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March 18, 2004

Guilty plea in "magic pipe" case

U. S. District Court Judge Ronald B. Leighton in Tacoma, Wash., yesterday accepted the guilty plea of Hoegh Fleet Services A/S to seven felony counts, including obstruction and making false statements to federal inspectors, relating to falsification of records and concealment of evidence of intentional dumping of waste oil into the ocean.

Hoegh Fleet Services A/S, a Norwegian operator of a fleet of ocean going cargo ships, pleaded guilty pursuant to a plea agreement requiring the company to pay a fine of $3.5 million, develop and implement a comprehensive environmental compliance plan for its fleet of thirty-eight vessels that call on United States ports, and serve four years on probation. The criminal penalty and probationary compliance plan, if approved by the U.S. District Court, would be the largest and most comprehensive issued in Washington State for this kind of pollution activity. Hoegh Fleet Services A/S is scheduled to be sentenced by Judge Leighton in Tacoma on June 29, 2004.

On September 25, 2003, Vincent Genovana, an engineering officer on the Hoegh Minerva, a vessel managed by Hoegh Fleet Services, also pled guilty to falsifying documents and covering up evidence in order to obstruct or influence a U.S. Coast Guard investigation. Genovana agreed to cooperate with the government in its investigation of Hoegh Fleet services. As a result of his cooperation, Genovana was sentenced in U.S. District Court in Tacoma to a thirty day term in custody, followed by two years of supervised release. Following his release, he was deported to his native Phillippines, with prohibitions against reentering the United States without permission of U.S. immigration officials.

According to the U.S. Attorney's Office, like other ships of its size, the Hoegh Minerva possessed equipment to properly handle its waste oil, including an oil water separator. Federal and international laws require that oily water be processed through the oily water separator so that any water discharged into the sea contains less than fifteen parts per million of oil. Under U.S. law, ships like the Hoegh Minerva that enter U.S. waters must maintain an Oil Record Book to document all transfers of oil on the ship, including discharges to the sea.

According to the plea agreement and other court records, Second Engineer Genovana directed another crew member on board the Hoegh Minerva to fabricate a bypass pipe that was fitted into the existing vessel piping system for the oil water separator to allow crew members to pump inadequately treated oil contaminated waste water directly overboard into the ocean. Crew members referred to the pipe as the "magic pipe."

The magic pipe was initially installed in June 2003 while the vessel sailed between Canada and Asia. It remained installed for several days at a time, allowing crew members to bypass the ship's pollution prevention equipment. None of the discharges was recorded in the Oil Record Book as required by international and U.S. law. Instead, crew members knowingly made false and fraudulent entries and omissions in the Oil Record Book in an effort to conceal the illegal discharges from U.S. Coast Guard inspectors.

The magic pipe was removed several days before the Hoegh Minerva arrived at the Port of Los Angeles, California on September 2, 2003. Following its removal, crew members painted the fittings where the magic pipe had been installed in an effort to conceal the prior use of the fittings.

U.S. Coast Guard officials boarded the vessel at the Port of Los Angeles and, several days later, in Richmond, California. At both ports, ships officers failed to inform Coast Guard officials of the illegal dumping. Moreover, in Richmond, crew members presented Coast Guard inspectors with the falsified Oil Record Book. On September 11, 2003, the falsified Oil Record Book was again presented to U.S. Coast Guard inspectors at the Port of Vancouver, Washington. The illegal dumping onboard the ship came to light after a whistle-blower on board the ship secretly passed a note to Coast Guard inspectors describing the illegal activity. An investigation in Vancouver prompted by the whistle-blower note led to the discovery of the magic pipe.

Hoegh Fleet Services A/S pled guilty to felony violations in the three West Coast judicial districts for obstructing Coast Guard proceedings, for making false statements to the Coast Guard, and for failing to maintain proper records associated with the ship's handling of its waste oil.

These guilty pleas are the latest in a series of recent federal criminal prosecutions along the West Coast in which shipping corporations and engineers have been convicted and sentenced for similar criminal behavior.

John McKay, United States Attorney for the Western District of Washington, Debra W. Yang, United States Attorney for the Central District of California, and Kevin V. Ryan, United States Attorney for the Northern District of California, emphasized that the multi-district prosecution of Hoegh Fleet Services A/S is a clear indication of the Department of Justice's resolve to work cooperatively with state and federal agencies to stop these practices and require vessel operators to develop comprehensive compliance programs to prevent future discharges. The United States Attorneys further applauded the courageous actions of a crew member aboard the ship who blew the whistle on the ship's illegal pollution activities, leading to the discovery of the bypass pipe by state and federal inspectors.

"These recent prosecutions demonstrate the commitment of state and federal inspectors to bring these environmental criminals to justice," said John Iani, the Administrator for EPA Region 10, overseeing federal environmental matters in Washington, Oregon, Alaska and Idaho. "This is a serious, yet easily prevented environmental crime. Vessel operators need to understand that they have the responsibility to impress upon their crews that the law must be complied with, because if it's not, we will enforce the law quite vigorously."

"I am very pleased by the results of this case and hope that it sends a strong message that protecting our oceans from all types of threats is important to the Coast Guard, and we will continue to aggressively enforce international and domestic environmental law," said Vice Admiral Terry M. Cross, Commander of the United States Coast Guard Pacific Area, who is responsible for all Coast Guard operations west of the Rocky Mountains and throughout the Pacific Basin to the Far East.

"I really appreciate the cooperative efforts of the Coast Guard and the Department of Justice in working with Ecology's inspectors to see that this company was successfully prosecuted for this unacceptable practice," said Dale Jensen, the Program Manager for the Washington Department of Ecology's Spills Program.

This matter was investigated by the Environmental Protection Agency Criminal Investigation Division and Coast Guard Marine Safety Office Portland, with assistance from the Coast Guard Investigative Service and the Washington State Department of Ecology, Spill Prevention, Preparedness and Response Program. The case was prosecuted in the Western District of Washington by Assistant United States Attorney Mark Chutkow; Special Assistant United States Attorney James D. Oesterle, Regional Criminal Enforcement Counsel with EPA; and Commander Larry R. Kennedy, Special Assistant United States Attorney and Principal Assistant Legal Officer for the Thirteenth Coast Guard District Legal Office. In the Central District of California, the case was prosecuted by Assistant United States Attorneys William Carter and Dorothy Kim. Assistant United States Attorney Maureen Bessette prosecuted the case in the Northern District of California.

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