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Ship Management Corp. to Pay $4 Million Penalty for Concealing Deliberate Pollution

Published Jan 20, 2011 3:27 PM by The Maritime Executive

Irika Shipping S.A., a ship management corporation registered in Panama and doing business in Greece, pleaded guilty on July 8, 2010 before Maryland U.S. District Court Judge Frederick J. Motz, to felony obstruction of justice charges and violation of the Act to Prevent Pollution from Ships related to concealing deliberate vessel pollution from the M/V IORANA, a Greek flagged cargo ship that made port calls in Baltimore, Tacoma, Wash., and New Orleans.

According to the multi-district plea agreement, Irika Shipping has agreed to pay a $4 million total penalty, be placed on probation for a maximum period of five years, and be subject to the terms of an Enhanced Environmental Compliance Program.

The proposed $4 million penalty includes a $3 million criminal fine and $1 million in organizational community service payments that will fund various marine environmental projects. In Maryland, $750,000 will go to the congressionally established National Fish & Wildlife Foundation and be used for Chesapeake Bay projects. In Washington, $125,000 will go to environmental projects in and around the waters of Puget Sound and the Straits of Juan De Fuca. In Louisiana, $125,000 will go toward funding habitat conservation, protection, restoration, and management projects to benefit fish and wildlife resources and habitats. Irika Shipping and its ships must also be audited by an independent firm and supervised by a court appointed monitor.

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 upon 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 that circumvented pollution prevention equipment required by law. 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 a Coast Guard inspection on Jan. 8, 2010, the Coast Guard obtained photographs taken on the 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.

In pleading guilty, Irika Shipping admitted the following:


  • 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 103-foot bypass 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 used to clean the bilge tank, which was contaminated with sludge and cleaned with diesel fuel, 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 had previously been involved in an environmental crimes prosecution and, as a result, 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.


In 2007, Irika Shipping was also the operator of the M/V Irika, a ship subject to a similar prosecution in Tacoma, Washington, 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 new vessels such as the M/V Iorana.

In connection with its 2010 guilty plea, Irika admitted that it hired back the convicted chief engineer from the prior 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.

SOURCE U.S. Department of Justice