Department of Justice Seal

OSG Press Conference
Boston, Massachusetts

December 19, 2006

       Thank you and good morning.

       Our oceans face many threats today, including the serious threat of pollution.  The Justice Department takes seriously its obligation to enforce our environmental laws, and has aggressively pursued and prosecuted companies and individuals who have engaged in the illegal and deliberate pollution of our waters.  We are here today to announce the latest success in our efforts to combat this sobering crime.

       Today, Overseas Shipholding Group, Inc., (OSG) has agreed to plead guilty to 33-counts related to illegal dumping from 12 ships in six major U.S. ports.  These charges include felony violations of:

       As part of this landmark plea agreement, OSG will pay a record $37 million—the largest-ever criminal penalty for illegal dumping.  Almost $10 million of the total amount will fund marine environmental projects on both the Atlantic and Pacific coasts.  In addition, OSG will be subject to a three-year term of probation during which the company will be subject to a stringent Environmental Compliance Program, review by outside independent auditors, and a court-appointed monitor as well as government review.

       This is an extremely important prosecution that will have lasting, positive effects on our oceans.

       In a joint factual statement entered with the court today, OSG admits that it was responsible for dumping hundreds of thousands of gallons of oily sludge and bilge into the ocean.  In this case, both oil-contaminated bilge waste and sludge were discharged overboard.  Bilge waste comes from mixing of water and oil that drips from machinery equipment in the bottom of a vessel.  Processed properly, water containing 15 parts per million or less may be discharged overboard.  Sludge comes from the purification of fuel and lubricating oil.

       On one ship, the M/T Overseas Shirley, it was estimated that 153 cubic meters (over 40,000 gallons) was discharged intentionally.  On another ship, the M/T Neptune, approximately 2,600 gallons of sludge and oily mixtures were deliberately discharged off the coast of North Carolina and then concealed with false records.  Discharges also occurred off the coast of New England and in the Gulf of Mexico.

       This oily waste was dumped regularly, intentionally and without regard for the laws that protect our waters from harm and pollution.  These crimes were committed through the fabrication of documents that log the amount of discharged oil and bilge; through the bypassing of required pollution prevention equipment; by dumping at night when the activity was easier to conceal; and through conspiracy to hide these crimes from Coast Guard officials during routine inspections.

       The extent of the pollution is serious, although the full extent is unknowable due to concealment with false logs used and presented while ships were visiting our ports and hiding bypass equipment.  In some cases, pipes were painted after illegal discharges to hide traces of the crime.

       In short, the facts of this case show a high level of awareness of guilt by those involved, including senior engineers responsible for huge oil tankers.  But it would be wrong to assume that the problem of intentional pollution and falsification of records is a problem that only involves ship engineers.  The nature and scope of the crimes committed by OSG show management to be ultimately responsible. These crimes continued not only after many similar prosecutions beginning in 1992, but in some instances continued during this criminal investigation.

       Like most white collar crime and cases of this type, there was a financial motive.  OSG’s actions avoided the costs of offloading sludge and oily waste in port, and, perhaps most significantly, to minimize the time that was required to offload waste in port and to purchase the best available technology.

       As in all corporate environments, responsible management requires creating a culture of compliance instead of one of corruption.  In such cases, we expect that shore-side companies and managers will provide their ships with adequate resources to comply with the law, sending the message that their company is willing to pay the necessary costs to ensure that the law is being complied with.

       Ship owners and operators have long been on notice – if you want to do business in America and use American ports and waters, you had better tell the truth, comply with our laws and with international standards.

       We hope to send a message with this case: Lying to the United States Coast Guard and polluting the marine environment are rogue acts that will not be tolerated and will be subject to severe penalties.  While the harm to the environment from major ship accidents is well known, experts have indicated that more oil is discharged into the marine environment from deliberate and routine sources. Intentional bypassing of required pollution prevention equipment is especially reprehensible because it is deliberate and done with full knowledge of its illegality.

       It is important for us to note that OSG cooperated with the government’s investigation in certain respects and also has taken extensive compliance measures.  While some of it was late in the game–after the government’s was almost complete and after representations made to the government proved erroneous, it was also significant to the success of the prosecution.  OSG has received credit for these disclosures in that each is charged with a single count.

       This prosecution has been a multi-district effort, involving more than three years of investigating and close coordination between the Environmental Crimes Section and the U.S. Attorneys Offices from the Districts of Massachusetts, Maine, Eastern District of North Carolina, Eastern District of Texas, Central District of California, and Northern District of California.

       Our investigation of OSG could not have been possible without the efforts of our agency partners, especially the U.S. Coast Guard, that were involved in this effort on every coast. I also want to recognize Transport Canada for initially bringing this case to the attention of the United States – a shining example of international cooperation.

       The prosecution of environmental crime is a priority for federal law enforcement and I want to commend all of the individuals involved in seeing that justice was done.

       Thank you again for coming – now AUSA Freniere will make some comments.