The client
A US steel manufacturer, engaged via a London-based law firm.
The challenge
Our client bought a high-value shipment of pig iron from a Ukrainian supplier in February 2022. After Russia’s invasion of Ukraine, the shipment became trapped on board a vessel in a Ukrainian Black Sea port.
As part of its insurance claim, our client needed to demonstrate that no route for exporting the pig iron was available from February 2022 to July 2023, either by sea or by a more involved process of discharging the cargo from the vessel, transferring it to Ukraine's rail/river networks and then exporting it via Poland or Romania. The client could not complete the claim as they had been unable to obtain any concrete information regarding the Ukraine shipping industry or export process.
Our solution
Control Risks’ political risk experts conducted a review of the political-security situation in the Black Sea and concluded that the vessel could not have left port over the key period due to the Russian blockade. At the same time, we discreetly interviewed 20 sources working in Ukraine’s port and railway infrastructure, financial institutions, government bodies, and private sector to understand whether an alternative export route, via rail/river, was possible.
We examined what had happened to the other approximately 100 vessels also trapped in Ukrainian sea ports. Through these enquiries, we tracked the fate of non-grain cargo on board other vessels and where it was successfully exported, providing insight into the exact conditions under which this had occurred. We corroborated these findings through export data analysis and public record research, including AIS vessel tracking undertaken by our maritime intelligence team.
From our analysis, we identified three vessels where non-grain cargo had been discharged from a trapped vessel and exported out of Ukraine via rail/river. In all three cases the owners had, according to our sources, paid bribes to overcome bureaucratic hurdles and facilitate the timely export of their cargoes. In the case of the 97 other vessels, the owners had not been able to export the original non-grain cargo.
Our final analysis was that the client would have found it extremely difficult to get the cargo out of Ukraine in a timely fashion by sea, river, or rail without paying bribes. This would have constituted a clear FCPA violation, and the client used our findings in court to support its Constructive Total Loss claim.