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February 3, 2006

$10 million "magic pipe" fine

MSC Ship Management (Hong Kong) Limited has been sentenced to pay a $10 million criminal fine after admitting to engaging in conspiracy, obstruction of justice, destruction of evidence, false statements and violating the Act to Prevent Pollution from Ships, the Department of Justice announced Wednesday.

The fine is the largest ever involving a single vessel charged with deliberate pollution and the largest criminal fine ever paid by a defendant in an environmental case in Massachusetts history.

A plea agreement was reached in December, but was subject to court approval. That came at a joint plea and sentencing hearing held in Boston on Wednesday. Under the agreement, MSC Ship Management was also ordered to pay an additional $500,000 for a community service project administered by the National Fish & Wildlife Foundation.

It will provide environmental education to mariners visiting or sailing from Massachusetts ports and inform them how to report environmental crimes to the U.S. Coast Guard.

"Deliberate pollution from vessels is a serious and recurrent problem that threatens the state of our oceans," said Sue Ellen Wooldridge, Assistant Attorney General for the Justice Department's Environment and Natural Resources Division. "The sentence imposed today is significant because it sends the message that we will seek increasingly tougher penalties for those in the maritime industry who continue to pollute."

MSC Ship Management admitted to charges filed by the Department of Justice 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.

Michael J. Sullivan, United States Attorney for the District of Massachusetts said, "Our hope is that this substantial fine will send a strong message to those in the maritime community who might try to circumvent our nation's anti-pollution laws. It is necessary to ensure that the consequences are significant, and that companies realize that violating our environmental laws will be taken seriously and will ultimately cost them more than legally disposing of the waste."

MSC Ship Management discharged approximately 40 tons or approximately 10,640 gallons of sludge during a five-month period in 2004 through a three-piece bypass pipe manufactured on the ship. An even larger volume of oil-contaminated bilge waste was also discharged with a rubber hose and portable pump. The MSC Elena made regular voyages from ports in Europe across the Atlantic to ports in the United States, including Boston.

In a related prosecution, Mani Singh--the Chief Engineer of the MSC Elena--was indicted in November on charges of making false statements to the Coast Guard; denying knowledge about the existence and use of the bypass equipment; obstructing justice by directing subordinates to lie to the Coast Guard; concealing evidence; and concealing the discharges in a falsified Oil Record Book/

Singh pleaded guilty in December 2005 and is scheduled for sentencing in March. Aman Mahana, the ship's Second Engineer, also pleaded guilty December 2005 and wass scheduled for sentencing yesterday.

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.

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