Tuesday, December 19, 2006

The world’s second-largest publicly traded oil tanker company yesterday agreed to plead guilty to 33 felony counts for deliberately polluting six U.S. ports and making false pollution log entries.

In what the Justice Department called the largest criminal penalty involving deliberate vessel pollution, Overseas Shipholding Group Inc. (OSG) will pay the government $37 million and plead guilty to the illegal dumping of waste oil, violations of the Clean Water and Oil Pollution acts, conspiracy, making false statements and obstruction of justice.

“OSG has engaged in repeated and deliberate pollution of our oceans,” acting Associate Attorney General William Mercer said. “What is more disturbing is that OSG’s management failed to uncover or stop this illegal activity after allegations were brought to the attention of management on several occasions and again after the initiation of the government’s investigation.”

Rear Adm. Tim Sullivan, commander of the First U.S. Coast Guard District, said the service is committed to achieving industrywide compliance with international and domestic pollution prevention rules.

“The case demonstrates that scofflaws within maritime industry can no longer treat intentional discharging of oil and the penalties associated with those acts as a ‘cost of doing business.’ Instead, the industry must embrace a culture of compliance,” he said.

New York-based OSG, which has 4,000 employees, transports crude oil, petroleum products and dry bulk commodities throughout the world. The company owns an international fleet of 106 operating vessels and has 30 under construction. The guilty plea involves 12 of its ships.

The ports where the pollution occurred were identified as Boston; Portland, Maine; Los Angeles; San Francisco; Wilmington, N.C.; and Beaumont, Texas.

The $37 million penalty consists of a $27.8 million criminal fine, which will be divided among the port districts, and a $9.2 million organizational community service payment that will fund marine environmental projects coast to coast.

According to a statement of facts filed by the Justice Department in the plea agreement, OSG admitted that it:

• Made illegal releases of oily waste from August 2001 to October 2003 into waters off the coast of New England, in proximity to Maine and Massachusetts, including the island of Nantucket.

• Was responsible for dumping sludge, including 40,600 gallons dumped overboard by one ship.

• Violated the Clean Water Act by discharging 2,640 gallons of oily waste and sludge off the coast of North Carolina, and made false statements about it.

• Made illegal discharges of oily waste in 2004 and 2005 in the Gulf of Mexico.

• Concealed the illegal discharges by falsifying official ship records, making discharges at night and hiding bypass equipment during U.S. port calls so the Coast Guard would not discover the criminal activity.

The company also said numerous high-ranking crew members engaged in conspiracies to commit illegal pollution and falsify ship records while lower-level crew participated because they were explicitly or implicitly threatened with loss of employment if they refused.

The Justice Department said the motive for the crimes was financial, adding that OSG “was saving the cost of offloading waste oil in port and the time it would take to comply with the law.”

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