Unicom Funds Snared As Cyprus Crisis Takes Toll On Shipmanager

Unicom, the shipmanagement wing of Russia’s state-owned tanker giant Sovcomflot, is one of the shipping companies that stands to lose millions of dollars as a result of the Cypriot government’s bank bailout plans.

The move will hurt many thousands of companies and individuals holding more than €100,000 ($128,000) in Laiki Bank, also known as Popular Bank, whose assets will be transferred to a so-called bad bank, with seemingly little possibility of ever seeing the money again.

Unicom is known to have an account with Laiki, according to a finance sector source with direct knowledge of the situation and a commercial supplier, who said Unicom had settled multiple recent bills through Laiki. Both sources asked not to be named.

Given the sheer number of shipping and shipmanagement companies on the island, it is almost certain that other shipping concerns will be caught in the net, the country’s Department of Merchant Shipping has confirmed.

Sovcomflot, asked in its capacity as Unicom’s parent to comment, would not confirm or deny the claims.
It said it would not make any statement on the matter until precise terms of the Cyprus package have been finalised.

Accordingly, the size of any Laiki account cannot be ascertained.

However, given that Unicom manages 91 vessels aggregating 7.2m dwt through its offices in the shipmanagement hub of Limassol, it would need to maintain a current account in double-figure millions of dollars to meet operating expenses and payroll costs.

With Cyprus positioning itself in recent years as the top offshore banking destination for Russian clients — not least through offering attractive rates of interest — Unicom may have maintained a deposit substantially in excess of operational requirements.

“Running the number of ships they run from there requires a significant amount of money. It’s a big operation, and you’ve got a logistics company on top of that,” said a ship finance specialist. “They may also be keeping retention accounts out there for some of their banking facilities as well.”

Commercial suppliers say Unicom remains a prompt payer, even though Cypriot banks have not transacted business since March 15.

Payments have been made through Laiki as well as other bankers, including UBS of Switzerland.
Most six-figure accounts at Laiki and Bank of Cyprus, which is also being hit by the crackdown, are ultimately owned by Russian beneficiaries.

Russia has already made plain its distaste for a proposal that forces its citizens to meet most of the costs of a measure designed to rescue the Cypriot banking system.

Any attempt to go one further and effectively expropriate money owned by Sovcomflot — and thus ultimately the Kremlin itself — could have diplomatic repercussions.

Sovcomflot has been dragged into the unfolding Cyprus financial crisis as a result of its decision in January 1991 — months before the collapse of communism in the Soviet Union — to set up a shipmanagement company on the island.

Given the political and economic chaos prevailing in Russia in this period, western sources of finance were highly reluctant to lend to Russian entities.

Unicom, described as “a member of the Sovcomflot group but an independent shipmanagement company”, provided a convenient vehicle through which to manage vessels owned by single-ship companies in more amenable jurisdictions.

Acomarit, a well-known shipmanagement outfit of the period since subsumed into V.Ships, initially held a 30% stake.
Unicom has since become a substantial concern, extending its activities to take in vessels owned by third parties and opening offices in Russia and in Singapore.

In 2011, Unicom executives told Lloyd’s List that the company employed 157 people on shore and 3,700 at sea.

for more maritime news see Lloyd’s List


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