China’s trespassing vessels and the economic impact on Ghana’s fisheries sector

ACCRA, Ghana – It is now over two years since Emmanuel Essien, a fishing observer vanished onboard a Chinese owned trawler called Meng Xin 15 in 2019. Ghana’s Minister of Information announced in October 2021 that an investigation into Essien’s disappearance had been concluded and a case docket has been submitted to the Attorney General for onward action.

Emmanuel Essien embarked on an observer mission in July 2019 but never returned. An observer’s job is to collect data on fishing activities and report on illegal practices occurring at sea.

The vessel he accompanied on that fateful Monday is registered locally as Kenbonad Fisheries Ltd, but investigations have shown that it is owned and operated by the Chinese company, Dalian Mengxin Ocean Fishery Co. Ltd.

“The Ghanaian law expressly forbids foreign ownership of industrial trawl vessels operating under the Ghanaian flag both in terms of ownership on paper, and, crucially, in terms of those who profit from the vessel – known as the ‘beneficial owners,” says Steve Trent, Director of Environmental Justice Foundation (EJF).

“The new 2019 Companies Act (Act 992) clarifies the definition of a beneficial owner, showing clearly that the way Chinese fishing corporations are using Ghanaian front companies is illegal,” he adds.

Ghana fishery officials have failed to take any action against fishing vessels owned by Dalian Mengxin despite the widespread evidence of beneficial ownership. As at 2021, twelve vessels owned by the Dalian Megxin were fronted by five companies registered locally in Ghana. These companies are listed in the table below:

Source: 2021 List of Licensed Vessels in Ghana, Ministry of Fisheries and Aquaculture, Ghana

A three-month investigation by Gideon Sarpong based on interviews with dozens of fishery experts, court records and company financial documents has shown a network of Chinese control and ownership of many industrial fishing vessels currently operating in Ghanaian waters in contravention of local laws.

The investigation revealed that these Chinese companies; Shandong Zhonglu Oceanic Fisheries Company Limited and Rongcheng Marine Fishery Co. Ltd have set up over ten “front” companies holding fishing licenses from the Ministry of Fisheries and Aquaculture in Ghana.

The investigation also shows that illegal trawler activities have significantly reduced Ghana’s fish stock, draining the economy of over $50m a year according to the Environmental Justice Foundation (EJF).

In June this year, the European Union issued a warning (yellow card) to Ghana for what it described as the country’s failure to impose, “effective sanctions on vessels engaging in or supporting IUU fishing activities.”

As a seafood market for Ghana-flagged trawl fleet, Ghana risks losing access to the European Union market as result of the lack of transparency around vessel operations and opaque ownership arrangements. This has however prompted very little reforms in the country.

Several years of calls for reforms from civil society actors, academia and the EU have so far yielded very little results.

Hidden Chinese Fleet – Shandong Zhonglu Oceanic Fisheries Co. Ltd

Shandong Zhonglu Oceanic Fisheries Co. Ltd, is a publicly traded Chinese company which has admitted to using a Special Purpose Vehicle via an operational lease to exert control over a number of Ghanaian registered companies.

The company headed by Lu Lianxing, a member of the Communist Party of China has its principal place of business at Qingdao in Shandong.

In its 2019 annual report, the company disclosed that it had a 100 percent share ownership of the following companies; Laif Fisheries Company Limited, Yaw Addo Fisheries Company Limited, Zhong Gha Foods Company Limited and Africa Star Fisheries Limited. It also described these companies as “significant foreign operating entities.”

A review of the Ghana’s 2021 licensed fishing vessels revealed that three of the companies owned by Shandong Zhonglu Ocean Fisheries Co. Ltd. had obtained licenses to operate five fishing vessels in Ghana.

This is listed below:

Source: Ministry of Fisheries, Ghana Licensed Vessels 2021

Section 47 of Ghana’s Fisheries Act prescribes clearly the requirements for obtaining a license for in Ghana.

Qualification as local industrial or semi-industrial fishing vessel:

(1) A local industrial or semi-industrial fishing vessel is a fishing vessel

(a) owned or controlled by a citizen, the Government, or owned or controlled by a company or partnership registered by law in the Republic which has its principal place of business in the Republic and the share of which is beneficially owned wholly by the Government, a citizen, a public corporation established by law in the Republic or a combination of any of them.

Fisheries expert Steve Trent argues that based on Ghana’s law and “given that the vessels appear to be operating under the flag of Ghana, it would indicate that either the vessels “did not declare their true beneficial ownership, or that the Ministry of Fisheries and Aquaculture Development (MOFAD) contravened the Fisheries Act by granting the vessels authorization.”

Rongcheng Marine Fishery Co. Ltd

The investigation also showed that 10 registered fishing vessels in Ghana, comprising the LU RONG YUAN YU fleet of vessels were owned and controlled by the Chinese company Rongcheng Marine Fishery Co. Ltd. This company had also set up front companies to conceal their influence and circumvent local laws in Ghana.

Rongcheng Marine Fishery Co. Ltd, which owns the LU RONG YUAN YU fleet of vessels was established in August 2011 with a principal place of operations in Rongcheng, Shandong Province. It was found that in the EU list of approved vessels from China, Rongcheng Marine Fishery Co. Ltd was identified as the owner of all LU RONG YUAN YU fleet of vessels whereas the situation was entirely different in Ghana.

A review of vessel licensing documents showed that the LU RONG YUAN YU fleet of vessels were fronted by six different companies all of which were only traced to P. O. box addresses.

This is listed below:

Source: Ministry of Fisheries, Ghana Licensed Vessels 2021

Repeated attempts were made to locate the contact details for these companies to approach them for comment, despite the lack of publicly accessible contact data or websites in Ghana.

Both Shandong Zhonglu Oceanic Fisheries Co. Ltd and Rongcheng Marine Fishery Co. Ltd did not respond to requests for comments.

Fisheries expert and director of coastal governance NGO, Hen Mpoano, Kofi Agbogah said Ghanaian subsidiary companies acquire licenses directly from the Ministry of Fisheries “through some opaque and phony arrangements”, while the vessels are “manned by Chinese owners.”

“This is illegal,” he added.

Impact-Economic and Biodiversity

The lack of transparency which allows these companies to set up opaque corporate structures and work through Ghanaian ‘front’ companies to obtain licenses to fish deprives Ghana of $23.7 million every year in revenue.

Illegal fishing which is linked to opaque ownership structures is also having a severe impact on Ghana’s ‘small pelagic’ fish populations, as sardinella is already on the brink of collapse, with landings having crashed by 80% over the past twenty years.

Francis Adam, President of the Central Region Fishermen and a local fisherman in Ghana confirmed the findings of this report.

“I have been in the fishing business for over three decades but the last decade, has been most challenging due to dramatic reduction in our catches as a result of influx of foreign vessels,” he said.

The World Bank has estimated that incomes of artisanal fishers in West Africa have reduced by 40 percent over the past decade plunging thousands of fishers and their dependents into abject poverty.

All of these revelations raise important questions about why officials in Ghana have failed to take any urgent action to deal with the perpetrators and the beneficiaries of this illegal fishing practices.

In September 2021, Ghana’s Fisheries Minister Hawa Koomson called on the media and civil society organisations to assist the ministry in addressing the challenge of illegal fishing in Ghana.

The minister has however failed to respond to the findings of this investigation two months after it was presented to her.

The World Bank raised concerns about Ghana government’s “weak commitment to reducing the industrial segment’s fishing capacity.”

It noted that the government is “highly influenced by forces within the industrial segment” and raised concerns that foreign-owned vessels being allowed to register in Ghana under beneficial ownership arrangements were not being investigated.

For a country with close to 25 percent of its population living below the poverty line, “Ghana’s valuable fisheries resources are being sold off for negligible returns to foreign operators in breach of the law,” says Trent.

He adds, “the minister must immediately resolve the issue of overcapacity in Ghanaian waters in-line with scientific advice so as to counter the collapse, or near collapse, of fish populations in the country.”

Just like the bleak short-term prospects facing Ghana’s fishery sector, Essien’s family also face an uncertain future.

“We are simply in the dark, no information from the ministry and no compensation. It is sad how a nation will treat one of its own workers,” says James, Essien’s brother.

“My mother keeps calling me, saying: “have you heard from the police? Tell them to bring my son.”

So far, investigations into Essien’s disappearance by Ghana’s Attorney General has not resulted in any prosecutions.

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Reporting and writing by Gideon Sarpong. Daniel Abugre Anyorigya contributed to this report.

This article was developed with support from the Africa-China Reporting Project.