Ship Owner Fined $1.75 Million in ‘Magic Pipe’ Case

The Japan-based operator of a cargo vessel that dumped oily sludge into the Gulf of Mexico and Atlantic Ocean has been sentenced to three years of probation and fined $1.75 million.
Hiong Guan Navegacion Japan Co. Ltd. pleaded guilty in November to federal charges of conspiracy and to falsifying and failing to properly maintain records meant to ensure environmental compliance.
“We’re very sorry about that and we accept all responsibility,” company representative Mitsumoto Odagiri told U.S. District Judge Steven D. Merry day. “We will work harder to make sure this doesn’t happen again. I just want to say, we apologize.”
As part of the probation, the company agreed to an environmental compliance plan in which its 24 ships will be audited by independent inspectors. The plan also involves court-appointed monitors.
The plan “does change the culture of the company, from passively letting things occur to proactively working,” defense attorney Michael Chalos. “I think we’re going to have a very compliant company going forward.”
U.S. Attorney A. Brian Albritton said his office, the Department of Justice and the Coast Guard are doing their best, through the compliance program, to prevent this from happening again.
“We certainly wanted to send a message that this is just not acceptable in our waters or any waters for that matter,” Albritton said.
Assistant U.S. Attorney Cherie Krigsman said she will notify the court within the next two weeks of as many as three whistleblowers who should receive a portion of the financial penalty as reward for alerting authorities to the pollution. The whistleblowers are in the Philippines, she said.
In a sentencing memorandum, prosecutors said the company has agreed to pay $400,000 of the $1.75 million fine to a charity named by the government. The prosecution recommended that charity be the National Fish and Wildlife Foundation. The prosecution also recommended that the company not be allowed to claim a tax deduction for the donation or claim it was a voluntary contribution.
Prosecutors say chief engineers falsified an oil record book kept aboard the Balsa-62, a 9,000-gross-ton bulk cargo vessel registered under the flag of Panama. Federal and international law requires ships pass the sludge through filtering equipment aboard the vessel or burn it in the ship’s incinerator.