Whistleblower's Cell phone photos showed Coast Guard how magic hose was used"

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September 22, 2010

Whistleblower's cell phone photos showed Coast Guard how "magic hose" was used

Whistle blowing crew members these days have a handy means of backing up their stories: cell phone cameras. That emerged in a case that yesterday saw Irika Shipping S.A. sentenced in Baltimore to pay a $4 million penalty that includes a $3 million criminal fine and $1 million in organizational community service payment.

U.S. District Judge J. Frederick Motz also sentenced Irika to serve the maximum of five years probation, subject to following a compliance program that includes audits by an independent firm and oversight by a court appointed monitor.

Judge Motz further ordered that four crew members that notified authorities about illegal discharges of oil and plastic from the M/V Iorana, a Greek flagged cargo ship, should be awarded $125,000 each under the Act to Prevent Pollution from Ships which provides that whistleblowers may receive an award of up to one-half of fines collected under that statute.

In 2007, Irika Shipping was the operator of the M/V Irika, a ship subject to a similar prosecution in Tacoma, Wash., 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 the M/V Iorana.

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 on 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. 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."

During an inspection on January 8, 2010, the Coast Guard obtained photographs taken on a 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.

Irika Shipping pleaded guilty on July 8, 2010, as part of a multi-district plea agreement arising out of charges brought in the District of Maryland, Western District of Washington and Eastern District of Louisiana, including felony violations of the Act to Prevent Pollution from Ships, related to port calls in Baltimore; Tacoma, Wash.; and New Orleans by the M/V Iorana, and obstruction of justice charges based upon false statements to the Coast Guard, destruction of evidence and other acts of concealment.

Irika also admitted that it hired back the convicted chief engineer from the 2007 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.

Irika Shipping 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 magic 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 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 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 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. The maximum penalty for each of these felony offenses is $500,000 or up to twice the gross gain or loss from the offense.


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