Hong Kong based ship company agrees to pay 
$10.5 million for covering up oil pollution

WASHINGTON (12/22/05) -- MSC Ship Management (Hong Kong) Limited—a Hong Kong-based container ship company—has agreed to plead guilty and pay a $10.5 million fine on charges that it engaged in conspiracy, obstruction of justice, destruction of evidence, false statements and violated the Act to Prevent Pollution from Ships. This is the largest fine in which a single vessel has been charged with deliberate pollution and the largest criminal fine paid by a defendant in an environmental case in Massachusetts history.

According to the plea agreement, including a joint factual statement, MSC Ship Management will plead guilty to a criminal information which charges that a specially fitted steel pipe, referred to as the “magic pipe,” was used on the MSC Elena, a 30,971 ton container ship, to circumvent required ship pollution prevention equipment and discharge oil sludge and oil contaminated waste directly overboard. Upon the discovery of this bypass equipment during a U.S. Coast Guard inspection in Boston Harbor on May 16, 2005, senior company officials in Hong Kong directed crew members to lie to the Coast Guard. Additionally, senior ship engineers ordered that documents be destroyed and concealed.

"This is the largest fine involving deliberate pollution from a single ship in a long series of similar prosecutions that have been brought as part of a vessel pollution initiative," said Sue Ellen Wooldridge, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Deliberate vessel pollution is a serious and persistent problem which we will prosecute to the full extent of the law."

Under the terms of the plea agreement, MSC Ship Management has agreed to plead guilty to charges that it made false statements to the Coast Guard denying knowledge about the existence and use of the bypass equipment; obstructed justice by directing subordinates to lie to the Coast Guard; concealed evidence; and concealed oil pollution in a falsified Oil Record Book— a required log in which all overboard discharges must be recorded.

MSC Ship Management has also agreed to plead guilty to charges that in response to a Coast Guard inspection, senior ship engineers directed that an “alarm” printout from the ship’s computer and a log containing actual tank volumes be concealed in an effort to cover up the falsification of records. Coast Guard inspectors were presented with fictitious logs containing false entries claiming the use of the Oil Water Separator and omitting any reference to dumping overboard using the bypass equipment.

Additionally, under the terms of the plea agreement, MSC Ship Management will be on probation for five years, during which time it must operate under the terms of a government-approved Environmental Compliance Plan. The plan includes review by an independent auditor of any of MSC Ship Management’s 81 ships—including the MSC Elena—that trade in the United States, and a review of those audits by a court-appointed monitor.

If the plea agreement is approved by the court, MSC Ship Management will pay a $10 million a criminal fine, and an additional $500,000 to support community service projects. The projects will be administered by the National Fish & Wildlife Foundation to fund non-profit organizations that provide environmental education to seafarers visiting or sailing from Massachusetts ports, including how to report environmental crimes to the U.S. Coast Guard.

This investigation was conducted by the Northeast Regional Office of the U.S. Coast Guard Investigative Service, with assistance from the U.S. Coast Guard Sector Boston; U.S. Coast Guard First District Legal Office; U.S. Coast Guard Office of International and Maritime Law; U.S. Coast Guard Headquarters Office of Investigations and Analysis; and U.S. Coast Guard Office of Compliance. The case is being prosecuted by Assistant U.S. Attorney Jonathan F. Mitchell in the District of Massachusetts’ Economic Crimes Unit, Special Assistant U.S. Attorney Luke M. Reid of the U.S. Coast Guard, and Senior Trial Attorney Richard A. Udell and Trial Attorney Malinda R. Lawrence of the Justice Department’s Environmental Crimes Section.