From: Denise Lavoie, Associated Press
Published December 20, 2005 12:00 AM

Shipping Company To Pay $10 Million Fine in Atlantic Dumping Case

BOSTON — A Hong Kong-based shipping company has agreed to pay a $10 million (euro8.4 million) fine for dumping 40 tons of oil sludge into the Atlantic Ocean, federal prosecutors said Monday.

Coast Guard officials said it is the biggest criminal fine ever paid anywhere in the world in a case involving deliberate pollution from a single vessel.

Under a plea deal with federal prosecutors in Boston, MSC Ship Management Ltd. has agreed to plead guilty to charges of conspiracy, obstruction of justice, destruction of evidence, making false statements and violating the Act to Prevent Pollution from Ships.

U.S. Attorney Michael Sullivan said one of the company's container ships, the MSC Elena, discharged about 40 tons of sludge during a five-month period in 2004 by using a specially fitted steel pipe to bypass required pollution prevention equipment.

Rear Admiral David P. Pekoske, commander of the First Coast Guard District, said the Coast Guard discovered the pipe -- dubbed the "magic pipe" by crew members -- during a routine inspection while the ship was docked in Boston Harbor in May.

The pipe discharged oil sludge and oil-contaminated waste directly overboard into the Atlantic along the ship's route from ports in Europe to ports in the United States. Coast Guard officials did not pinpoint the locations where the sludge was dumped.

Ronald W. Zdrojeski, an attorney for MSC Ship Management, said installing the pipe was "a direct contravention of the company's procedures," but that the company takes full responsibility for the dumping.

"We regret it very deeply and we think the penalty that is proposed is more than adequate to meet the offense," Zdrojeski said.

Coast Guard officials said the ship had the required anti-pollution equipment on board, but installed the pipe to circumvent that. The equipment is expensive to maintain, Pekoske said.

The chief engineer of the ship, Mani Singh, was indicted in November and has agreed to plead guilty at a hearing scheduled for Tuesday. The ship's second engineer, Aman Mahana, pleaded guilty earlier this month. Both men are expected to be sentenced early next year.

Under the terms of the plea agreement, MSC will be on probation for five years. During that time, it will operate under an environmental compliance plan, which will include a review by an independent auditor of any of the company's 81 ships.

Source: Associated Press

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