Marine Log

March 23, 2006

Wallenius to pay $6.5 million in "magic pipe" case

Wallenius Ship Management Pte. Ltd. is to pay a total of $6.5 million in criminal fines and community service payments under a plea agreement in which it admitted to deliberate discharges of contaminated bilge waste and other pollutants.

Nyi Nyi, the chief engineer of the vessel involved, the Singapore registered car carrier Atlantic Breeze pleaded guilty to false statements for submitting a false Oil Record Book to the Coast Guard. He faces a maximum penalty of five years in prison.

U.S. District Judge Joseph A. Greenaway, Jr., took the guilty pleas from the corporation and Nyi. He scheduled sentencing for July 10. If the plea agreement is approved by the court, Wallenius Ship Management will be on probation for a minimum of three years. In that period, the company must operate under the terms of a government-approved environmental compliance plan that includes an outside independent auditor that will scrutinize the company's ships that trade in the United States and a court appointed monitor to review the audits and advise the court.

The announcement of the successful prosecution was made yesterday by Christopher J. Christie, the U.S. Attorney for the District of New Jersey; Sue Ellen Wooldridge, Assistant Attorney General in the Department of Justice’s Environment and Natural Resources Division; Rear Admiral David P. Pekoske, Commander, First Coast Guard District in Boston, Massachusetts, and Granta Y. Nakayama, EPA's Assistant Administrator for the Office of Enforcement and Compliance.

According to a Joint Factual Statement agreed to between the government and Wallenius Ship Management, the U.S. Coast Guard began an investigation in November 2005 after crew members on the Atlantic Breeze sent a fax to an international seafarers' union alleging that they were being ordered to engage in deliberate acts of pollution, including the discharge of oil contaminated bilge waste and sludge as well as garbage. As a result of the tip from the whistle blowers, the Coast Guard conducted an inspection of the ship on Nov. 9, 2005, and discovered a multi-piece bypass system--referred to on board as "the Magic Pipe"--hidden in various locations of the ship.

According to the Joint Factual Statement, deliberate discharges had been taking place since 2002 under the direction of Nyi and other chief engineers aboard the Atlantic Breeze. The chief engineers falsified the ship's Oil Record Book, in order to conceal the deliberate acts of pollution. Similarly, the company admitted that it made material false statements by falsifying a Garbage Record Book that concealed the deliberate discharge of plastic refuse.