Sea Views: DNV chief executive resigns under a cloud

Following allegations of insider-trading, owning shares of some major clients and a questionable remuneration deal, Helge Midttun has resigned as CEO of Norwegian classification society Det Norske Veritas (DNV). He stepped down saying, "I have chosen to resign in order to create a more stable environment that enables DNV to move forward," and his resignation was accepted immediately.

Prior to the extraordinary board meeting, at which he quit, full details of the affair had been published by the Norwegian newspaper, Aftenposten. Mid-ttun's successor is Miklos Konkoly-Thege, DNV's head of certification, who was appointed at the same meeting.

One of the controversies of the situation is Midttun's compensation package, which was kept confidential when he was hired in 1999. It is reported that it included severance and pension benefits worth nearly $4 million – a sum considered to be very high by Norwegian standards.

Furthermore, when he was hired from his previous position as CEO of a company called Stento, DNV agreed to buy the stock he owned in that company at a higher-than-market-value price and it is now alleged that Midttun at that time told DNV that Stento was in take-over talks. These matters have been subject to an investigation by the Oslo Stock Exchange and now referred by the Exchange to Norwegian financial regulators to determine whether 'insider-trading' laws were broken.

The reports also criticised Midttun for initially retaining stock in companies, such as Royal Caribbean and Brovig, which are major customers of DNV.

The Chairman of DNV's Board, Wilhelm Wilhelmsen, issued a statement confirming the change of CEO and went on to say, "The Board highly regrets the difficult situation that has arisen for DNV in which internal unrest and criticism of, among other things, Midttun's employment conditions and the way in which these have been dealt with, have been negative for both the company and its employees. We must now make every effort to create stable working conditions within the company."
Wilhelmsen also emphasised that the affair would not change the strategy of DNV in any way.

Seafarers' rights undermined on FOC vessels - ILO: A report issued by the International Labour Organisation (ILO) says that seafarers aboard ships that operate under Flags of Convenience (FOC) are more vulnerable to abuse of their rights under international rules relating to working and living conditions, than those aboard ships operated under other types of flag.

When compiling the report the ILO compared conditions of seafarers under open registers with those on vessels operated under closed registers. It focussed on living and working conditions, restrictions on the use of foreign seafarers, legislation and collective agreements for nationals and non-nationals along with employment conditions pertaining to recruitment, minimum age, wages, health and social security.

The report studied conditions of seafarers from ships flagged by the Bahamas, Lebanon, Liberia, Malta, the Marshall Islands, Panama and Vanuatu and compared these with 53 other non-FOC states. It also carried out detailed case studies on the maritime industry in Denmark, India, the Isle of Man, Panama and the Philippines.

The report accepted that FOC states may well have laws prescribing the living and working conditions of seafarers aboard ships using their registers, but concluded that their ability to enforce such standards is limited.

Furthermore, crewmembers themselves may find it difficult to pursue grievance procedures because of a lack of institutional provisions for the protection of foreign seafarers. While seafarers aboard FOC ships have some of the characteristics of migrant workers, the report also found, unlike migrant workers, they have no rights within the states in which they legally work.

Bimco reiterates need for free trade: At a meeting held last week in Cyprus, hosted by the Cyprus Shipping Council (CSC) and attended by more than 80 delegates from 22 countries, the Baltic and International Maritime Council (Bimco), has emphasised its previous call to maintain global free trade. It also gave recognition that over the years its members had developed a close co-operation with a wide range of Customs services worldwide.

Bimco's president, Michael Everard commented, "Today, those contacts are of tremendous benefit to our members. The authorities appreciate the fact that Bimco represents nearly 2,700 (shipper) companies in 122 countries, controlling 65 per cent of the world fleet." He went on to say, "We are therefore in a unique position to provide the authorities, as well as our members, with practical input and solutions and it is very important that the flow of free trade is maintained. If not, the terrorists will have achieved one of their aims."

Andreas Droussiotis, president of CSC said, "International shipping is now undergoing a difficult and decisive phase and it is only with sincere and close co-operation between the governmental regulators and their social partners that progress can be achieved." He added this would only be possible by the adoption and implementation of comprehensive international shipping standards.

Bureau Veritas turnover grows 19pc: In the financial year 2001, French classification society, Bureau Veritas, recorded a 19 per cent growth in its consolidated turnover, which reached 1,012 million euros.

The operating profit was up by 23 per cent, and grew to 99.5 million euros, giving a net revenue of 60.5 million euros, an increase of 12 per cent. At the same time, operational cash flow increased by 38 per cent and equity capital by 25 per cent.

These profits were achieved in spite of an appreciable slowdown in global growth in the second half of the year, which particularly affected the construction, international commerce and new shipbuilding markets.

The increase in the turnover is divided equally between internal growth and contributions linked to acquisitions. In 2001, Bureau Veritas purchased MTL, an American company specialising in textile and clothing testing, LCIE, a French company specialising in the testing and certification of electrical and electronic products, and Plant Safety Ltd, an English inspection company for in-service industrial installations.

These acquisitions were made possible by the excellent profits recorded over the last few years, which meant that they could be financed with equity capital.

Since 1995, Bureau Veritas has recorded an average annual growth of 18 per cent. Consequently, the company's size has trebled, its workforce has doubled, its operating profit has increased seven-fold and its net profit fourteen-fold.


Frank Kennedy is a marine consultant based in Dubai.