Ship Management Corp. to Pay $4 Million Penalty for Concealing Deliberate Pollution

WASHINGTON, July 9 /PRNewswire-USNewswire/ -- Irika Shipping S.A., a ship management corporation registered in Panama and doing business in Greece, pleaded guilty on July 8, 2010 before Maryland U.S. District Court Judge Frederick J. Motz, to felony obstruction of justice charges and violation of the Act to Prevent Pollution from Ships related to concealing deliberate vessel pollution from the M/V Iorana, a Greek flagged cargo ship that made port calls in Baltimore, Tacoma, Wash., and New Orleans.

According to the multi-district plea agreement arising out of charges brought in the District of Maryland, Western District of Washington, and Eastern District of Louisiana, Irika Shipping has agreed to pay a $4 million total penalty, be placed on probation for a maximum period of five years, and be subject to the terms of an Enhanced Environmental Compliance Program.

The proposed $4 million penalty includes a $3 million criminal fine and $1 million in organizational community service payments that will fund various marine environmental projects. In Maryland, $750,000 will go to the congressionally established National Fish & Wildlife Foundation and be used for Chesapeake Bay projects. In Washington, $125,000 will go to environmental projects in and around the waters of Puget Sound and the Straits of Juan De Fuca. In Louisiana, $125,000 will go toward funding habitat conservation, protection, restoration, and management projects to benefit fish and wildlife resources and habitats. Under the terms of the proposed plea agreement, Irika Shipping and its ships must also be audited by an independent firm and supervised by a court appointed monitor.

According to court documents, the investigation into the M/V Iorana was launched in January 2010 after a crew member passed a note to the Customs and Border Protection inspector upon the ship's arrival in Baltimore alleging that the ship's chief engineer had directed the dumping of waste oil overboard through a bypass hose that circumvented pollution prevention equipment required by law. The whistleblower's note stated: "We are asking help to any authorities concerned about this, because we must protect our environment and our marine lives."

"Deliberate pollution from ships, intentional falsification of records to cover up pollution, and obstruction of justice are serious crimes that will be vigorously prosecuted," said Ignacia S. Moreno, Assistant Attorney General, Environment & Natural Resources, U.S. Department of Justice. "The Department of Justice will continue to protect human health and the environment through robust enforcement of the law."

"Criminal prosecutions are needed to deter deliberate efforts to circumvent pollution laws," said Rod J. Rosenstein, U.S. Attorney for the District of Maryland. "A total of $750,000 will be devoted to protecting Chesapeake Bay as a result of this prosecution," said Rosenstein.

"This was a case of willful and deceitful pollution, and the corporation responsible is being held accountable," said Rear Adm. "Dean" Lee, Commander of the Coast Guard's 5th District. "This case should serve as a deterrent to those who would violate marine pollution laws."

"Maritime laws exist in order to protect the ocean from being used as dumping grounds for oily wastes," said David M. Dillon, Special Agent in Charge of the Environmental Protection Agency's (EPA) criminal enforcement program in Philadelphia. "This prosecution sends a clear and deterrent message that those who cut corners and break the law will be vigorously prosecuted."

During a Coast Guard inspection on Jan. 8, 2010, the Coast Guard obtained photographs taken on the whistleblower crew member's cell phone showing the use of a 103-foot long "magic hose" to bypass the ship's oily water separator. The illicit bypass system used to discharge oily waste, including sludge, was routed through the ship's boiler blow down system where any trace of oil could be expected to be steam cleaned away. The illegal discharges were concealed in a fraudulent oil record book, a required log in which all overboard discharges are to be recorded.

In pleading guilty, Irika Shipping has admitted the following in a detailed joint factual statement:

• Approximately 23 cubic meters of oil contaminated sludge and bilge waste (approximately 6,000 gallons) were dumped overboard in December 2009 during the voyage from Gibraltar to Baltimore using the 103-foot bypass hose;
• The flanges where the bypass hose was connected were repainted before arriving in port in order to cover up tool marks caused when the bypass hose was connected and disconnected;
• The bypass was used at night, and plastic bags filled with oil soaked rags used to clean the bilge tank, which was contaminated with sludge and cleaned with diesel fuel, were dumped overboard at night;
• Additional episodes of illegal discharges took place after the ship's first voyage in June 2009 and continued through the middle of December 2009;
• Irika Shipping did not have a company budget, a budget for the vessel or a waste management plan. Irika's crew members received little training regarding the company's environmental policies;
• Crew members were not informed by the company that it had previously been involved in an environmental crimes prosecution and, as a result, was to have been operating under a court-imposed Environmental Compliance Program; and
• Irika obstructed justice in various ways including: senior ship officers made false statements to the Coast Guard, crew members were told to lie to the Coast Guard, and evidence of illegal dumping was destroyed.

As set forth in the plea agreement, Irika pleaded guilty in U.S. District Court in Baltimore, Maryland to two counts of violating the Act to Prevent Pollution from Ships for failing to maintain an accurate oil record book and garbage record book; one count of obstruction of the Coast Guard's inspection; three counts of concealing evidence; one count of making materially false statements; and one count of obstruction of justice filed. The maximum penalty for each of these felony offenses is $500,000 or up to twice the gross gain or loss from the offense.

In 2007, Irika Shipping was also the operator of the M/V Irika, a ship subject to a similar prosecution in Tacoma, Washington, where the ship's owner, Irika Maritime S.A., and the ship's chief engineer were convicted. As part of the sentence in that case, both Irika Maritime and Irika Shipping were required to develop and implement an Environmental Compliance Plan that would apply during a four year period of probation to the entire fleet of vessels managed by Irika Shipping, including new vessels such as the M/V Iorana.

In connection with its 2010 guilty plea, Irika admitted that it hired back the convicted chief engineer from the prior case who committed new violations on the M/V Iorana during the probationary period. A subsequent chief engineer, Triantafyllos Marmaras, was in charge at the time of the January 2010 inspection in Baltimore. Chief Engineer Marmaras pleaded guilty in June 2010, in U.S. District Court in Baltimore, to obstruction of justice charges in a related case.

Yesterday's prosecution was made possible through the combined efforts of the U.S. Coast Guard Sector Baltimore, the Coast Guard Investigative Service, Coast Guard Office of Maritime and International Law, Coast Guard Office of Investigations and Analysis, Environmental Protection Agency Criminal Investigations Division with assistance from the U.S. Customs and Border Protection. The cases were prosecuted by Richard A. Udell, Senior Trial Attorney of the Environmental Crimes Section of the U.S. Department of Justice, P. Michael Cunningham, Assistant U.S. Attorney in Baltimore, James Oesterle, Assistant U.S. Attorney in Seattle, and Dorothy Manning Taylor, Assistant U.S. Attorney in New Orleans.

SOURCE U.S. Department of Justice