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Lawyer comments on M/V Ocean Hope oil discharge case

Owner and operator liable for crew’s wrongdoings even if they are acting for their own benefit.
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The following article is written by Matthew Johnston, an Associate at Lewis Brisbois Bisgaard & Smith LLP; he was commenting on the M/V Ocean Hope case where employers of crew involved in illegal oil discharge operations were convicted at nine U.S. counts over criminal liability.

On May 7, 2018, the Fourth Circuit in United States v. Oceanic Illsabe Limited affirmed the conviction and sentencing of a vessel owner and operator for violations of the Act to Prevent Pollution from Ships (APPS).

Appellants, the owner and operator of the M/V OCEAN HOPE (a Greek oceangoing cargo ship), were convicted of offenses related to illegal discharges of large quantities of oily pollutants from the vessel into the ocean. Appellants violated the APPS which was created to comply with MARPOL. The Act provides that foreign ships in the navigable waters of U.S. are subject to federal discharge requirements, and the Coast Guard can assert jurisdiction outside of the U.S. when a foreign ship fails to make complete and accurate entries in the Ship’s Oil Record Book, which must be updated “without delay.”

M/V OCEAN HOPE’s Engine Department was principally responsible for violating APPS, and also made false statements to the Coast Guard, obstructed justice and tampered with witnesses. The case involved pumping unprocessed bilge water into the ocean and the use of a “magic pipe” – a hose between the vessel’s sludge pump and an illegal onboard discharge valve on the storage tank, which ultimately draws the sludge into the ocean. One of the Engine Department’s crew videotaped and photographed the “magic pipe” arrangement.

The MV OCEAN HOPE’s owner and operator asserted that they were not vicariously criminally liable for any of the violations revealed by the Coast Guard, and that it was all the Engine Department crewmembers’ fault. They said that they had hired qualified crew that could reasonably be relied upon and the misconduct was unknown to owner and operator. However, the owner and operator were convicted on nine counts. The appellate court upheld the vicarious criminal liability noting that the Engine Department crew met the standard that “the employee or agent acted within the scope of the employment with the intent to benefit the corporation.” Those responsible were employed to carry out pollution prevention for the ship but consistently ordered subordinate crew to violate MARPOL and APPS along with various other criminal statutes and regulations. Further the owner and operator had knowledge of “multiple oddities” from weekly updates of the Oil Record Book.

The Court also noted that as long as “the corporate agent intends, at least in part, to benefit his employer, the entity can be criminally liable even if the agent was also acting for his own benefit.” The Court found that this standard was met when, for example, the supervisors of the Engine Department told the crew not to tell the Coast Guard investigators about illegal discharge, and in that way intended to prevent the Coast Guard from finding deficiencies onboard the M/V OCEAN HOPE which may cause the vessel to be detained or delayed.

This case underscored the serious nature of falsifying Oil Record Books and illegal discharges into the ocean. It also highlights the scope of the U.S.’s jurisdiction to protect the waters and enforce U.S. law. The full decision can be found here.

Manifold Times comment: Singapore shipping firm Hai Soon Ship Management, the sister firm of Singapore-based bunker tanker owner Hai Soon Diesel & Trading, was recently fined $1 million in regards to APPS.

Published: 16 July, 2018
 

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Legal

Florida bunker supplier indicted over alleged USD 5 mil SEA Card fuel purchase fraud

Owner of Independent Marine Oil Services, allegedly submitted fake invoices to US Navy ships and other vessels through the SEA Card Program, which allows US vessels to purchase fuel from suppliers at ports.

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3 days ago

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June 20, 2025

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The US Department of Justice recently said a federal grand jury in Miami returned an indictment recently charging a Florida business owner with multiple counts of wire fraud, money laundering, and forgery for his alleged role in orchestrating a scheme to defraud the US Department of Defense and other federal agencies. 

He allegedly did so by submitting altered and fake invoices to US Navy ships and other vessels through the SEA Card Program, which allows US vessels to purchase critical fuel from suppliers at ports around the world.

According to court documents filed in the Southern District of Florida, between August 2022 and January 2024, Jasen Butler, 37, of Jupiter, Florida, the owner of Independent Marine Oil Services LLC, submitted dozens of falsified documents to multiple U.S. warships — including the USS Patriot — demanding and receiving over USD 5 million dollars in payments for phony expenses that Butler had not incurred. 

These ships were attempting to purchase fuel in international ports such as Saudi Arabia, Singapore, and Croatia, among others. Butler also concealed his identity from government officials by using a false name and feigning employment by a fictitious fuel division of a different company. As alleged in the indictment, Butler used the millions in fraud proceeds to personally enrich himself and purchase multiple properties, including in Florida and Colorado. 

“This indictment sends a clear, public message: the Antitrust Division and its Procurement Collusion Strike Force under President Trump will not rest until all who defraud the brave men and women of the U.S. military and the American taxpayers receive swift justice,” said Assistant Attorney General Abigail A. Slater of the Justice Department’s Antitrust Division.

“Our office is steadfast in its commitment to prosecute individuals that seek to unjustly profit at the expense of the U.S. military,” said U.S. Attorney Hayden P. O’Byrne for the Southern District of Florida. “Such fraud undermines military readiness and jeopardizes the dedicated service members who selflessly defend our country.”

“Mr. Butler’s alleged involvement in unlawfully submitting fraudulent invoices related to U.S. naval ships receiving fuel during port visits is an affront to the warfighter and taxpayer,” said Special Agent in Charge Greg Gross of the Naval Criminal Investigative Service (NCIS) Economic Crimes Field Office. “NCIS remains committed to thoroughly investigating those who commit fraud impacting the Department of Navy.”

“Those who exploit the Department of Defense for personal gain — by inflating costs, falsifying bids, or manipulating the contracting process — will be relentlessly pursued and held accountable,” said Special Agent in Charge Jason Sargenski of the Department of Defense Office of Inspector General Defense Criminal Investigative Service (DCIS), Southeast Field Office. 

“DCIS and our law enforcement partners remain unwavering in our mission to protect taxpayer dollars and preserve the integrity of DoD contracts that directly support our nation’s warfighters.”

If convicted, Butler faces maximum penalties of 20 years in prison for each count of wire fraud, up to 10 years for each count of forgery, and up to 10 years for each count of money laundering. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. 

The case was investigated by the Coast Guard Investigative Service, Defense Criminal Investigative Service, and Naval Criminal Investigative Service.

 

Photo credit: Pepi Stojanovski from Unsplash
Published: 20 June, 2025

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Sanctions

UK slaps sanctions on bunker company and Russian shadow fleet of oil tankers

Government has imposed sanctions on 20 oil tankers and Rosneft’s bunker fuel trading subsidiary Rosneft Marine (UK) Limited, in its latest action targeting Russia’s financial, military and energy sectors.
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June 19, 2025

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The UK government on Tuesday (17 June) has imposed sanctions on 20 oil tankers and Rosneft’s bunker fuel trading subsidiary Rosneft Marine (UK) Limited, in its latest action targeting Russia’s financial, military and energy sectors.

The new sanctions crack down further on Russia’s shadow fleet, targeting 20 of oil tankers. The UK is also tightening the net around those who enable Putin’s illicit oil trade, sanctioning Orion Star Group LLC and Valegro LLC-FZ, for their role in crewing and managing shadow fleet vessels. 
The action also targets Russia’s military capabilities, hitting the military agency leading the development of Russia’s underwater intelligence gathering operations (GUGI), protecting the UK from attacks on subsea infrastructure, restricting Putin’s war machine and increasing our security at home. 

“These sanctions strike right at the heart of Putin’s war machine, choking off his ability to continue his barbaric war in Ukraine,” Prime Minister Keir Starmer said.

“We know that our sanctions are hitting hard, so while Putin shows total disregard for peace, we will not hesitate to keep tightening the screws.

“The threat posed by Russia cannot be underestimated, so I’m determined to take every step necessary to protect our national security and keep our country safe and secure.”

According to Rosneft’s website, Rosneft Marine UK, a Rosneft trading division, was established in 2010 to carry out bunker fuel trading for international cargo shipping.

In 2010, an office was opened in London, then in Beijing in 2012.

 

Photo credit: balesstudio on Unsplash
Published: 19 June, 2025

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Winding up

Singapore: Annual general meetings scheduled for Xihe Holdings subsidiaries

Annual general meetings of companies/creditors will be held for Xin Chun Shipping and Xin Dun Shipping on 1 July respectively, according to Government Gazette notices.
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5 days ago

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June 18, 2025

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Notices were published on the Government Gazette on Tuesday (17 June) regarding scheduled annual meetings, to be held by electronic means, for two Xihe Holdings subsidiaries Xin Chun Shipping Pte Ltd and Xin Dun Shipping Pte Ltd.

Annual general meetings for Xin Chun Shipping are to be held on 1 July at the following times:

For the company: 10am
For the creditors: 11am 

Annual general meeting for Xin Dun Shipping are to be held on 1 July at the following times:

For the company: 2pm
For the creditors: 3pm

AGENDA

  • To receive an update on the liquidation.
  • To receive an account of the Liquidators’ acts and dealings, and of the conduct of the winding up.

The following are the details of the liquidator:

Ho May Kee
Liquidator
c/o 8 Marina View
#40-04/05 Asia Square Tower 1
Singapore 018960

Xihe Holdings Pte Ltd and its subsidiaries are owned by the Lim family, who are also the owners of the embattled Hin Leong Trading.

Related: JMs: First creditors meeting of Xihe Holdings subsidiaries to be held in January 2021

 

Photo credit: Benjamin-Child
Published: 18 June, 2025

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