US Court Penalty Issued In San Nikunau Case

Following a trial in August 2012, the U.S. District Court in Washington, D.C. has today fined Sanford Limited $US1.9 million in the case relating to noncompliance with MARPOL requirements aboard its Tuna fishing vessel, the San Nikunau while it operated in international waters around American Samoa.

The Court ordered that a further Community Service Payment of $US500,000 be paid to the US National Fisheries Foundation.  A probationary period of three years has been set during which time Sanford vessels cannot enter US Ports until approved audits of the Company’s Environmental Compliance Plan have been completed.  The first audit is scheduled in February.

At the hearing, which got underway at 9:30am in Washington, Sanford’s lawyers argued that the US Justice Department’s call for the maximum US$3 million fine and a five year probation period, including a ban on Sanford boats entering US waters, was ‘excessive’.

They told Judge Beryl Howell that Sanford has a proven record of sound environmental management and compliance and has moved ‘aggressively to broaden and strengthen its Environmental Management System for its Pacific tuna vessels and across all of its vessel operations.’

Counsel for Sanford said that the company’s fleet was no longer calling at US ports or transiting its waters.

Sanford Managing Director, Eric Barratt was in Washington for today’s sentencing.  He said the company respected and understood the Court’s sentencing. “This case has raised serious issues for Sanford, which have required the company to make significant changes to ensure they will not be repeated.  These new environmental management systems are now in place across our fleet.  We are pleased the court issue is now behind us and we can concentrate our efforts on improving our overall environmental compliance.”

Mr Barratt went on to say: “Historically, Sanford Vessels rarely transited through US waters, but now avoid doing so.  The fleet is not presently calling at any US Ports. Our vessels no longer use Pago Pago as an unloading port with all catch now being sold and transferred to fish carriers at sea or landed in New Zealand.”

In 2012, Sanford also invested in a significant capital upgrade of the San Nikunau and its equipment.

Sanford’s tuna vessels are also set to be accredited to ISO 14001 by February 2013. ISO 14001 focuses on three key aspects: continual improvement; the prevention of pollution; and, the commitment to comply with all legal requirements. “All three of which support our commitment of operating in a sustainable manner,” said Eric Barratt.

“All waste-management and recording systems on our tuna purse seine fleet have been upgraded to ISO 14001 certification standard and all crew fully trained on requirements to comply with MARPOL, the international treaty that guards against marine pollution, and other international safety standard systems.”

“Choosing to gain accreditation for our Pacific tuna operations was voluntary, and includes a rigorous and intense accreditation process. Once accredited, ISO 14001 requires renewal every three years, with annual surveillance audits undertaken in the in-between years.”

The San Nikunau’s former Chief Engineer, James Pogue was found guilty in respect of two Oil Record Book related charges. He was today sentenced to one month custodial sentence, five months home detention and 18 months probation.

The San Nikunau is one of three tuna purse seiners that Sanford operates throughout the Pacific and, on occasions, in New Zealand. The vessel targets skipjack tuna, which was unloaded and sold into one of the two canneries based in Pago Pago, American Samoa.

Following a routine investigation in Pago Pago in July 2011, the San Nikunau was detained for five months, which led to criminal charges being filed in January 2012 in the United States of America alleging that Sanford was vicariously liable for the crew’s failure to properly maintain the vessel’s Oil Record Book, which deals with the management of oily wastes aboard the vessel, including the use of the oily water separator. ENDS

Eric Barratt, Managing Director, Sanford Limited +64 21 325 209
www.sanford.co.nz

San Nikunau Case – Fact Sheet (amended)

Sanford has a proven history of environmental leadership across its fishing operations in New Zealand including:

  • The only major seafood company to have maintained ISO 14001 environmental certification across its New Zealand operations for the last 10 years.
  • The only major seafood company to have publicly reported on its environmental, social and economic performance against targets it has established to reduce its environmental footprint (and received the Association of Chartered Certified Accountants award for the best Sustainability Report by a Corporate in New Zealand in 2011).
  • The only major seafood company to have consistently argued for setting Total Allowable Catch limits for hoki at the lowest of the recommended research options.
  • Is credited by bodies such as CCAMLR and the UK Government of operating fishing vessels such as the San Aspiring with an ecological footprint equivalent to the best operated vessels in the world.
  • Actively encouraged and supported the certification by the Marine Stewardship Council (MSC) of fisheries such as Hoki and Southern Blue Whiting in New Zealand and Toothfish in the Ross Sea and in South Georgia.
  • Pioneered the use of V8 Supercar fuel monitoring technology to apply to its deep sea fishing vessels to increase efficiency and reduce the use of fuel during fishing and steaming operations.
  • Installed fishoil recovery technology onboard three of our deepwater trawl vessels allowing the vessels to make their own bio-fuel.
  • Is actively engaged with regulatory authorities in New Zealand in assisting with additional research and reporting requirements on the state of New Zealand fish stocks and a key partner with two other New Zealand companies and the New Zealand Government Primary Growth Partnership to develop a new wildfish harvesting technology that will allow more precise catches and allow fish to be landed fresher and in better condition.

However, a recent case involving the company’s Tuna fishing vessel, F/V San Nikunau, which operates in the waters around American Samoa, has raised questions regarding our processes for the correct management and recording of bilge waste on vessels at sea.

Since the verdict in this case was delivered by a Federal District Court Jury in Washington on 16 August, there have been media reports stating that Sanford was found to have discharged oily waste directly into the ocean and the Pago Pago Harbour.  This is not what the jury found.

The jury verdicts on the MARPOL charges in this case did not involve a finding that the San Nikunau had discharged any oily waste overboard. The MARPOL charges proved in the case related only to a failure to record internal transfers of oily bilge waste between compartment areas on the ship, based on a definition given to the jury by the court of “machinery spaces” which is a term used in MARPOL, New Zealand Law and US Law. Prior to this case, the term “machinery spaces” has never been defined by any of the applicable regulations.

The conviction on the seventh count related to the discharge of seawater into Pago Pago Harbour from a leaking rudder stock, not oily waste, again based on the definition of the term “machinery space” provided by the court.

Sanford Limited and the Ship’s Engineer, James Pogue were both defendants in the case.

The company and the vessel’s crew were operating within their understanding of New Zealand’s regulations concerning “machinery spaces” as that term is used in MARPOL, the international treaty that protects against pollution on the high seas.

Given the legal precedent set by this case, Sanford is reviewing its processes in this area for vessels likely to call at ports under US jurisdiction (Sanford does not fish in US waters). It is also calling on Maritime New Zealand to provide a usable and practical definition of this term “machinery spaces” for the operations of its vessels in New Zealand waters.

A summary of the facts of the case and the jury’s verdicts are set out below.  The Judge’s Instructions to the Jury and the Verdict are attached to this release.

Sentencing has been set down for 11 January 2013.

San Nikunau Case: Facts

  1. The case involved the company’s Tuna fishing vessel, F/V San Nikunau, which operates in international waters in the Pacific and by specific approvals from various Pacific Island state EEZ’s all managed, controlled and supervised by the Western and Central Pacific Fisheries Commission. The case revolved around reporting in the Oil Record Book during port calls to Pago Pago to unload tuna and was brought by the U.S. Attorney’s Office for the District of Columbia and by the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice.

  2. Sanford Limited was charged on the basis of vicarious liability of certain engine room crew members including the Chief Engineer and the relieving Chief Engineer to properly maintain the San Nikunau’s Oil Record Book in connection with the management and movement of oily wastes on board the vessel and the obstruction of port state control inspections by the U.S. Coast Guard through false entries in the Oil Record Book indicating that the oily water separator had been used, when it had not. The verdicts were returned by a jury in the US Federal District Court in Washington DC following a two week trial.

  3.  SUMMARY OF THE JURY’S FINDINGS
    Count One: – Conspiracy: Conspiring to knowingly fail to maintain an accurate Oil Record Book.

    The jury found that only one of 42 alleged ‘overt acts’ against Sanford Limited was proven. That act occurred on 9 July 2010 and related to the San Nikunau entering US navigable waters with a knowingly falsified Oil Record Book. The Jury found that on this count, Sanford Limited was guilty, but Ship’s Chief Engineer, James Pogue was not.

    Counts Two (Sanford and James Pogue July 9 2010) & Four (Sanford July 14 2011): – Charged with violating the Act to Prevent Pollution from Ships (APPS) by knowingly failing to account for internal transfers of oily bilge waste from “machinery spaces” to other areas of the ship in the vessel’s Oil Record Book.

    The guilty verdict on both counts two and four related to a failure in the Oil Record Book to account for the internal transfer only of oily bilge waste onboard the ship only.

    Relief Chief Engineer Rolando Vano pleaded guilty to Count Four prior to the trial.

    Counts Three (Sanford and James Pogue) & Five (Sanford): Obstruction of US Coastguard Inspection on July 9 2010 and July 14 2011, through false entries in the Oil Record Book indicating that the oily water separator had been used, when it had not.
    Count Six: Obstruction of Justice

    This count alleged that Sanford Limited through the actions of its crew attempted to obstruct justice by telling crew members being interviewed in Pago Pago to not tell the truth.

    The jury found Sanford Limited not guilty.

    Count Seven: Violation of the Act to Prevent Pollution from Ships.

    The Prosecution alleged that the San Nikunau had discharged oily machinery space bilge waste into Pago Pago harbour in American Samoa on 15 July 2011. Whilst the Jury returned a guilty verdict on this count, the prosecution evidence only recorded that seawater coming on board the vessel from a leaking rudder stock was discharged and that there was no evidence of any pollution in Pago Pago harbour. However the jury found that that seawater should have been processed through the oily water separator.

  4. The case stemmed from a U.S. Coast Guard investigation that commenced in American Samoa in July 2011.  The charges were filed in January 2012 and involved conspiracy, false record keeping in respect to oil waste management on the San Nikunau on the high seas, and one count involving a discharge in Pago Pago, American Samoa.

  5. Each count in relation to Sanford Limited carries a maximum penalty of US$500,000.  Sentencing has been set down for November 16 2012.

  6. During the trial the US Government withdrew a forfeiture claim against Sanford for the  US$24m proceeds from the fish catch covering the period of the allegations.

  7. Michael Chalos and Brian McCarthy from the New York based law firm of Chalos O’Connor LLP and Gregory Linsin and Paul Mark Honigberg from the Washington D.C law firm of Blank Rome LLP represented Sanford Limited in the federal court action.

  8. Sanford has stated that any decision regarding an appeal in the case will be made following sentencing in November.

Jury Instructions Sanford Pogue Trial.pdf
Jury Verdict Form Sanford Pogue Trial.pdf

Sanford introduces foreign crew management system

AUCKLAND, 30 July, 2012

Sanford Limited has today announced a new system to strengthen Sanford oversight and protect the safety, pay and working conditions of fishing crew working on Foreign Charter Vessels (FCVs) that supply Sanford operating in New Zealand waters.

All crew working on foreign charter fishing vessels will be paid directly by Sanford under a new Foreign Crew Management System, which the company says could become the blueprint for the New Zealand fishing industry.

Sanford has consulted with the Ministry of Business, Innovation and Employment (MBIE), formerly New Zealand’s Department of Labour, and foreign crew to develop the system, which applies to the four FCVs supplying Sanford now and any future charters.

The changes being implemented across Sanford’s FCV operations will complement those being phased in over the next four years by the New Zealand Government following the Ministerial Inquiry into Foreign Charter Vessels.

In a first for the New Zealand fishing industry, Sanford will take control of wage payments away from foreign vessel operators and off-shore manning agents and will pay fishing crew directly.

Sanford Foreign Crew Management System – Main Features:

  • The system will ensure full and transparent payment to crew directly from Sanford.
  • Sanford will act as ‘paymaster’ and will be responsible for receiving crew wages from the FCV owner and then depositing those wages into crew bank accounts. Crew wages will be paid into a bank account in their name in New Zealand.
  • The role of offshore manning agents will be strictly limited to recruitment and these agents will have no role in the receipt or payment of crew wages nor will they be permitted to hold any documents or other securities over crew.
  • Strict new requirements for manning agents and Charter Vessel operators to ensure crew contracts and wage documents are transparent and understood by all crew.
  • Sanford’s investigations have revealed that not all monies remitted to crew agents by the employer have been passed on to the crew.  Sanford’s revised system will include complete oversight of the Charter Vessel Operator’s work to put right any previous shortfall in crew wages for both current and former crew.
  • Sanford is the only New Zealand company that has had a policy of 100% independent observer coverage on its Charter Vessels for over 10 years.  Under the new management system, reporting requirements for observers have been strengthened to require formal reporting on crew welfare, treatment and health & safety.

A copy of the Overview of Sanford Foreign Crew Systems is available at www.sanfordfacts.com

The new system has been developed following a number of investigations and audits carried out by Sanford and independent third parties into FCV operations, which provided a comprehensive view of the existing model and changes needed.

As part of this process, Sanford has also investigated two specific allegations, raised publicly by one former crew member earlier this year, of mistreatment aboard a foreign charter-fishing vessel that supplies Sanford.

Those audits and investigations, including interviews with independent observers, current crew and former crew who worked aboard the vessels at the time of the alleged incidents, have not found evidence to substantiate those allegations. In summary the investigations found that foreign crew on FCVs chartered by Sanford are well treated and not subject to abuse or mistreatment.

However, these probes have found that there is an issue with crew wage payments and record keeping, particularly with regard to practices offshore. Consequently, the quantum of compensation payments to be made to crew by Korean Charter operator Dong Won Fisheries Co Limited is to be confirmed with each individual, and the new system includes a process for the calculation of those figures and for payment direct to affected crew.

The lack of transparency over payment to crew by offshore interests falls well short of what Sanford would expect.  The new Foreign Crew Management System is being implemented immediately to ensure all crew receive their agreed wages in full and on time. It is now in place on the three Dong Won Vessels supplying Sanford. Implementation on the Pacinui will be completed in September.

Crew have been consulted over the new pay arrangements and new contractual arrangements have been put in place with FCV owners to ensure the new system is implemented in line with the expectations of Sanford Limited. ENDS

About Sanford SAN.nz:

  • New Zealand company established in 1904.
  • Produces $400m exports per annum.
  • Devoted entirely to the harvesting, farming, processing, storage and marketing of quality seafoods and aquaculture products, mainly from New Zealand waters.
  • Supports the sustainable utilisation of seafood from New Zealand’s unique marine environment, and in the other waters in which the company operates.
  • Seeks to act responsibly in all commercial operations in accordance with international best practice in the marine and coastal environment and ensuring that customers receive quality products.

About Foreign Charter Vessels (FCVs):

  • Sanford currently has four FCVs operating in New Zealand waters, which complement Sanford’s own fleet of 13 deep-water fishing vessels.
  • Foreign Charter Vessels are an important part of Sanford’s deep-water fishing operations.

Sanford has been and continues to be actively and constructively involved with government, regulatory authorities and various committees, including the Ministerial Inquiry into Foreign Charter Vessels, and the subsequent review of its recommendations.

For further information or interviews please contact Eric Barratt, Managing Director Sanford Limited.

Overview of Sanford Foreign Crew Systems

BACKGROUND

Foreign Charter Vessels (FCVs) form an integral and crucial part of Sanford’s deepwater fishing operations in New Zealand waters. As such, Sanford has been and continues to be actively and constructively involved with government, regulatory authorities and various committees, including the Ministerial Inquiry into Foreign Charter Vessels (FCVs), and the subsequent review of its recommendations.

Sanford understands its obligations to all foreign crew under New Zealand legislation and the Code of Practice on Foreign Fishing Crew, and has always endeavoured to comply with those obligations.

In the wake of some negative international publicity and publication of results of the Ministerial Inquiry, Sanford has been engaged in a range of audits on its FCV operations, including internal Sanford audits/investigations, third party Sanford commissioned audits, and customer initiated third party audits. During April 2012 we began drawing together a raft of data and information flowing out of those audits and investigations, and forming what we believe is a comprehensive picture of the crewing arrangements on our FCV operations. The key findings are outlined below, but in summary we found:

  • Foreign crew on FCV chartered by Sanford are well treated and not subject to abuse or mistreatment;
  •  There is an issue with crew wage payments and record keeping, particularly in regard to practices offshore.

Unsatisfactory wage and record keeping offshore makes it difficult to track how much each individual crew member has been paid and when he received monies owed and remitted to him offshore.  Overwhelmingly crew reported no dissatisfaction with the wages received, but the lack of transparency over payment by offshore interests falls well short of what Sanford would expect.

In early May of 2012, given these concerns and the climate of uncertainty after the announcement of the Ministerial Inquiry recommendations, Sanford decided to engage with officials on proposals to address our concerns.  Independently, we began to develop a new, robust foreign crew management system. The outcome of this engagement and development work by Sanford and its charter partners is contained in the new Sanford foreign crew management system.

OUTCOMES OF INVESTIGATIONS

Summary of Sanford findings regarding Sanford operated foreign charter vessels.

  • No indications of any sexual abuse occurring on Sanford charter vessels.
  • One allegation of minor physical abuse that was reported by the complainant as not physically hurtful but which made him feel angry towards the supposed perpetrator.  This allegation was investigated, however inconsistencies in the allegations and contrary testimony by other persons interviewed meant we were unable to determine the truth of the matter.
  • No incidents of medical neglect or sick/injured crew being forced to work.
  • Generally crews are happy with their living and working conditions on the vessels, (also evidenced by the 47% returning crew rate).
  • Generally crews are happy with their agent, wages and received wages consistent with what they expected to receive when they signed up with the overseas crewing agent for the job.
  • In addition to the employment contract crew sign with their employer (FCV owner), they sign additional contracts (a work contract and a service contract) with their agent.
  • In response to the many crew absconding from vessels in the 2004 – 2006 period, crew agents in many cases applied financial controls in an attempt to discourage such crew behaviour.
  • In a few cases, agents are holding personal documents belonging to individual crew members.
  • Crew had agreed with the agent to a penalty regime if they deserted the vessel or terminated the contract early.
  • Wages records and documentation was extensive, but in some areas unsatisfactory.

SANFORD INVESTIGATIONS FOLLOW UP

Having considered its FCV operations in respect to crewing and the issues identified by a number of audits and investigations, Sanford finds the current model of operation is unacceptable. We believe a new model of operation is required, incorporating greater transparency, robust systems and more direct involvement by Sanford.

Sanford is aware of government decisions relating to the FCV Ministerial Inquiry report and the current dialogue/consultation regarding the implementation of new government systems over the next four years. However Sanford believes it should take urgent action to develop and implement a new model for crew payments on our FCVs.

To that end Sanford has developed the package as set out in this document, for implementation within a short timeframe.

TERMS OF REFERNCE FOR SYSTEM DEVELOPMENT

In developing the new foreign crew management system, some initial guidelines and concepts were put in place.

  • That systems would need to be robust, ensure fair treatment and easily understood by crew.
  • The system and implementation must allow for crew families offshore to receive money promptly as each crew member decides.
  • Sanford would be the “paymaster” in the system.

SANFORD FOREIGN CREW MANAGEMENT SYSTEM

  1. Independent observer monitoring
    Sanford has had a policy of 100% observer coverage on its FCVs for over 10 years. These observers have primarily focused on fishery compliance, although observers were asked to report on an informal basis on issues regarding crew treatment, living and working conditions and health & safety. Sanford has now strengthened this reporting, with the observer reporting requirements formalised in respect to crew welfare, treatment and health & safety.
  2. Transparency of documentation
    Sanford has implemented a policy whereby documents which foreign crew sign relating to their wages (such as times sheets, receipts of money, receipts of goods etc) must be multi-language documents, being in English and the languages of both the crew signing the documents, and the crew administering the documents.
  3. Documentation
    New and amended documentation has been developed for the new crew management system.
  4. Consultation with crew
    Sanford believes it is important to involve the crew themselves in the development of crew management systems. We have already had feedback via individual questionnaire forms from all crew, regarding how they would like to be paid and other wages related questions. This information has been considered in developing the new model, and further briefing of crew regarding the new system will occur before implementation.
  5. Transitional arrangements
    Sanford is mindful of the need for transitional arrangements between the old and new crew management systems. The proposals on this are:

    • Until arrangements for payment of all crew wages in New Zealand can be implemented
      1. Family support monies will continue to be remitted to families overseas via the crew agents.
      2. Agents will be instructed that they cannot retain any family support money; it must all be forwarded to the families.
      3. FCV owner will pay the monthly agent fees. This will be remitted to the agent separately to the family support money.
    • Any “savings” money currently held by crew agents on behalf of crew, will be required to be remitted to New Zealand for payment to the crewman in New Zealand at the end of his contract.
    • Any personal documents of crew held by an agent will be required to be returned to the crewman or his family by the agent.
    • Due to issues noted from Sanford investigations, the FCV owner crew employment agreement will need to be reviewed and changed. This work is now competed and crew have been offered new improved contracts.
  6. Compensation payments
    Sanford investigations have revealed that not all monies remitted to the crew agents by the employer have been passed on to the crew. Various portions of it have in the past been retained by the agent. Sanford therefore believes that at least some crew did not in fact receive their full entitlement of wages. It is difficult to determine however precisely which crew were/are affected and to what degree.  Sanford believes an honest attempt to put right any short fall in crew wages needs to be made, by way of a compensation payment. Sanford’s revised system will include complete oversight of the Charter Vessel Operator’s work to put right any previous shortfall in crew wages for both current and former crew in the following ways:

    1. For current crew, any shortfall between wages monies remitted to their agent and money received by their families will be calculated and agreed with each crew member and arrangements made individually with each crew as to how they wish these payments to be made. The calculation of crew final wash up payments will only include money which has been paid to their families by the agent, not the amounts remitted offshore by their employer.
    2. For current crew who have also completed previous contracts, it is intended to settle any applicable wages shortfall from those previous contracts, by way of a compensation payment based on a standard monthly credit. The amount of the standard monthly credit will be an average determined by Sanford investigations. For each crewman in this category, the monthly credit amount will be multiplied by the months of service that crewman had previously served on his vessel in New Zealand, to determine his compensation payment. Our investigations have shown that an appropriate standard monthly credit is US$340 or US$440 per month, depending on the period of employment. It should be noted that crew will also be given the option to have their compensation payment calculated individually if they believe they are disadvantaged by using the standard monthly credit process and have evidence to support this. However if crew take up this option, they will have to abide by the results of the individual calculation, no matter whether the end result is higher or lower than under the standard monthly credit calculation.
    3. Crew who no longer work for the FCV owner will also be eligible to make a claim for a compensation payment for wages shortfall under previous employment with the FCV owner. While many ex-crew will hear of this via word of mouth, Sanford and the FCV owner are in discussion with MBIE, on options available to make ex-crew aware of the claims process.
    4. It is anticipated that in some cases, the compensation payment for some crewmen may be substantial. For some crew the amount of their payment in the context of their home country will likely be a very large lump sum payment, which raises concerns regarding the unintended consequences of settling the compensation issue. We do not wish to create any kind of security issue for a crewman or his family, through him receiving a large cash pay-out, which proves too tempting for criminal elements in his country. The options available to make these payments and which might alleviate some of these concerns are listed below.
      1. Direct deposit to a crewman’s bank account in his home country.
      2. Deposit to a crewman’s individual New Zealand bank account, whereby he can access those fund even when offshore, via an ATM card.
      3. Deposit to a third party administered trust account in the home country of a crewman, with the crewman being able to draw off that account as and when he wishes, up to the amount of what he is owed.
      4. Western Union transfer, or
      5. Cash if this is their preferred option
    5. Sanford has taken legal advice on the tax implications of making compensation payments to crew and ex-crew. We are advised that Sanford is not required to deduct PAYE from compensation payments to the crew or ex-crew.
  7. Contractual arrangements going forward.
    As a key component of the new crew management system, contractual changes will be needed as follows:

    • New FCV owner crew employment agreements are being offered to all current and future crew. This will be completed by the end of July 2012 for Dong Won and mid September for Juahm.
    • FCV owner will formalize its relationship with the crew agents. This relationship will be on the basis of the agent providing to the FCV owner the services of recruitment of crew and making the necessary arrangements (work visas, air travel etc) to get the crew to New Zealand. The costs of these services shall be charged by the agent to the FCV owner. This will be completed before the end of July for Dong Won and mid September for Juahm.
    • There will be a need for Sanford and the FCV owner to review the current contractual arrangements for vessel chartering. These contractual arrangements do not prohibit the implementation of the proposals in this document, however the charter agreement may need some amendment when it is reviewed later in the year.
  8. Final process going forward.
    Barring changes required to fit with government requirements flowing out of the Ministerial Inquiry recommendations, it is envisaged that once the new Sanford foreign crew management system is fully implemented, it will operate as per the following overview.

    1. The role of crew agents offshore will be reduced to recruitment only through formalised contracts with the FCV owner, to recruit suitable crew and make arrangements for those crew to come to New Zealand. The agents will invoice the FCV owner directly for these services. That will be the end of the process for the crew agent.
    2. Upon arrival on board their vessel, crew will be properly inducted on board. This induction will include but not be limited to:
      1. Health & Safety on board.
      2. The Ministry of Business, Innovation and Employment (MBIE) information pamphlet for foreign crew working in New Zealand.
      3. Wages payment and banking options available to them.
      4. Options available to them to remit money home to their families.
      5. Who Sanford Limited is and our role.
      6. The role of on board observers.
      7. Employment dispute and complaint processes.
      8. Fisheries compliance
    3. Individual New Zealand bank accounts will be set up for crew upon arrival in New Zealand. Assistance will be given to crew to activate those accounts when they are ready.
    4. Crew wages will be paid into a bank account in their name in New Zealand.  Crew will be responsible for their own money, including remitting money back to their families (although information on options and available processes will be provided).
    5. Sanford will act as paymaster for crew wages, and will be responsible for receiving crew wages from the FCV owner and then depositing those wages into crew bank accounts.
    6. Any records crew sign on board in relation to their work hours, goods & services received etc, will be signed in a timely manner, and on multi-language records sheets which they can understand.
    7. When a crewman finishes their term of employment, and before their departure from New Zealand, their final wash up wages payment will be calculated and submitted to Sanford for approval. If Sanford approves the calculation, we will make the wages payment to the crewman by cash, bank deposit or other means as per their wishes.
    8. Sanford will continue to maintain a policy of 100% observer coverage on its FCV’s, and will continue to require its contracted observers to report on crew welfare, living & working conditions and health & safety.

CONCLUSION

In developing these systems Sanford is taking a hands on approach to ensuring foreign crew on our FCV’s are treated fairly and in accordance with government requirements.

Sanford will apply this system to all FCV operations Sanford is involved with now or in the future.

Sanford hopes that other FCV operators will match our commitment to improving the systems and accountability of our FCV operations.

Sanford Respects Government Decision on Foreign Charter Vessels

AUCKLAND, 22 May, 2012 — While respecting the Government decision today on foreign charter vessels, it is unfortunate that the irresponsible actions by some operators, particularly in respect to the Oyang vessels, have necessitated this action. Regrettably, those irresponsible actions have caused damage to New Zealand’s international reputation as a responsible and reputable fishing nation and forced the Government to make this decision.

Sanford Limited has had a policy of 100% observer coverage onboard its Korean charter vessels for more than 10 years, and has been able to deal with any issues that have occurred in a responsible and timely manner.

Sanford continues to actively seek ways to improve processes on board its four foreign flagged charter vessels to ensure that the conditions aboard its charter vessels reflect New Zealand standards and requirements and will continue to do so for the next four years.

The effect of this decision is not immediate as there is a four-year phase in period which will give us time to assess what our options are going forward. The decision will also have to be considered by the current vessel owners to determine the effect and their willingness to allow the vessels to be reflagged.

Eric Barratt
Managing Director

Press Release FCVs 22 May 2012

UPDATE: Ongoing Internal Investigation Finds No Corroboration of Human-Rights-Abuse Allegations on Sanford Foreign Chartered Vessels

Over the past several months, we have launched an investigation into claims of alleged human rights abuses aboard the Dong Won 519 foreign fishing vessel chartered by Sanford Limited. Interviews with independent observers and crew aboard the vessels, many conducted by impartial third parties, continue to find no evidence to support assertions of improper treatment of the crewmen. Our investigation is continuing as we make every effort to determine if these allegations have any merit whatsoever. To date, we have been unable to verify the claims made against Sanford.

Our inquiry did reveal some discrepancies between the crew compensation paid by Dong Won to the crewing agent, and the payments ultimately received by some of the crew members from the agent. We have commissioned and retained an international accounting firm to investigate this issue further. We are also taking immediate action to ensure the crewmen are compensated properly by offering to pay them directly in New Zealand, and we will provide financial restitution where a discrepancy exists. These actions support our long-standing commitment to creating ethical and responsible work environments for all those who service and support our foreign charter vessels.

We’re Taking Strong Action to Ensure Fair Treatment of FCV Workers

By Eric Barratt, managing director of Sanford Limited

It’s been said that a reputation takes years to build and only moments to destroy. We are learning that here, in New Zealand, after a recent Bloomberg report claiming serious labor abuses on some foreign-chartered fishing vessels (FCVs) operating in our waters.  These reports threaten to damage New Zealand’s standing as a responsible fisheries manager and champion of human rights.

While such allegations would be abhorrent anywhere in the world, they are particularly shocking for us because this isn’t the way things are done in New Zealand. We take it as a matter of national pride that we uphold the highest standards of human dignity.  Not only is that the right thing to do, it’s also a key competitive advantage in a marketplace in which customers are more carefully scrutinizing where their seafood comes from.

As the largest operator of New Zealand-owned and crewed fishing vessels as well as an FCV operator we have a long-standing reputation for maintaining safe working conditions aboard our vessels. Sanford Limited takes these allegations in respect to abuse on FCV’s very seriously.  In response we immediately commissioned our own investigation – much of it conducted by an outside third-party – and were unable to corroborate any of the allegations referenced in the Bloomberg story. Further customer-commissioned independent audits are also being undertaken.

Still, we strongly believe industry-wide reforms are needed to ensure the fair and equitable treatment of all hired crews aboard foreign-chartered fishing vessels. Fortunately, our New Zealand government is taking action.

A special Ministerial Inquiry panel convened to address FCV reforms released its report and recommendations just a few weeks ago.  Among the Inquiry report’s proposals are the placement of dedicated monitors aboard each FCV; a standardized reporting process by vessel, operator, and charter party; and the use of updated technology to streamline reports from onboard observers . . . all practices Sanford is proud to have pioneered over the past decade.

Sanford has been the only operator in New Zealand to require independent observers aboard each of our foreign charters during all of their voyages. These observers report on a broad range of onboard activities, including the living and working conditions aboard the vessel — unlike government observers principally charged with monitoring compliance with fisheries regulations. Sanford’s observers have access to satellite phones and email, and are required to immediately report issues of concern directly to Sanford management.

While these would be good practices for all New Zealand operators to adopt, there is more that the FCV industry can do to better protect the crews. That’s why Sanford is taking the following extra steps:

  • We are working with our foreign partners to restructure agreements with overseas agencies that arrange employment for the crews for our FCVs to make these agencies responsible for crew recruitment only, not the distribution of salaries.
  • We are developing a process whereby all crewmembers would be paid directly in or from New Zealand, rather than by the overseas agency.
  • We support greater accountability among all FCV operators so that companies found out of compliance with the Ministerial Inquiry report’s new proposals face appropriate and immediate consequences.
  • And we are calling on other FCV companies — especially smaller enterprises that do not have a significant market presence — to adopt these and other measures for the betterment of our industry.

As an established and trusted New Zealand institution, Sanford recognizes that we must be a leader in ensuring safe working conditions and fair employment practices.

We welcome this responsibility, just as we have for more than 130 years.  And we are honored to do our part to uphold our nation’s global reputation for honesty, integrity, compassion and fairness to all.

To learn more about what Sanford is doing to improve fishing practices in New Zealand waters and to get the latest information about Sanford in the news, continue to visit SanfordFacts.com

 

An Update from Sanford on Ensuring Safe Working Conditions and Fair Employment Practices

Several new developments have taken place since E. Benjamin Skinner’s Feb. 23 Bloomberg/BusinessWeek article appeared alleging substandard labor practices aboard some New Zealand foreign charter fishing vessels (FCV). We want to take a moment to update our site with new information on this important issue.

On March 1, the New Zealand government released its Ministerial Inquiry report, which proposed new policies for FCV operators to strengthen crewmen oversight and reporting protocols. Sanford stands in strong support of the proposals so far adopted by government which we believe will help protect the safety and well being of FCV workers across our entire industry. Among its many proposals, the report has recommended:

  • The placement of dedicated monitors aboard each FCV;
  • A standardized reporting process by vessel, operator, and charter party; and
  • The use of updated technology to streamline reports from onboard observers.

At Sanford, we have already implemented these and other important practices. For the past decade, Sanford has been the only operator to require independent observers aboard each of our foreign charters during its entire voyage. These observers report on a broad range of onboard activities, including the living and working conditions aboard the vessel, unlike government observers charged only with monitoring compliance with fisheries regulations. Sanford’s observers have access to satellite phones and email, and are required to immediately report issues of concern directly to Sanford management.

They are also obligated to submit a formal report to Sanford at the conclusion of each voyage documenting their findings. To assure their impartiality, they are employees of an independent agency and have no allegiance to or interest in Sanford whatsoever. With specific respect to Bloomberg’s allegations, we have completed a series of interviews with the actual observers assigned to the Dong Won 519 voyages that took place two years ago. Interviews were also completed with shipmates of the lead character in the Bloomberg article, from the time he was on the Dong Won 519.

To avoid even the appearance of a conflict of interest, Sanford retained an outside law firm to conduct these interviews with no Sanford employees present. Neither the observer reports nor the interviews that have been completed have corroborated any of the allegations of abuse on vessels chartered by Sanford.

To be clear, this is not to say additional reforms of FCV labor policies, including our own, aren’t necessary. There are a number of changes that the FCV industry can implement, beyond those cited in the Ministerial Inquiry report, to better protect the crews aboard these vessels and provide safe and ethical working conditions. To this end, Sanford is pursuing additional steps to ensure the fair and equitable treatment of all hired crews aboard foreign chartered fishing vessels. For example:

  • We are working with our foreign partners to restructure agreements with overseas agencies that arrange employment for the crews for our FCVs. We intend for these agencies to be responsible for crew recruitment only, not the distribution of salaries.  Once a crewmember is in New Zealand jurisdiction, payments would be made to that crewmember according to New Zealand law. With payments structured this way, the overseas agencies would no longer have any perceived authority over the crews they deal with.
  • We are currently developing a process whereby all crewmembers would be paid directly in or from New Zealand, rather than by the overseas agency.  This process would need to include an ability for crew to remit funds to designated family members in a timely and reliable manner.
  • We support greater accountability among all FCV operators so that companies are obligated through the relevant quota owner to submit to a financial or operational penalty if they are found to be noncompliant with the Ministerial Inquiry report’s new proposals. We are actively engaged with government and other industry members — in consultation on and support for government action — to achieve the intent of the recommendations in the Ministerial Inquiry Report.
  • We are calling on other FCV companies — especially smaller enterprises that do not have a significant market presence — to adopt these and other measures for the betterment of our industry.

We are proud of New Zealand’s international reputation for high-quality, safe and sustainably produced seafood. This is a major competitive advantage in a world where food production is coming under increasing consumer scrutiny.

As an established and trusted New Zealand institution, Sanford recognizes that we must be a leader in ensuring safe working conditions and fair employment practices. We welcome this responsibility, just as we have for more than 130 years.

An Open Letter to Our Customers

Recently, news reports have alleged abhorrent working conditions aboard foreign charter fishing vessels (FCVs) operating in New Zealand waters.  One of these stories cited allegations by an anonymous individual on a voyage chartered by Sanford in 2010.  We take these allegations seriously and have launched a full investigation to determine the facts as they may relate to our company. Thus far we have found no evidence of any improper activity on the 2010 voyage, but our investigation is ongoing as is our endeavor to learn the truth behind these claims.

Sanford Ltd is committed to ensuring safe working conditions for crews aboard all FCVs and we strongly agree with the recent Ministerial Inquiry that all those who fish in New Zealand waters should be subject to the same standards and rules regarding vessel safety, workplace conditions and fisheries regulations. This way, the high standards we strive to uphold at Sanford will be applied to all.

To that end, we will support and cooperate with any independent agency regarding FCV labor practices.

Sanford has long been a leader in ensuring the safety and wellbeing of its crewmembers. We are the only company in New Zealand that has had a policy of 100% independent observer coverage on its charter vessels for over 10 years.

But we believe more must be done. That’s why we are taking the following steps to ensure that proper standards are observed on FCVs chartered by Sanford:

  1. We are redrafting our observer contracts to increase their accountability and will implement a process of independent audit interviews with crew at the end of each voyage and at the end of each person’s contract.
  2. We are initiating a comprehensive review of crewing agents and use only those that offer transparent and professional services to both crew and vessel owners.
  3. We are improving our payment processes to ensure crewmembers are paid their agreed wages and exploring ways to enable them to receive wages directly or to their family or other independent channel.
  4. We will specify on all our seafood whether it was caught by Sanford-owned vessels or by charter vessels.

The mistreatment of any crewmember on any vessel is inexcusable. We will take swift action if we uncover substantiation of such behavior on vessels contracted by Sanford.  Until then we cannot validate the claims made about Sanford by unnamed sources in the news media.

A Word About the Bloomberg BusinessWeek Article

On Feb. 24, 2012, Bloomberg BusinessWeek published a story by reporter E. Benjamin Skinner, “Fishing as Slaves on the High Seas,” alleging abhorrent working conditions aboard foreign charter fishing vessels.  Among the companies mentioned in the report was Sanford Limited.  The article included allegations made by “Yusril,” an anonymous crewman aboard a Sanford-chartered vessel, the Dong Won 519, on fishing voyages from 2008 to 2010.

Sanford is committed to maintaining safe working conditions for crews aboard all foreign-charter and non-charter fishing vessels.  As part of this commitment, we are conducting our own thorough investigation of the allegations cited in the Bloomberg story.  As yet we have been unable to substantiate the claims made about Sanford, but we are continuing our investigation.

Regrettably, in the wake of Bloomberg’s story, other media organizations have repeated the unverified allegations and failed to mention that Sanford has been the only company in New Zealand for the past 10 years to always require an independent observer on board its charter vessels. These independent observers have direct access to Sanford management and are able to relate any concerns about the crew’s treatment directly from the vessel to shore at any time.

To ensure the public receives accurate information on this issue, this forum will communicate the facts and point out when media organizations publish inaccurate information, or violate their very own journalistic standards of sourcing, fairness and objectivity in the production of their stories.