Favoritism in India shakes APM Terminals
LONG BEACH, CALIFORNIA
The otherwise quite stable part of Maersk Group, APM Terminals, is shaken by two cases in India where employees are accused of either favoring old friends of the house, or in any case not abiding by the internal rules of the game, consisting of choosing the best and cheapest suppliers of services for the company. These employees are at least in some way accused of breaking from the framework thay they are committed to work within.
ShippingWatch has been in contact with a number of sources with concordant statements about two awkward cases from the business in India, which have landed on the desk of CEO, Kim Fejfer. According to the sources, at least one of the cases, possibly both, were behind the dramatic dismissal last week of three executives, including Christian Møller Laursen.
Irregular payments
The first case allegedly concerns irregular payments in relation to the Indian terminal business in Kattupalli in southern India, which APM Terminals showed interest in as as far back as about a year ago. The aim was to take over a majority share from the former owners Larsen & Toubro. Apparently the case emerged just recently when the internal audit discovered that executives had overstepped their boundaries and broken with the company's framework. This lead at first to the dismissal of three employees - which besides Christian Møller Laursen, include CCO and business director, Martin Gaard Christiansen, as well as the head of implementing global projects Michael Lund Hansen - as they were asked to immediately step down from their positions Tuesday night last week.
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What the case entails more precisely is uncertain, but APM Terminals, with headquarters in The Hague, is presumably sending a team to India to investigate the case further.
Regional head involved in second case
The second case can prove to be even more sensitive, as it according to ShippingWatch also involves Maersk's regional head in India of many years. The information currently points to the regional head being treated preferentially with exorbitant design contracts in APM Terminals' important port, the strategically interesting Pipanav north of Mumbai. APM Terminals owns 43 percent of the port, which has been projected to have a growing significance for the flourishing Indian economy.
But it looks as though certain sums of money have been given to the expansion of the port facilities in Pipanav, sums that by far exceed the norm, not least because a normal bidding round was completed that featured other and cheaper players. But most of all, the case is sensitive, because one of the executives of the company that won the lucrative contract, Man Infraconstruction, is an old acquaintance of the Maersk Group - namely Maersk's and Safmarines' (Maersk Line subsidiary) regional head in India of many years, Dinesh Lal. These accusations come from the competitor to Dinesh Lal's property company, which has contacted APM Terminals regarding the case. Supposedly the company Shapoorji Palanji has pointed out that its bid was no less than roughly USD 14.97 million cheaper than that of Dinesh Lal's company, which still ended up with the contract.
Since APM Terminals both runs and develops ports, it is a normal part of business to take over small ports all over the world, or take over areas where there are not yet ports, expand them and be in charge of operations afterwards on long-term contracts.
APM Terminals still declines to comment on the case and refers to the fact, that these are personal cases, which is also why the company declines to comment on ShippingWatch's information, which was presented to the company Sunday evening.
Although previously in comments to ShippingWatch, CEO, Kim Fejfer, has pointed to the fact that the Indian market was not at the top of the investment list. Back then Kim Fejfer referred in particular to the lack of infrastructure, which would make it difficult to operate an efficient port. But the latest information shows that there are other challenges in this large market, which by many is expected to surpass China in annual growth before long.
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