The North Korean freighter that ran aground on a reef near the Mexican port of Tuxpan last month didn’t have the legally required insurance to cover the environmental damage it caused, according to a press release from the Federal Attorney for Environmental Protection (PROFEPA) in July.
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The Mu Du Bong damaged 3662 square meters of coral when it sailed into a reef 12 km from the shore, grounding itself in the process.
In response, the Mexican authorities demanded a deposit of 10 million pesos ($756,000) in order to pay for salvage and environmental damages ensuing from the operation. But the lack of requisite insurance meant that the Tuxpan Port Authority had to temporarily impound the vessel.
“[The] Tuxpan Port Authority is as new custodian of the ship; the ship is not insured against environmental damage,” the press release from PROFEPA reads.
Due to the size of the 6800 tonne vessel, a specialized private company was hired to perform the salvage. The 24 hour operation involved coordination from the Tuxpan Port Authority, the Mexican Foreign Ministry, a local shipping agent, PROFEPA and the National Commission of Natural Protected Areas (CONAMP).
The ensuing scramble and apparent lack of environmental insurance meant the North Korean Embassy officially asked the Mexican Government for “urgent support for the rescue of the vessel Mu Du Bong”.
Specialized salvage operations are not cheap however, which in turn raised the thorny issue of payment. The North Korean government responded by issuing a guarantee promising to pay all salvage and associated costs.
“The [DPRK] embassy sent out a letter of guarantee … to cover rescue costs of the run aground vessel and every potential damage incurred during the rescue, damages to the environment and other charges for any damage caused under the responsibility of the vessel’s owner,” PROFEPA said.
As part of the salvage the vessel was emptied of fuel and taken to Tuxpan Port, where it stopped transmitting AIS location data on August 1.
To make use of ports and busy waterways like that Panama Canal, vessels should have a ‘Certificate in Full’, meaning they are covered on everything from wreck removal to environmental damage.
Though maritime insurance is a fairly opaque industry, WikiLeaks cables show up until 2011 the Bermuda-based South of England Protection and Indemnity Association (SEPIA) insured about half the North Korean fleet.
SEPIA however, was shut down by the High Court of Bermuda amidst concerns that it was unable to meet its financial obligations.
It was unclear who picked up the North Korean business after SEPIA was wound up: until an advert for the Korea Shipowners’ Protection & Indemnity Association (KPI) appeared in a DPRK newspaper, the Pyongyang Times on July 24.
The advert claims the “KPI provides members with very attractive rates on premium and payment terms through exclusive deals,” and appears to be targeted at foreign ship owners.
The KPI is also the Mu Du Bong’s insurer, according to the Maria de los Angeles from the Tajin Consignaciones Shipping Agency, which mediated between the North Korean embassy and the Tuxpan Port Authority in July.
The KPI advert also mentions that it can “make placement with P&I risks”, though outside of covering “pollution”, no other kind of environmental damage is mentioned.
The presence of domestic P&I insurance club would go some way to explaining how the North Koreans have continued to use busy ports and waterways unimpeded since 2011.
THE MAN FROM MU DU BONG SHIPPING
While the Mu Du Bong did not have appropriate insurance to cover the accident when it happened, NK News has learnt that a representative from the ship’s registered owner – Mu Du Bong Shipping – has been working to remedy this.
This is despite the company having no registered address and being the owner of only one vessel, two characteristics usually indicative of North Korean front companies.
The Equasis Shipping database lists Mu Du Bong Shipping’s address as being ‘care of’ the Pyongyang based Taedonggang Sonbak Co Ltd, with the recently sanctioned Ocean Maritime Management (OMM), also listed as the vessel’s safety manager.
“One of the people from the Mu Du Bong Shipping line is doing everything. He has made every agreement, and is doing everything well,” Maria de los Angeles told NK News.
“They had insurance, but it did not cover some topics. But now the insurance is paying everything,” she continued.
The Mu Du Bong Shipping representative has already covered the costs of the salvage operation and according to Angeles will probably resolve the issue of the environmental damage this week.