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December 20, 2000

Guilty pleas in Neptune Dorado case
The owner and operator of the oil tanker T/V Neptune Dorado pled guilty yesterday in San Francisco federal court to felony criminal charges. They were sentenced to pay criminal and civil penalties of more than $2.5 million for failing to report the ship's hazardous condition while operating in San Francisco Bay.  The captain and former captain of the ship also pled guilty to criminal charges,

According to a statement from the U.S. Attorney's Office for the Northern District of California, the Coast Guard, the FBI and the EPA, the criminal charges stem from numerous dangerous conditions found by the Coast Guard aboard the T/V Neptune Dorado, including inoperable fire pumps, oil leaks into the engine room, faulty ventilation systems and, most significantly, the fact that a significant quantity of oil cargo had leaked into the ship's ballast tanks, creating a serious risk of explosion.

Elmhirst Pte. Ltd., a Singaporean company and the ship's owner, and Polembros Shipping Limited, a Liberian company which is the operator and manager of the vessel, admitted in their guilty pleas that they violated the Ports and Waterways Safety Act by willfully and knowingly failing to report to the United States Coast Guard the hazardous condition of the T/V Neptune Dorado, in violation of 33  U.S.C. § 1232(b) and 33 C.F.R. § 160.203 and 160.215.  Kiriakos Daioglou, the ship's captain, pled guilty to the same charges.  The vessel's former captain, Hristoforos Sotiriadas, acknowledging that he was aware of and failed to disclose the hazardous condition of the vessel when he turned over command of the ship to Daioglou in June 2000, pled guilty to operating, and aiding and abetting operation of the ship in a grossly negligent manner, in violation of 46 U.S.C. § 2302 and 18 U.S.C. § 2. 

Under the plea agreements, Polembros and Elmhirst will be placed on three years probation and ordered to pay criminal and civil fines and penalties totaling $2,500,000.  Both companies also agreed to be bound by the terms of a Corporate Compliance Agreement which will subject the entire fleet of Polembros vessels to greater oversight by an independent auditor and increased inspections by the international class societies responsible for ensuring that tanker vessels comply with U.S. and international law. 

Daioglou and Sotiriadas will be placed on three years probation and ordered to pay criminal fines of $25,000 and $5,000 respectively.  Both captains will be banned from operating vessels in the United States for one year, and will have to go through re-training and re-certification before again entering the United States. 

According to the Information filed by the U.S. Attorney, on approximately August 18, 2000, the T/V Neptune Dorado took on a load of crude oil in Australia  for delivery to the Tosco Refinery at the Richmond Long Wharf in the San Francisco Bay.  In the course of the voyage from Australia to San Francisco, Captain Daioglou knew that the ship was in a hazardous condition in that: the main fire pumps were inoperable; there were oil leaks in the engine room; there were leaks from the marine sanitation device into the bilges; and three of the ballast tanks were contaminated by a combination of oil, sludge and/or vapors, which created a significant risk of explosion. 

Daioglou and the chief engineer reported some of these conditions to Polembros by way of telex during the voyage.  None of the problems were reported to the United States Coast Guard, as required, when the vessel arrived in San Francisco Bay on September 23, 2000. 

According to his plea agreement, Daioglou admitted on October 6, 2000 to agents of the Coast Guard Investigative Service and the FBI  that three of the ballast tanks contained oil cargo, sludge and/or vapors.  He said that he had been very worried about the condition of the T/V Neptune Dorado, including the vapors in the ballast tanks, during the voyage from Australia to San Francisco.  He admitted that the condition of the vessel, especially the hydrocarbon vapors in the ballast tanks, was so potentially dangerous that he attempted to ventilate the ballast tanks during the voyage to lesson the risk of an explosion. Daioglou also said that he had  communicated with Polembros before and during the Australia to San Francisco voyage regarding the condition of the vessel.

When the ship arrived in San Francisco Bay on September 23, 2000, it proceeded to Anchorage Nine, just south of the Bay Bridge.  On September 24, 2000, the Coast Guard sent inspectors to conduct a routine safety inspection.  

When the inspectors boarded the ship, Captain Daioglou failed to report any of the hazardous conditions that he knew existed aboard the vessel.   A Polembros port engineer who was present likewise failed to disclose any of the hazardous conditions. 


In an ensuing series of inspections, the Coast Guard discovered the hazardous conditions.   The most alarming discovery was the presence of approximately 500 tons of oil cargo and associated vapors in the Number 7 port ballast tank, which created a serious risk of an explosion, and which could have risked both the lives of the vessel's crew, anyone else on board the vessel,  and the waters of San Francisco Bay.   Further, the Coast Guard discovered that vessel's log books falsely indicated that the ballast tanks were empty, and had been empty throughout the voyage from Australia to San Francisco.    
                 
United States Attorney Robert S. Mueller, III, in announcing the guilty pleas, said: "The integrity of the San Francisco Bay and Pacific coastline demand that we be vigilant in prosecuting those who threaten our natural resources.  In this case, the criminal failure of the  captain and the owners of the Neptune Dorado to report the ship's dangerous condition put our environment–not to mention the crew–at risk of a deadly explosion."

Mueller added that, as in the case of the oil tanker Command which last year was successfully prosecuted for spilling oil off the coast of San Francisco and then leaving the scene of the accident, "the U.S. Attorney's Office will not hesitate to bring criminal charges in environmental cases if the situation demands it.  Protecting the environment is an important priority for this office," he said.

Mueller said that Polembros and Elmhirst fully cooperated with the investigation after the Coast Guard uncovered the hazardous conditions, by promptly making all repairs requested by the Coast Guard, and voluntarily entering into a fleet-wide compliance agreement.  

Captain Larry Hareth, Captain of the Port for the United States Coast Guard, said: "If you bring a substandard ship into U.S. waters, expect to be caught, expect to be detained and expect to be prosecuted."

 Special Agent in Charge of the FBI, Bruce J. Gephardt, stated: "Ship owners as well as ship captains must be held accountable when their vessels pose serious risks to our environment."

This case arose out of an investigation by the United States Coast Guard, Federal Bureau of Investigation and U.S. Environmental Protection Agency.  The case was prosecuted by Assistant U.S. Attorneys Melinda L. Haag, Jeffrey L. Bornstein and Herbert G. Johnson with assistance by legal technician, Stacy Willis.

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