COLUMN | Holiday shorts: books to read, podcasts to download and topical films [Offshore Accounts]

Photo: Petrobras

Ah, the beauty of summer in the northern hemisphere, a time to spend hours queuing at Dover or Folkestone if you are British, or waiting endlessly at security at Schiphol if you are Dutch, or trying to recover your lost baggage if you are flying anywhere at all. As heatwaves and forest fires rage across Europe, China and North America, we can all glimpse what a future amid the climate crisis might look like, and it’s not pretty.

But everyone needs a break, so here are a few ideas for poolside reading or beachside listening, one book to absolutely avoid, and a quick summary of the latest offshore news through two topical but classic films.

Book: Putin’s People by Catherine Belton (2020)

Subtitled “How the KGB Took Back Russia and Then Took on the West,” Belton’s book was published before the horrific Russian invasion of Ukraine this February. As a former Financial Times Moscow correspondent, Catherine Belton has conducted painstaking hours of interviews with key players to examine how Vladimir Putin rose to become Russian President, and how he has ruthlessly held on to power for more than two decades. She documents his ascent to the presidency, supported by a clique of KGB colleagues, amid a series of catastrophic apartment block bombings that killed hundreds of Russians in 1999, and which were attributed to Chechen terrorists, even though the evidence suggests that Russia’s own government might have been responsible.

The attacks, and the public shaming of a state prosecutor conveniently caught in a sex video in the middle of the election campaign, gave Mr Putin the opportunity to demonstrate his hardman credentials to Russian voters, who were sick of the corruption and chaos of the Boris Yeltsin presidency. First in 2000, and then over and over again, they have elected Putin and supported his vision of a national revival.

Reading this book with hindsight about the Ukrainian conflict makes it even more powerful – we see how Putin levelled Grozny in the Second Chechen War, invaded Georgia in 2008, and systematically eradicated all those who might challenge him, most notably the owner of the Yukos oil company, Mikhail Khodorkovsky, and the independent media in Russia. The uncompromising nature of Mr Putin becomes even more apparent with the Beslan school massacre and the sinking of the submarine Kursk. A disturbing pattern of lying, violence, and thievery from the Kremlin emerges. Opponents are assassinated or jailed, businesses are confiscated, and the Russian court system becomes a vehicle to enforce the president’s will.

Putin’s clique amasses fabulous wealth, funneling oil and gas revenues into the pockets of his friends even as standards of living for the average Russian citizen stagnate after 2009. Gazprom and Rosneft are treated as piggy-banks to be emptied of billions at leisure, as Belton documents.

The book has impressive vision, but the dizzying array of names and events can be confusing. Belton digs deep into what Putin did in St Petersburg in the 1990s, when he was aide to the mayor there, managing governmental relations with criminal syndicates at the port, and the funds for the import of food supplies from abroad. She covers in detail how Putin shut down and nationalised Yukos, and how Putin’s relationship with the west gradually soured, especially after the murder of the hedge fund lawyer Sergey Magnitsky in prison after he exposed a multi-million dollar embezzlement (here).

After 2014, Belton’s account does become a little rushed, almost as if every time she tried to finish the book, a new drama unfolded – like the assassination of opposition politician Boris Nemtsov outside the Kremlin, Russian involvement in the deepening war in Syria, the shooting down of doomed Malaysian Airlines flight MH17 by Russian separatists in the Donbas, the overthrown of his puppet ruler in Ukraine in 2014, and the attempted murders by poison of both a former Russian agent in Salisbury in the UK along with his daughter, and opposition leader Alexey Navalny. More depth on the last decade would be beneficial.

Belton’s book survived a defamation lawsuit in the British courts from the billionaire Roman Abramovich, who took issue with the description of the circumstances in which he bought Chelsea football club in London. As a result, 1,700 words were deleted and amended in the new editions of Putin’s People to accommodate the oligarch’s wishes. But the author and her publisher paid no damages, and the book is a joy – after reading it, you will be wiser to the brutal nature of the Russian regime, even before the missiles began to rain down on Kyiv this year.

Podcast: Londongrad by Paul Caruana Galizia (2022)

Whilst Catherine Belton focuses on events within Russia in her book, Maltese journalist Paul Caruana Galizia examines the story of Britain throwing open its doors to Russian oligarchs and all their lovely oil and gas money, which the English establishment was oh so keen to embrace. You’ll hear how posh, upper class, English public relations people, lawyers, and interior designers abased themselves at the feet of the rich Russians, turning a blind eye to the source of how the oligarchs’ money was acquired, just so they could benefit. With his lilting Maltese accent, Caruana Galiziam shows how Elton John, Anna Wintour, and other celebrities were only too keen to bathe in the reflected glory of the oligarchs, asking no questions, and enjoying the Russians’ champagne and caviar hospitality.

The podcast focuses on former KGB agent Alexander Lebedev and his son Evgeny, who ended up buying both the London Evening Standard and the Independent newspapers in the UK. Evgeny now sits in the House of Lords, as Lord Lebedev of Siberia. He was appointed to his peerage by Boris Johnson, against the advice of the British intelligence services, and is notorious for hosting hard-drinking parties at his villa in Umbria, which the Italian secret services regarded as red-light events where the Russian secret service likely gathered kompromat (compromising material) on the participants.

Needless to say, disgraced British prime minister Mr Johnson was one of the most eager attendees, sitting beside reality television star Katie Price as she flashed her breasts to the other diners before she made a toast to Mr Lebedev.

Lebedev père managed to make a fortune in 1990s Russia, and ended up owning a bank, a lot of shares in Gazprom, part of Aeroflot, and media interests in Moscow. He was quick to launch his clueless son Evgeny onto the British social scene before the financial crisis, throwing lavish social functions at his stately home in the country outside London, and endowing a charity. The only person he failed to charm was former prime minister Theresa May, who refused his entreaties for afternoon tea at his place in the grounds of Hampton Court Palace.

For an account of how cheaply an entire nation could be bought by Russian money, this podcast is superb. Don’t bother with the bonus episode on Boris Johnson, however – it’s a rehash of the previous episodes.

Book: The Mechanism by Vladimir Netto (2019 in English) 

Subtitled “A crime network so deep it brought down a nation,” Vladimir Netto’s book is the go-to account of the Petrobras bribery scandal, which rocked Brazil from 2014 to 2021. This was known as the “Car Wash Scandal” (Lava Jato in Portuguese), due to the fact that the first money launderer to be apprehended, Alberto Youssef, was operating from an office above a modest garage in the capital Brasília.

Netto’s book covers the biggest corruption scandal in the history of Brazil, a scandal that saw three former presidents – Fernando Collor de Mello, Michel Temer, and Luiz Inácio Lula da Silva – investigated and indicted for their involvement in the embezzlement of billions of dollars from the state oil company Petrobras. Directed by lead investigative judge Sergio Moro, the police task force used wire-taps, plea bargains, and extensive surveillance to bring dozens of Petrobras managers and directors, Brazilian politicians, and construction company bosses into court and prison. Hundreds of people were investigated and indicted, plea bargains were used to delve deeper into the corrupt network, and the Brazilian population was shocked both by the scale of the law breaking and by the fact that many of the rich and powerful participants actually went to jail.

At the centre of the scandal stood a cartel of sixteen construction companies that were rigging bids and passing bribes back to the political parties, which controlled senior appointments in different departments in Petrobras. Netto takes us step by step through how the net closed on the fraudsters, and their efforts to challenge the findings of Sergio Moro and his team.

The construction company Odebrecht was hit by fines totalling US$2.6 billion in Brazil, Switzerland, and the United States, and its CEO was jailed for nineteen years after Odebrecht confessed to bribing officials in a dozen nations with nearly US$800 million in kickbacks. The scandal then spread to other Petrobras departments and divisions, dragging in companies as diverse as Keppel in Singapore, Vantage Drilling, and SBM Offshore.

Like Belton’s book on Russia, Netto’s book on Brazil is packed with numerous names and details, which can be intimidating to the reader, but it is solidly grounded in research, dozens of interviews, and police records. It raises questions about which other national oil companies may be subject to fraudulent procurement procedures. I am sure regular readers will have some ideas, particularly if they are in Malaysia, the Middle East, Indonesia or Mexico. One big deficiency of the book is a lack of an index in the English language edition, which makes it hard to link across the text.

The Mechanism was thinly fictionalised into a two-season Netflix drama series in 2018 and 2019, also called The Mechanism, which several Brazilians have also recommended to me.

Podcast: The Last Voyage of the Pong Su by The Sydney Morning Herald and The Age

On Easter 2003, the Australian Federal Police made one the biggest drug busts in the nation’s history when they seized 125 kilograms of heroin that had been landed ashore on a remote beach in Victoria from a Tuvalu-registered freighter owned by North Korean interests. This was the Japanese-built, 106-metre-long, 8,000DWT Pong Su. Listeners with offshore experience will wonder why the drug smugglers didn’t invest in a decent davit and a proper fast rescue craft, rather than using an ancient derrick to launch a flimsy boat into stormy seas, a decision that cost one crewmember his life, his body washing up on the beach near Lorne on the touristic Great Ocean Road, with his crewmate on the run.

This excellent ten-part SMH podcast covers the police investigation into the ship, the drugs bust, and the ensuing court cases. Reporter Richard Baker examines the Asian crime networks and the role of the North Korean government in the supply of lethal narcotics to Australia. A lot remains unrevealed, however, especially on the domestic drug network responsible for bringing Pyongyang’s heroin to market once ashore.

The detailed SMH report shows how easily open registers/flags of convenience can be used by bad actors, as we have highlighted here. Australian readers will not be surprised to find that the Crown Casino in Melbourne played a key part in the saga.

Book: Innovations in Shipping by Peter Lorange (2020)

This is possibly the worst-written book about shipping I have ever had the misfortune to read. Badly written, badly edited, and often downright wrong, Norwegian business professor and “wealth consultant” Peter Lorange’s ego-trip is not worth your time or your money.

You’ll read how Lorange inherited a shipping company from a distant relative in the 1980s (like we all do) and sold a handful of platform supply vessels (PSVs) in the shipping bubble of the mid 2000s for a profit, which made him rich enough to believe that his success was all down to his own strategic genius.

Innovations in Shipping is littered with typos, arithmetic mistakes, and factual errors, which may provide more amusement for the reader finding them, than ploughing through the turgid prose. Lorange is slavish in his praise of anyone who has more money and more ships than him, and he lauds “Jacques de Chateauvieux’s ideas of what characterises a great company,” which is rather ironic, given the catastrophic bankruptcy of Bourbon.

One of the more hilarious (or ironic) lines is Lorange’s description that Bourbon’s sale and leaseback plan “created emotional dyfunctionalities internally,” when the correct conclusion should be that it led to the bankruptcy of the company and Mr De Chateauvieux losing his entire shareholding in 2019.

If you do manage to finish reading Innovations in Shipping, which I don’t recommend, you probably won’t be signing up Lorange and his phalanx of family members to advise you on your wealth. Whilst Lorange admits in the book’s introduction that he is a shareholder in shipping industry software player Marsoft, this information is barely mentioned in the text, but the endless plugs for a business in which the author has an ownership share are both tedious and arguably unethical. Even celebrity chefs and Instagram influencers can’t hawk their own products in their work in the manner that Professor Lorange does.

The cursory reference to Marsoft then going bankrupt at the end of the book really is the icing on the cake.

Film: Thunderball (1965)

Thunderball is a classic James Bond film with Sean Connery in his prime. The film is replete with jet-packs, underwater fight scenes in Scuba gear, and a bad guy, Emilio Largo, who feeds his enemies to a pool of sharks at his villa in the Bahamas. Agent 007 must battle the evil S.P.E.C.T.R.E. organisation, which has seized two nuclear warheads from a downed British jet bomber, and is blackmailing the world.

The film is definitely worth watching, and it is very topical. Three weeks ago, we reported (here) that embattled Middle Eastern fabrication yard Lamprell was facing a cash crunch and needed to raise US$95 million by the end of this month. UK-listed Lamprell was subject to competing interest from two of its largest shareholders, both based in Saudi Arabia. The largest shareholder is Blofeld Investment Management, which is named after the leader of S.P.E.C.T.R.E., managed by Osama Al Sayed, and holds just over a quarter of the company’s shares. On July 1, Al Gihaz Holding Closed Joint-Stock Company, which owns just under 20 per cent of Lamprell, and is controlled by Sami Al Angari, also announced it was interested to make a bid.

Now the two have agreed to work together to rescue Lamprell through a newly formed company called Thunderball Investments, which is a joint venture between Blofeld Investment, holding 60 per cent, and Al Gihaz Holding, owning 40 per cent.

Thunderball will offer Lamprell shareholders nine pence a share to take the company private and ensure it can receive fresh loans and capital.

“The offer values the entire issued and to be issued ordinary share capital of Lamprell – assuming the full exercise of rights under the Lamprell share plans – at approximately £38.8 million (US$46.5 million),” Lamprell said in its stock exchange release here.

Lamprell has confirmed that “various parties related to its proposed buyers” have agreed to a US$145 million bridging loan to support Lamprell until Thunderball completes its acquisition. The company is saved, employee jobs are saved, and Lamprell’s customers will get their partly-built rigs finished, but the other shareholders will get pennies on their investments as Lamprell goes private.

Film: The Manchurian Candidate (1962)

Directed by John Frankenheimer and starring Frank Sinatra, this is a classic film about a conspiracy involving a former prisoner of war, Sergeant Raymond Shaw (portrayed by Laurence Harvey), who was captured by the Communists in the Korean War and brainwashed to become an assassin. The twist is that Shaw is a sleeper who will be activated as a killer only upon his return to America. It was remade in 2004 with Denzel Washington in the lead role (Sinatra’s role in the 1962 film).

The film’s plot provides a neat segue to the rising threat to the western wind turbine manufacturers from the Chinese manufacturers. Rather than a deadly assassin in the form of a returning war hero, GE, Siemens Gamesa, and Vestas face the threat of a London-listing from MingYang Smart Energy, China’s biggest turbine maker. At the start of this month, the China Securities Regulatory Commission gave its approval for MingYang to issue 168 million new Chinese mainland shares, which will become about 33.7 million global depository receipts listed on the London Stock Exchange. Yicai Global reported that the secondary listing will raise about US$550 million (here).

Profitable Yangming is now bringing greater financial resources to its battle for market share against its loss-making western competitors. We covered the bloodbath in the segment here. MingYang says it will use 60 percent of the proceeds to enhance its production capacity, while 20 per cent will be utilised to to advance its international strategy.

The stakes in the wind turbine making industry just got a lot higher, as MingYang raises fresh capital. Will the new Communist plot succeed?

Happy Holidays!

Further Reading

Italian readers might enjoy the 2021 book Oligarchi by Jacopo Iacoboni and Gianluca Paolucci (here). The book covers how the Russian billionaires also influenced the Italian elite.

The Guardian’s 2017 coverage of the Petrobras corruption investigation is here.

See here for our coverage of Keppel’s Brazilian travails, here for SBM’s issues, and here for the fall of Sembcorp Marine’s Brazilian agent.

Hieronymus Bosch

This anonymous commentator is our insider in the world of offshore oil and gas operations. With decades in the business and a raft of contacts, this is the go-to column for the behind-the-scenes wheelings and dealings of the volatile offshore market.