Privatization of Shipping Corp in troubled waters following the qualification of Safesea Group

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Safesea Group’s qualification to participate in the privatization of Shipping Corporation of India (SCI) has left a hornet’s nest following revelations of a long-standing dispute between the US-based company and the common carrier over royalties unpaid for services rendered. , a case which would have led to the disqualification of the company from the offer according to the eligibility standards set by the government.

To recover some $ 500,000 in unpaid dues, including interest, Safesea even went so far as to arrest an SCI-owned bulk carrier with the help of a local court in Durban, South Africa, last November. The SCI succeeded in having the vessel released thanks to a guarantee given by the company’s protection and compensation club (insurer) which covers the claim made by the injured party until the dispute is settled.

The boarding of the vessel has been widely reported. The case is currently before the South African justice.

The “general restrictions” set by the preliminary information memorandum (PIM) soliciting expression of interest from potential bidders for the agreement state:

“In addition, the interested party (IP) / member of the consortium and its / their respective subsidiaries and associated companies and the parent company should not be parties to material disputes or existing legal proceedings by or against SCIL or its directors in as directors of SCIL, which procedure may be hampered by the participation of the PI or any Member of the Consortium in the Transaction selection process ”.

“Big gap”

Safesea Group is one of three parties qualified by the government transaction adviser, RBSA Capital Advisors LLP, in April-May to proceed with the next cycle of the divestment process.

Government sources in Delhi point to a “major failure” in the qualification of the Safesea group.

“It’s not that the transaction advisor was unaware of the seizure of the vessel; it was everywhere, ”said a government source informed on the matter.

“And, if SCI, being fully aware of the long outstanding case of unpaid dues, has not brought it to the attention of the transaction advisor, I do not know how such a breach occurred.” , did he declare.

The unpaid dues relate to invoices for arranging container, general cargo and unconventional freight forwarding services for SCI provided by Safesea in the United States, a destination to which SCI does not operate liner services. Therefore, he has to rely on freight forwarders such as Safesea to transport the cargo.

“If any money is unpaid, it must be resolved amicably. In all fairness, this is SCI’s fault. It also appears to be the willful negligence of SCI that it did not bring it to the attention of the transaction advisor in order to qualify the bidders, ”the government source said.

The seizure of a vessel in the context of a trade dispute is considered a serious matter. “The party stopping the ship has to be very careful and has to have solid evidence to do so. It costs the owner a tremendous amount of money when a vessel is seized, ”said an industry source.

The PIM was issued by the transaction advisor on December 22, a few days after the seizure of the vessel.

Indian-born businessman SV Anchan, chairman of Safesea Group, said his company made regular shipments of containers, general cargo and unconventional cargo for SCI.

“We do regular business with SCI. Wherever SCI does not have a service, they use our service. There is an ongoing accounting that we have with them. There is a regular overdue amount with them, ”said Anchan Activity area.

Arrest for contribution

The ship was stopped to recover the contributions which had crossed a certain period due to delays in the processing of invoices by the SCI, he said.

When asked why the seizure of the vessel and the dispute over the unpaid royalties had not been disclosed in the expression of interest filed by Safesea, Anchan said: “If there was a dispute, SCI should say that there was a dispute. Why should I speak for them, “he joked, adding that” everyone knew about the vessel’s arrest. ”

Anchan also claimed that the “dispute was resolved”. But this claim was contradicted by the government source, citing the ongoing court case in South Africa regarding the seizure of the vessel. “The amount to pay or not to pay to Safesea depends on the outcome of the trial,” he said.

Companies that have been qualified can still be disqualified, according to the PIM.

“If any information is known after the Interested Party (IP) has been qualified to receive access to the Data Room and Request for Proposals (RFP), what information would have enabled the GoI / TA (Transaction Advisor) to reject or disqualify the EoI from the relevant IP, the GoI / TA reserves the right to reject the IP at or any time after such information becomes known to the GoI / TA, ”according to the PIM.

RBSA, the trading advisor, did not respond to a detailed questionnaire sent out Tuesday to seek comment.

Letters sent to SCI on Wednesday and Thursday have not elicited a response at the time of going to press.

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