Sinking a Supertanker

Lloyd's pursues what may be the biggest maritime swindle ever

At 10:50 a.m. Greenwich time on Jan. 17, crewmen aboard the tanker British Trident sighted a ship in distress off the coast of Senegal in northwest Africa. The Salem, a 214,000-ton supertanker, registered in Liberia, was listing and dead in the water. By radio contact with the tanker, Trident learned that a series of mysterious explosions was responsible for the disaster; indeed, a cloud of orange smoke billowed from the tanker's deck. By 11:30 the disabled ship's Greek-born captain, Dimitrios Georgoulis, and his 22 crewmen, most, of them Tunisians, had pulled away in two lifeboats, their luggage neatly stowed. Six minutes later the tanker's stern lifted; it went down in a churning maelstrom of spray and debris, plunging nearly two miles to the bottom of one of the Atlantic Ocean's deepest trenches.

Was this just another maritime accident? After all, 1979 had been a graveyard year for cargo vessels. At least 279 ships sank, weighing 2.3 million tons in all--a 60% increase from the year before. Insurance experts at Lloyd's of London, now claim that the Salem was deliberately scuttled. If true, it would make for the biggest maritime swindle in history. Shell International Trading, which had purchased the 194,000 tons of Kuwaiti oil aboard the Salem, has filed the largest cargo claim ever received at Lloyd's: $56.3 million. Shell has also filed a suit against the Salem's owner, a Lebanese-American shipper named Frederick Soudan, charging that he purposely ordered the ship sunk two weeks after 170,000 tons of its oil were secretly unloaded in South Africa. Because of the magnitude of the alleged fraud, Scotland Yard has entered the investigation, and as a Greek shipping executive in London observed last week, "It's a lulu." At the heart of the mystery may be the oil needs of South Africa. Blacklisted by Arab oil producers, and with no wells of its own, the Pretoria government has said it will buy oil however and wherever it is available. Aware of South Africa's needs, a group of high-seas swindlers allegedly went to work. The prime suspect is Soudan. A resident of Houston, the 36-year-old Lebanese expatriate was an insurance agent and would-be oil broker who last October set up a one-man business called the Oxford Shipping Co. In November, using $11.5 million that he reportedly claimed later was a legacy from his deceased father, Soudan bought a ten-year-old Swedish VLCC (Very Large Crude Carrier) that had previously been known as South Sun and Sea Sovereign. Soudan rechristened his new prize Salem.

About the time that Soudan was opening his shipping firm, a man calling himself Bert Stem--fortyish, with gray hair and a vaguely Germanic accent--appeared in Piraeus, Greece, to hire a crew capable of working a supertanker. The load was to be 194,000 tons of Kuwaiti oil, to be delivered in Genoa to an independent Italian oil company, Pontoil. On Nov. 30, the ship--Soudan's Salem--sailed for Kuwait and picked up the crude. After four days at sea, however, the cargo was sold to Shell in a normal spot-market transaction. Shell kept Genoa as the point of delivery.

It has been claimed that on or about Dec. 27 the Salem anchored offshore at Durban, South Africa's largest port. By then the crew had painted over the name Salem on the hull, making it read Lema--a simple three-letter switch. The vessel then slipped out of Durban around Jan. 2, Lloyd's believes, with its tanks full of sea water to simulate a full load. Two weeks later, when the ship was almost back on its original schedule, it sank off the Senegalese coast.

The Trident's officers immediately suspected that the Salem's sinking might not have been an accident; for one thing, the oil spillage was unusually small for a fully loaded tanker of that size. Then a talkative Tunisian crew member leaked the story to Senegalese authorities and new information quickly came to light. Detained in Dakar on charges of water pollution, Captain Georgoulis claimed that his ship's log had gone down with the ship. Local police, in piecing together the details, however, learned there was a 30-hour gap from the time of the first "mysterious explosions" to the ship's final descent. Then a Liberian official charged that the 42-year-old captain was not even a certified master: he was carrying the forged license of a Pakistani engineer. One year earlier, moreover, Georgoulis was allegedly involved in the mysterious sinking of a freighter carrying sugar for Saudi Arabia that was blown up off the coast of Lebanon.

In Dakar, Georgoulis dismissed the suggestions of fraud as "complete lies." Last week Soudan was in Switzerland; he has pledged to furnish absolute proof of his innocence. South Africa's Minister of the Economy, Schalk van der Merwe, has insisted that his country's "hands are clean." Lloyd's, however, surmises that after buying the Salem's oil, South Africa then resold it, at a 10% increase, to Rhodesia.

Paying off Shell's huge claim would add to Lloyd's already impressive financial woes. Among other things, the venerable insurance market is being sued by 36 of its member underwriters in a case involving insured Bronx slum buildings put to the torch. Last year, Lloyd's investigated the smoking of five supertankers and dozens of other vessels; it estimates that, worldwide, 100 cargo ships were purposefully sunk in 1979, accounting for losses of $250 million.

Many of these crimes were apparently engineered by a small band of Greek and Lebanese merchant shippers operating from Piraeus and other Mediterranean ports. But the sinking of the Salem may have set a new precedent. Explains Eric Ellen, chief constable of the Port of London: "The Salem is the first such incident involving oil, but we knew it would happen because of the attractiveness of the cargo. It takes an event like the Salem to make people realize how horrific this problem has become."

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