Negotiating in Sri Lanka

Let me tell you a story.

First the background:

I was working for a US corporation that did engineering design work, then fabricated the various components of a very large boiler, ship them around the world and they were installed by third parties not under contract with the company. When I first started working for the company, it was largely owned by a Dutch corporation, which was turned on by a combined German Austrian corporation. Eventually, accompany I work for and three other US entities were sold by the German Austrian parents to a group of venture capitalist (VC) in the United States. 

By the time of this incident, I had worked with two prior CEOs and was now about a year into working with a CEO who at one time had been an expert witness for me in a case against a foreign manufacturing company. The CEO and I did not agree on certain things, but I found out that I was sent to a lot of places that nobody else wanted to go because either they didn’t know what to do or they couldn’t just be bothered (By the way, the CEO eventually left the corporation and on the way out used a portable drive to download confidential information.) 

We had about $14 million worth of equipment, some produced in Korea and some produced in Thailand that were on a ship, headed to the country of Latvia. Of course, there were liquidated damages associated with us failure to meet the delivery date, since the erection crews in that country had likely submitted a schedule based upon our delivery date. Anyway, the ship got “arrested” in the port of Hambantota, Sri Lanka. LDs were probably when accumulated for all the various equipment going to be in the neighborhood of $80,000 plus per day that we missed the delivery date.

Maritime law is perhaps the first “accepted” documentation of legal steps that was applied to almost any reasonably large port around the world, regardless of the country in which it was located. And, Maritime law muc favored the ship. Of course, the king of the ship was the captain of the ship. That gives the summary of what I knew about Maritime law, even though I had been involved in a number of cases on behalf of the corporation, I relied on outside counsel for the details. In this case, I had not talked to any outside counsel the only person I talked to was our shipping agent, who I knew because of I negotiating his contract and from dealing with other situations relating to shipments around the world.

The CEO had no experience whatsoever with the situation as described, nor did anybody else within the corporation’s structure or the executive suite of the company owned by the CVs. At that time, I had let it be known to each him that I answered to the board of directors, not him, especially when applying analysis or behavioral ethics. He decided that the thing to do was send me to the port in Sri Lanka. He thought he was stressing me out by so exercising the authority that he did have , but it was really like throwing Brer Rabbit into the briar patch. (Hope everybody gets that.)

I flew to Atlanta, then to Dubai, then to Colombo Sri Lanka. That part of the trip took right at 24 hours or so and as I landed in Sri Lanka, it occurred to me to think about what I would do if I didn’t see someone holding a piece of cardboard with my name on it at the airport. As it turns out, my driver was very confident and spoke some English. He got a big kick out of when I open the right side of door to the car, front seat and was about to get in. He took out the keys and faked like he was throwing them to me, and I looked in and saw the steering wheel. Once we sorted that out, he did appreciate that I sat in the front seat instead of the back and off we had, taking six hours to go about 150 miles and he told me that he had saved two hours on the trip by driving more aggressively than he normally did. By the way, his hair looked just like Frankie Valli in the 60s.

I ended up getting to the hotel about three in the afternoon third time since we had to go to the little port town first before we got directions to the hotel which was right on the water with the next point south of me being Antarctica. Now, there are at least four more stories about the hotel that I’m gonna set aside and jump to the next day when I got up and was driven to the port at about 10 o’clock in the morning their time. This actual port was different than the port that originally gave rise to the town as it had been recently built by Chinese money, and was for large boat commercial purposes with big long pier on one side, parallel with the edge of the land, but no cranes, yet. (turns out that the Commonwealth games were scheduled to occur in Sri Lanka almost due north of where this port was built about four or five years down the line.) When I got to the port all of us there was a paved area that was probably the size of four football fields, and one ship tied up in the middle of what was otherwise a wide open port and pier

My agent had been on the ship before and had given me a report, but I wanted to go on the ship, not for any real purpose other than to see what it was like there since I had never been on such a ship. He left me on the dock while he went on board to make arrangements. I walked the length of the ship and also a little bit out on the dock while I was waiting, never imagining whether people were watching me or not but now feeling like they certainly must’ve been. Eventually, I see the agent coming down the gangplank from the pilot house way up high to a landing station where the plane leaves the ship, probably 40 feet above the pier. I go up that gang plant and meet the agent and it turns out the captain, right where there is a check-in station run by a guard. I find out that the captain is Russian and he appears to me to be 30 years old or so. At the time, I was probably mid 50s. He conveys to me immediately that the owners of the ship have ordered him not to allow me on board. I look at the agent and get suggestion of how he would treat the situation but I asked the captain, if we could walk down the side of the ship a little bit and I could talk to him. Once we got clear of the guard station and the agent, I told the captain that I appreciated the situation in which he found himself. Then I told him that I was going to send a ship there with cranes on it with the intent to unload all of my equipment off of his ship ASAP. Then I advised him that right now. He had all the leverage, but if I came back, I would have leverage and that might cost the ship money and other things.

I decided that my work was done and had the agent contact my driver who had to drive to where we were in order to give me a ride back to the airport, so I got to the airport about 9 o’clock that night. At that time, I ended up talking to someone back in the office and they told me that the CEO didn’t want me coming home until I had things ironed out there and I told the guy I’m hanging up and I’ll see you Monday since it was now Friday night.

Bottom line, by my negotiations under the terms of the contract, we ended up delivering all of our equipment to Latvia without assessment of any liquidated damages, and I’m pretty sure that we was held payments associated with a due date upon delivery from the ship that was arrested. By the way, there’s a great story about the arresting of the shift that had nothing to do with us, but was a very artful move by the Chinese company who had built the ship and had not been fully paid therefore.