11 Sep 2020 ESG issues in Beirut Blast

Posted at 18:51h in Corporate Governance, ESG by

SVI start publishing today reports by Christina Lawandos on the current Lebanese situation from an ESG perspective. Christina is our contact in Lebanon, a local witness strongly engaged in sustainable topics. Unfortunately, what happened in Beirut has to do with very severe ESG topics: negligence, corruption, total lack of risk prevention and assessment (Governance), H&S resulting in very severe human and environmental impacts and, last but not least, the flaws in the international maritime capital regulations, as Laleh Khalili, professor of international politics at Queen Mary University of London, points out in her article on the Guardian of August 8th 2020.

This report is particularly meaningful after yesterday, Thursday September 10th, when another fire erupted in Beirut Port, less than a month from the devastating blast that caused a manslaughter and completely destroyed the port and the neighborhoods around. The new fire appeared to have started in a warehouse belonging to a private company that imported cooking oil. It then spread to a stock of rubber tires, according to the port’s interim general manager, Bassem El-Kaissi. President Michel Aoun has called for the formation of a committee to “ensure general safety” in the port and said the fire could have been caused by sabotage, a technical mistake or negligence.

by Christina Lawandos

On Tuesday, August 4, an explosion took place in Beirut, Lebanon. One of the warehouses located at the port had supposedly caught on fire. A few seconds later, the city’s inhabitants who were curious as to what had caused the smoke were met with a mushroom cloud followed by a huge blast. The explosion that occurred, one that is being dubbed as the third biggest explosion in history, was caused by 2,750 tones of ammonium nitrate that were stored at the port. The blast radius destroyed over 90,000 homes, left 300,000 people homeless, injured over 5,000 inhabitants, and caused the death of more than 200 people. Dozens of people have not been found.

How the deadly chemical ended up in the city of Beirut in such a staggering amount can be better understood by looking at maritime law. In 2013, a cargo vessel called the MV Rhosus had set sail to Mozambique from Georgia. It was supposed to be on its way to a Mozambican company that manufactures commercial bombs. Once in Beirut, the Lebanese authorities impounded the ship and detained its crew due to a breach in the regulations of the International Maritime Organization that labelled the ship defective. The ship was later on abandoned by its owners. Therefore, the presence of ammonium nitrate at the Beirut port was a result of transporting a cargo by unpaid employees using an unsafe vessel to a private explosives company. The reason it had remained stored for over 6 years; however, was due to the possibility of the Lebanese state auctioning off the cargo in the future.

The lawlessness of international shipping coupled with the greed and systematic negligence of the Lebanese political ruling class have devastated the country’s most populated city. Additionally, the explosion has added more strain onto the inhabitants of a country that were already undergoing an economic crisis. The dollar insolvency is another consequence of the incompetence of the Lebanese state. The local pound had been pegged to the dollar for decades due to the financial engineering crafted by Riad Salameh. Salameh is the governor of the Lebanese Central Bank and his fabricated monetary system over the years has led to the financial crisis that the country is currently in. Salameh’s name has also come up back in July following civil lawsuits against him in which he was accused of embezzlement and poor governance.

The government’s response to the blast was not taken well by the city’s inhabitants who have been putting up with the state’s incompetence and job negligence for years. Coupled with political turmoil in the region, prohibitively expensive living standards, and the lack of the most basic of social services including, but not limited to, affordable electricity and water, the fact that the Prime Minister resigned and dissolved his cabinet was not enough for the people. Days after the blast, protesters took to the streets to put an end to a hardship they have been forced to live under for years. In addition to the government’s lack of responsiveness and show of accountability for their actions, a truck that was followed by a convoy of security was seen entering the region of Zouk Mikael in which inhabitants raised safety concerns in the fear that some dangerous material was now being transported from the port to be stored in another location’s factory. Although representatives have denied the transportation of any explosive substance, the remaining trust people once had in their political authorities was shattered along with their homes in the recent blast.

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