Friday, December 20, 2013

Bulk Shipping Guilty of Pollution as Flags of Convenience Vessels Prosecuted Again

Stiffer Sentences May be the Future Following Two Similar 'Magic Pipe' Cases Which Ended This Month
Shipping News Feature

US – GREECE – LIBERIA – MALTA – This month has seen the resolution of two broadly similar cases which relate to an activity which a generation ago would not have earned more than a mention, but with the environment at the top of the agenda for everyone involved in the shipping trade, now deserve a more thorough examination. Both involve bulk carriers, both involved discharge of noxious substances into the sea by way of a ‘magic pipe’ and all the guilty parties were all employed on vessels sailing under flags of convenience.

Back in August we wrote about the Diana Shipping Services (DSS) vessel Thetis, a bulk carrier which in September 2012 was found to have dumped waste oil and oil-contaminated waste in US waters after the US Coast Guard uncovered an elaborate plot to hide the fact from any inspection. In April of this year evidence that the coal ship Antonis G Pappadakis had been similarly guilty emerged after another Coast Guard examination.

As we say there are many similarities between both incidents, crew members aboard both vessels had employed similar subterfuge to disguise their illegal activities by pumping the waste through a ‘magic pipe’ into sewage discharges thereby bypassing the ships’ oil separators and environmental controls. Both crimes came to light following evidence produced by whistle blowers working aboard and both were tried before US District Judge Mark Davis in Norfolk, Virginia with Mr Joseph Kosky as Federal Prosecutor.

In the case of the coal ship, a crew member slipped a note and a camera containing evidence to the Coast Guard who subsequently discovered from the oil record book, a mandatory document, records that the engineer accused of the deception had only utilised the oily water separator half the amount of his predecessor a year earlier. Similarly the Diana ship’s crew had revealed evidence against the two perpetrators despite threats should the pump and pipe be discovered.

The Antonis G Pappadakis was owned and operated by Kassian Maritime Navigation Agency Ltd. (KMNA), a Liberian corporation with offices in Athens which the Court found had been ignorant of the deception, as had the vessels master. The case of the Thetis was different in that owners, DSS, were found culpable and vicariously liable resulting in a $1,100,000 fine and a three and a half year probation for the company earlier this month.

Under the law up to 50% of the fine imposed can be given to the whistle blowers in the crew, happy days for some on the Thetis but no consolation for Second Engineer Nathaniel Enicola of the Maltese vessel. In the event the Court’s level of sentence, on both corporate and personal levels, proved less than many expected. KMNA obviously avoided censure completely having satisfied the Court that the company had adequate measures in place which had simply been bypassed by Chief Engineer Lambros Katsipis. He was found guilty on seven out of eight counts (he was acquitted of conspiracy), including falsification of records and obstruction of justice but received a lesser sentence that he otherwise would have done because of tragic personal circumstances.

Mrs Katsipis died from terminal cancer from which she had been suffering for four years and passed away whilst her husband was being detained by federal authorities. The prosecution pressed for a prison term of up to six years but the Judge decided, despite finding that Katsipis lied under oath, that circumstances must have affected the engineer’s judgement and sentenced him to a year’s probation, the first third of which to be served in confinement at a ‘halfway house’.

No such mitigation was claimed in the Thetis case but, having fined the company heavily for obstruction of justice amongst other things (although a considerably higher $5.5 million penalty was available to the Court), and found Chief Engineer Ioannis Prokakis and 2nd Engineer Antonios Boumpoutelos guilty of ten and eleven federal felonies including conspiracy, falsification of records and obstruction of justice, together worth around a maximum sentence of thirty years, and the prosecution asking for up to fourteen, Judge Davis opted for comparative leniency. Both men were given a year’s probation but no fines, and both were ordered to be repatriated to their native Greece.

When appearing before the Court the Director and Treasurer of DSS, Mr Ioannis Zafirakis, stated that DSS has previously undertaken a comprehensive review of its existing Management System and operations, and implemented an Enhanced Environmental Management System (EEMS) to ensure that all of the vessels managed by DSS are operated in accordance with applicable maritime environmental laws and regulations. Mr Zafirakis also noted that the EEMS has been independently audited and certified as being ISO 14001 compliant and that environmental compliance will continue to be given utmost priority by Diana Shipping Services S.A. He added that DSS intends to continue to transform its corporate culture and operations to make certain that it is a model in the maritime industry for environmental compliance.

Environmental group however point out that the number of Chief Engineers prosecuted for similar offences by federal authorities in the past seven years had now reached thirty nine, the maximum term of imprisonment hand down being only six months, despite the draconian penalties available to the Courts. They point out that such sentences are clearly not acting as a deterrent and therefore examples should be made in future cases. Given the strength of feeling and the depth of the environmental lobby it will be no surprise is a Judge shortly decides that enough is enough.

Photo: The coal carrier Antonis G Pappadakis makes her smoky way out of harbour after release by the federal authorities.