officials speaking to the newspaper express ongoing concerns about Turkey serving as a hub for Russia's sanctions violations, including the use of ghost fleets for Russian oil, sanctioned cargo shipments, and the delivery of Western-made electronics needed for Moscow's military. A Western diplomat refers to the dialogue between the US government and Turkish officials, stating, "We have an ongoing dialogue with the Turkish government on these matters. Our sincere hope is to avoid a scenario where a Turkish company would be subjected to sanctions, and we have informed both the government and the private sector about real risks."
Cemil Ersoz, a board member and co-founder of Beks Ship Management, says that the company finances its ships from banks in France, China, Japan, Taiwan, and Australia. He avoids disclosing the lenders' names due to confidentiality agreements but emphasizes that none of the funding comes from Russia. He asserts, "We don't just work with Russia. We work everywhere. We perform all necessary sanctions checks with our British lawyers."
According to shipping data collected by commodity data provider Kpler and examined by The Wall Street Journal, ships belonging to Beks Ship Management have recently loaded oil at Russia's Kozmino port on the Pacific Ocean coast. The oil was consistently sold above the ceiling price. Despite global warnings against loading oil in Kozmino and other Russian Far Eastern ports, Beks continued to ship oil from these terminals, leading some major shipping companies to halt their exports. The report also notes that some unlisted companies, including another Turkish shipping company Imza Marine, continue to ship from these terminals.
One of Beks' largest vessels, the crude oil tanker Beks Sun, reportedly docked at Russia's state-owned Transneft pipeline terminal in Kozmino in July and then set course for India, according to shipping data. Most of Beks' shipping business involves transporting oil to and from Russia, primarily delivering oil to China, India, and other buyers.
The article concludes by stating that despite the war and sanctions, Russia has managed to expand its share in some of the world's largest oil markets due to low prices and its extensive range of shipping options. The WSJ highlights that Russia briefly surpassed Saudi Arabia as China's top oil supplier in April, and while analysts expect Russia to regain that position in the coming months, the two countries are currently neck and neck. In India, the shift has been even more dramatic, with Moscow now supplying nearly 40% of India's oil imports, up from the pre-war 3%, according to commodity data provider Kpler.