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November 25, 2008

OSG fined another $3 million

Overseas Shipholding Group Inc. (OSG) pleaded guilty and was sentenced yesterday in federal court in Beaumont, Texas. As part of the sentencing, OSG was ordered to pay an additional $3 million to satisfy an original criminal settlement with the United States, entered on June 20, 2007, that originally involved 33 felony counts, 12 oil tankers and ports located in Beaumont, TX, Boston, MA, Portland, ME, San Francisco, CA, and Wilmington, NC, announced Rebecca A. Gregory, U.S. Attorney for the Eastern District of Texas.

The total $37 million penalty is the largest-ever involving deliberate vessel pollution and was announced on Dec. 19, 2006 in Boston.

The charges involving twelve OSG oil tankers range from June 2001 to March 2006 and include violations of the Clean Water Act, as amended by the Oil Pollution Act of 1990, the Act to Prevent Pollution from Ships, conspiracy, false statements, and obstruction of justice.

In pleading guilty, OSG admitted that it deliberately falsified the Oil Record Book of various ships,, made discharges at night, and concealed bypass methods used to circumvent required pollution prevention equipment during U.S. port calls so that the Coast Guard would not discover the criminal activity.

For the part of the case in East Texas, on June 20, 2007, U.S. District Court Judge Thad Heartfield previously sentenced OSG to pay a total of $7 million ($5.3 million criminal fine and $1.7 million in community service) for making false statements to the Coast Guard. OSG was ordered to pay another $3 million in escrow for additional charges that will bring the total to $10 million in the Eastern District of Texas.

Those additional charges were addressed yesterday. In accordance with the plea agreement, today Judge Heartfield sentenced OSG upon it plea of guilty to three separate counts of violating the Act to Prevent Pollution from Ships. The charges stemmed from the failure of the OSG oil tanker Pacific Ruby to maintain an accurate Oil Record Book during port calls in Southeast Texas in December 2004 through March 2005. Judge Heartfield ordered OSG to pay an $800,000 fine on each of the three counts to which it yesterday pleaded guilty.

In addition, OSG was ordered to pay approximately $600,000.00 in community service payments.

The $600,000.00 in community service payments was directed to go to the National Park Foundation and National Fish and Wildlife Foundation for the explicit goal of funding environmental projects and initiatives designed to benefit, preserve and restore the environment and ecosystems in the Eastern District of Texas, including the waters along the counties of Jefferson, Orange, Hardin, Liberty, Tyler, Jasper and Newton.

Prosecutors have previously credited OSG's self-disclosures, cooperation and compliance measures taken by proposing fewer charges and reduced criminal fines. OSG was originally sentenced on June 20, 2007 to serve a three-year term of probation during which it must implement and follow a stringent environmental compliance program that includes a court-appointed monitor and outside independent auditing of OSG ships trading worldwide.

The investigation and prosecution was conducted through the combined efforts of the U.S. Coast Guard units in each port, including Port Arthur and Houston, Texas, the Coast Guard Investigative Service, Coast Guard Office of Maritime and International Law, Coast Guard Office of Investigations and Analysis. The case was prosecuted by the Environmental Crimes Section of the U.S. Department of Justice and the U.S. Attorney's Offices in the affected districts.


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