Back to results LEADERSHIP : Lost at Sea - Lessons Pacific shippers should have learned The unfolding tragedy of the loss of 74 passengers and crew when the Tongan inter-island ferry Princess Ashika sank in August last year is being revealed by a Royal Commission of Enquiry that began last October. The disaster could, it seems, have been avoided. Bruce Gilkison describes his involvement with a Solomon Islands shipping company in 2004 which threatened a similar ending. He draws invaluable management and leadership lessons from his experience. By Bruce Gilkison The engineer’s report to the Malaita Shipping Company board meeting made chilling reading. “We are risking the lives of passengers and crew on every voyage,” it said. “It is only a matter of time before the horror of facing a sinking ship comes to light… the frequency at which holes are noticed indicates that the entire bottom plate is ready to go… there is imminent danger of an all-out hull rupture with an uncontrollable ingress of water into all four compartments… the ship may come apart about this point… frequent life-threatening incidents… the vessel itself and lives of humans are in danger of being lost.” The board’s response to the report was equally chilling. This was just one of many papers tabled at its monthly meeting. The engineer, it seemed, had been giving this warning for months. The directors agreed his report was accurate, but too negative. They had a shipping service to run. This was not helpful. The board was keen to move to the next agenda item. I needed to speak. I had been in the Solomon Islands only two months. I was not familiar with local business practices, and knew very little about shipping. And, I had just been appointed finance and planning advisor to the Malaita Provincial Government, the Islands’ most populated province, which owned this company. The ships were always full – dangerously overloaded in fact, with up to 800 passengers on each sailing – but the company had never paid a dividend. I wanted to know why. I travelled to Honiara and asked to attend at least part of the meeting. I had no speaking rights and, was due to leave in just a few minutes. I understood, I said, why they wanted to provide a service. But, we could not let these ships sail in this condition. I commended the engineer, a young local employee, for saying what he believed, rather than saying what everyone had hoped for. It was fortunate he had brought the problems to our attention, and we could not ignore his report. Thanks, but… The directors had the engineer’s advice, and now they had mine. Safety was paramount – the ships must not sail. The directors were courteous, and my speech was applauded. But after my departure the decision was made to continue sailings. That night I had dinner with the chairman and gave him my advice in writing. The board, he said, wanted to continue sailing to generate funds to pay the crew’s wages and eventually to pay for repairs. But the figures didn’t stack up. The deeper I dug the next day, the worse they looked. The ships belonged to the Provincial Government, bought with large loans and leased to the company, and were now worth just a fraction of the funds borrowed. The lease required the company to service the Province’s loans, with payments made directly to the lender. Payments had not, however, been made during the several years of ‘ethnic conflict’ in the Solomons, and the Province had a massive debt to the lender that it was unaware of. It was obvious, at least to me, that the company and the Province were technically insolvent. Accurate statements of the company’s finances had not been prepared for several years. It was likely that large losses had been incurred. It remained, so to speak, afloat by deferring repairs and maintenance, sailing without any insurance cover and not making lease payments. A high proportion of free travel for “connected groups”, such as friends, family and militants, and often on uneconomic routes, no doubt contributed to the losses. The company had leased three vessels from the Province: Ramos I, II and III. Ramos II had already been repossessed by its funds lender. Ramos I needed major repairs. Ramos III was, at the time, still operating and the subject of the engineer’s warning report. People I spoke to, particularly some Australian ‘expat’ residents, dismissed my safety concerns. They suggested I look at other ships. They were just as bad. Besides, they said, Solomon Islanders were “more accustomed” to taking risks. I wondered about that. Was I just being too ‘New Zealand-ish’ – too cautious? The possibility, however, of an overnight sailing disaster, with hundreds of bodies floating in a dark sea and out of sight of land – many of the life rafts and jackets had gone missing during the years of local ethnic conflict – haunted me. Besides, a sister ship had recently sunk in the Philippines in which scores of people had died. I arranged to meet Nick Warner, then special coordinator of the Regional Assistance Mission (RAMSI) – an assistance partnership between the Solomon Island government and 15 contributing countries. Warner was arguably the most powerful person in the country at that time. “That’s a horrible story,” he said. “Thanks so much for coming to tell me.” My story was authenticated and a few days later the Solomon Islands’ Marine Division issued a Detention Order. There would be no more sailings until repairs had been carried out. I returned to Malaita to explain what had happened, and why. The Premier and his executive endorsed all steps taken. It was a shock to them. They believed that the ships and the company had real value. Suddenly, they found they had lost a shipping service and the Province was in financial trouble. But they now understood this. Some quick changes were made to encourage other shipping operators to fill the void. For example, fees charged to outside shipping companies to protect the provincial company, were slashed. Overnight almost, safe effective alternative shipping services flourished. Sinking feeling Several months later, just before Christmas, came some unlikely news. The Detention Order had suddenly been lifted. The crew in Honiara was, without authority, selling tickets and Ramos III, the largest vessel, was about to sail. We were told it was too late to stop it. The Premier could not be contacted. We called an urgent meeting with some local ministers. “Nothing has changed,” I said. No repairs had been done, so why was it suddenly safe? The company had, in the meantime, been wound up. I warned that, because the company no longer existed, the Provincial government would be held responsible, and it had no authority and no insurance. “If the ship sails and sinks, after the advice you’ve had, it will be on your own heads,” I said. And, I added perhaps a little unfairly, that it would be their friends and relatives that died, not mine. The ministers were persuaded. With just a few hours to go, the sailing was cancelled and tickets refunded. Self-doubt struck again. Was I being too risk-averse? If Marine Division had approved the sailing, what was wrong with that? A few days later and out of the blue came a phone call from the principal surveyor, Marine Division. He had been overseas and knew nothing about the incident until he saw my press release explaining the cancellation. The ship had, he said, been checked but, only above the water-line. There had been ‘interference’ in his absence. The ban should not have been lifted and had been re-imposed. He later confirmed by fax that indeed, “All life-saving appliances placed on board have either been stolen, removed, reduced in number, or sold. How many more holes waiting to happen is the threat...the safety of my people remains my priority.” The Ramos III was officially unsafe again. I congratulated the ministers on their decision to stop it sailing. There was, over the next few months, confirmation of the correctness of our actions. One calm night Ramos I sank like a stone without warning. Its hull was full of holes. And a short time later Ramos III was beached, unable to be salvaged when its systems failed in heavy seas. It was a sad ending but, it could have been so much worse. Both Ramos I and III were out of service and no lives were lost. Lessons learned The sinking of the Princess Ashika in Tonga reminded me that there are lessons still to be learnt. If they are not, companies will repeat avoidable tragedies. The Malaita ships had been built for use in calm waters, not open seas. They were past their ‘best by date’ when the company acquired them. Their hulls had been patched with timber and cement, which didn’t bond properly to rusting steel. The Tongan inquiry looks likely to confirm similar, tragic inadequacies. For me, there were lessons about adjusting to doing business in a different culture. Until I understood it better, I was shocked by board disregard for the safety of passengers and crew. I concede there were contributing factors. The country was emerging from five years of civil conflict, a period in which almost nothing worked unless it was ‘patched’. Using timber and cement to patch holes in a hull had begun to feel normal. The success of the company was gauged by its ability to keep providing services, come what may. Its mission statement referred to “acquiring better and bigger vessels”. Nothing was said about the need for “safe, reliable transport”. The directors’ governance priority was to run a shipping company and keep it running, regardless of challenges and risks. Because the mission statement failed to specify safety, it was consequently undervalued. Directors were appointed to represent geographic areas, not for their governance skills. This left serious leadership and skill gaps. The risks attaching to the operation of an unsafe and uninsured vessel, and of trading while clearly insolvent, were not understood. Misplaced optimism led to an assumption that, if the ships kept sailing the profits made would eventually pay for the repairs – though all evidence was to the contrary. There were, of course, very highly competent individuals involved in this story. The engineer, for example, risked his job by producing an unwelcome but vital and professional report. His report may have saved hundreds of lives. For a New Zealander new to that beautiful country, there much to learn about values, standards and attitudes to risk that seemed quite different from my own. I was unquestionably under pressure to let the ship sail and, it would have been easy to let that happen. My personal lessons are that we should not easily abandon our existing values. We have ethical standards which have been tried and tested. We should stick to them, at least until we fully understand the culture we are working with. Above all, whatever first appearances might suggest, we should never assume that other societies value human life less than we do. And finally, if in any doubt, make decisions that will let you sleep soundly at night. Bruce Gilkison is a chartered accountant and sustainable business consultant. His work in the Solomon Islands was supported by Volunteer Service Abroad (NZ) and AusAID. © Copyright NZ Management magazine March 2010 All material appearing is copyright and cannot be reproduced without prior permission of the publisher. Please contact the copyright officer: Ph 0-9-845 5114, Email copyright@mediaweb.co.nz.	Username Password Keep me logged in on this computer Forgotten your password? Enter your email address and we will email your password to you:

LEADERSHIP : Lost at Sea - Lessons Pacific shippers should have learned

The unfolding tragedy of the loss of 74 passengers and crew when the Tongan inter-island ferry Princess Ashika sank in August last year is being revealed by a Royal Commission of Enquiry that began last October. The disaster could, it seems, have been avoided. Bruce Gilkison describes his involvement with a Solomon Islands shipping company in 2004 which threatened a similar ending. He draws invaluable management and leadership lessons from his experience.

By Bruce Gilkison

The engineer’s report to the Malaita Shipping Company board meeting made chilling reading. “We are risking the lives of passengers and crew on every voyage,” it said.
“It is only a matter of time before the horror of facing a sinking ship comes to light… the frequency at which holes are noticed indicates that the entire bottom plate is ready to go… there is imminent danger of an all-out hull rupture with an uncontrollable ingress of water into all four compartments… the ship may come apart about this point… frequent life-threatening incidents… the vessel itself and lives of humans are in danger of being lost.”
The board’s response to the report was equally chilling. This was just one of many papers tabled at its monthly meeting. The engineer, it seemed, had been giving this warning for months. The directors agreed his report was accurate, but too negative. They had a shipping service to run. This was not helpful. The board was keen to move to the next agenda item.
I needed to speak. I had been in the Solomon Islands only two months. I was not familiar with local business practices, and knew very little about shipping. And, I had just been appointed finance and planning advisor to the Malaita Provincial Government, the Islands’ most populated province, which owned this company.
The ships were always full – dangerously overloaded in fact, with up to 800 passengers on each sailing – but the company had never paid a dividend. I wanted to know why. I travelled to Honiara and asked to attend at least part of the meeting. I had no speaking rights and, was due to leave in just a few minutes.
I understood, I said, why they wanted to provide a service. But, we could not let these ships sail in this condition. I commended the engineer, a young local employee, for saying what he believed, rather than saying what everyone had hoped for. It was fortunate he had brought the problems to our attention, and we could not ignore his report.

Thanks, but…
The directors had the engineer’s advice, and now they had mine. Safety was paramount – the ships must not sail. The directors were courteous, and my speech was applauded. But after my departure the decision was made to continue sailings.
That night I had dinner with the chairman and gave him my advice in writing. The board, he said, wanted to continue sailing to generate funds to pay the crew’s wages and eventually to pay for repairs.
But the figures didn’t stack up. The deeper I dug the next day, the worse they looked. The ships belonged to the Provincial Government, bought with large loans and leased to the company, and were now worth just a fraction of the funds borrowed. The lease required the company to service the Province’s loans, with payments made directly to the lender.
Payments had not, however, been made during the several years of ‘ethnic conflict’ in the Solomons, and the Province had a massive debt to the lender that it was unaware of. It was obvious, at least to me, that the company and the Province were technically insolvent. Accurate statements of the company’s finances had not been prepared for several years. It was likely that large losses had been incurred. It remained, so to speak, afloat by deferring repairs and maintenance, sailing without any insurance cover and not making lease payments.
A high proportion of free travel for “connected groups”, such as friends, family and militants, and often on uneconomic routes, no doubt contributed to the losses. The company had leased three vessels from the Province: Ramos I, II and III. Ramos II had already been repossessed by its funds lender. Ramos I needed major repairs. Ramos III was, at the time, still operating and the subject of the engineer’s warning report.
People I spoke to, particularly some Australian ‘expat’ residents, dismissed my safety concerns. They suggested I look at other ships. They were just as bad. Besides, they said, Solomon Islanders were “more accustomed” to taking risks. I wondered about that. Was I just being too ‘New Zealand-ish’ – too cautious?
The possibility, however, of an overnight sailing disaster, with hundreds of bodies floating in a dark sea and out of sight of land – many of the life rafts and jackets had gone missing during the years of local ethnic conflict – haunted me. Besides, a sister ship had recently sunk in the Philippines in which scores of people had died.
I arranged to meet Nick Warner, then special coordinator of the Regional Assistance Mission (RAMSI) – an assistance partnership between the Solomon Island government and 15 contributing countries. Warner was arguably the most powerful person in the country at that time. “That’s a horrible story,” he said. “Thanks so much for coming to tell me.” My story was authenticated and a few days later the Solomon Islands’ Marine Division issued a Detention Order. There would be no more sailings until repairs had been carried out.
I returned to Malaita to explain what had happened, and why. The Premier and his executive endorsed all steps taken. It was a shock to them. They believed that the ships and the company had real value. Suddenly, they found they had lost a shipping service and the Province was in financial trouble. But they now understood this. Some quick changes were made to encourage other shipping operators to fill the void. For example, fees charged to outside shipping companies to protect the provincial company, were slashed. Overnight almost, safe effective alternative shipping services flourished.

Sinking feeling
Several months later, just before Christmas, came some unlikely news. The Detention Order had suddenly been lifted. The crew in Honiara was, without authority, selling tickets and Ramos III, the largest vessel, was about to sail. We were told it was too late to stop it. The Premier could not be contacted. We called an urgent meeting with some local ministers.
“Nothing has changed,” I said. No repairs had been done, so why was it suddenly safe? The company had, in the meantime, been wound up. I warned that, because the company no longer existed, the Provincial government would be held responsible, and it had no authority and no insurance. “If the ship sails and sinks, after the advice you’ve had, it will be on your own heads,” I said.
And, I added perhaps a little unfairly, that it would be their friends and relatives that died, not mine. The ministers were persuaded. With just a few hours to go, the sailing was cancelled and tickets refunded.
Self-doubt struck again. Was I being too risk-averse? If Marine Division had approved the sailing, what was wrong with that?
A few days later and out of the blue came a phone call from the principal surveyor, Marine Division. He had been overseas and knew nothing about the incident until he saw my press release explaining the cancellation. The ship had, he said, been checked but, only above the water-line. There had been ‘interference’ in his absence. The ban should not have been lifted and had been re-imposed.
He later confirmed by fax that indeed, “All life-saving appliances placed on board have either been stolen, removed, reduced in number, or sold. How many more holes waiting to happen is the threat...the safety of my people remains my priority.” The Ramos III was officially unsafe again. I congratulated the ministers on their decision to stop it sailing.
There was, over the next few months, confirmation of the correctness of our actions. One calm night Ramos I sank like a stone without warning. Its hull was full of holes. And a short time later Ramos III was beached, unable to be salvaged when its systems failed in heavy seas. It was a sad ending but, it could have been so much worse. Both Ramos I and III were out of service and no lives were lost.

Lessons learned
The sinking of the Princess Ashika in Tonga reminded me that there are lessons still to be learnt. If they are not, companies will repeat avoidable tragedies.
The Malaita ships had been built for use in calm waters, not open seas. They were past their ‘best by date’ when the company acquired them. Their hulls had been patched with timber and cement, which didn’t bond properly to rusting steel. The Tongan inquiry looks likely to confirm similar, tragic inadequacies.
For me, there were lessons about adjusting to doing business in a different culture. Until I understood it better, I was shocked by board disregard for the safety of passengers and crew. I concede there were contributing factors. The country was emerging from five years of civil conflict, a period in which almost nothing worked unless it was ‘patched’. Using timber and cement to patch holes in a hull had begun to feel normal.
The success of the company was gauged by its ability to keep providing services, come what may. Its mission statement referred to “acquiring better and bigger vessels”. Nothing was said about the need for “safe, reliable transport”. The directors’ governance priority was to run a shipping company and keep it running, regardless of challenges and risks. Because the mission statement failed to specify safety, it was consequently undervalued.
Directors were appointed to represent geographic areas, not for their governance skills. This left serious leadership and skill gaps. The risks attaching to the operation of an unsafe and uninsured vessel, and of trading while clearly insolvent, were not understood. Misplaced optimism led to an assumption that, if the ships kept sailing the profits made would eventually pay for the repairs – though all evidence was to the contrary.
There were, of course, very highly competent individuals involved in this story. The engineer, for example, risked his job by producing an unwelcome but vital and professional report. His report may have saved hundreds of lives.
For a New Zealander new to that beautiful country, there much to learn about values, standards and attitudes to risk that seemed quite different from my own. I was unquestionably under pressure to let the ship sail and, it would have been easy to let that happen.
My personal lessons are that we should not easily abandon our existing values. We have ethical standards which have been tried and tested. We should stick to them, at least until we fully understand the culture we are working with. Above all, whatever first appearances might suggest, we should never assume that other societies value human life less than we do.
And finally, if in any doubt, make decisions that will let you sleep soundly at night.

Bruce Gilkison is a chartered accountant and sustainable business consultant. His work in the Solomon Islands was supported by Volunteer Service Abroad (NZ) and AusAID.

© Copyright NZ Management magazine March 2010

All material appearing is copyright and cannot be reproduced without prior permission of the publisher.

Please contact the copyright officer: Ph 0-9-845 5114, Email copyright@mediaweb.co.nz.

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LEADERSHIP : Lost at Sea - Lessons Pacific shippers should have learned