CARGO COMPANY INDIVIDUALS INDICTED FOR DUMPING OIL CONTAMINATED GRAIN AND CONSPIRING TO CONCEAL THEIR ACTIVITIES

MIAMI, FL - Thomas L. Sansonetti, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division and Marcos Daniel Jiménez, U.S. Attorney for the Southern District of Florida today announced that three senior executives, a marine superintendent and two licensed ship-board officers, were indicted by a federal grand jury in Miami, Florida, for their role in overboard dumping of part of an oil-contaminated grain cargo from the SS Juneau, a U.S. flag vessel, into the waters of the South China Sea in early February, 1999 and their efforts to impede the United States Coast Guard and other authorities from learning of the illegal conduct.

The defendants named in the charges are: Rick D. Stickle, Chairman and CEO of Sabine Transportation, Inc., a Cedar Rapids, Iowa based company; Michael R. Reeve, President of Sabine; John Karayannides, Vice President of Operations; Michael M. Krider, Port Engineer; George K. McKay, Master of the SS Juneau; and Philip J. Hitchens, Chief Officer of the SS Juneau.

“We are committed to bringing to justice those who seek to pollute our waters, lie to our government and endanger our well-being,” said Tom Sansonetti, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Companies and individuals who navigate our waters should take note that we are keeping a watchful eye.”

“This prosecution reflects the commitment of this District to seek out those who would degrade the environment for profit and hold them accountable,” said Marcos Daniel Jiménez, U.S. Attorney for the Southern District of Florida. “We will not tolerate the use of the oceans as a dumping ground for unscrupulous operators. We will aggressively pursue these operators no matter where they are or how long it takes to hold them accountable for their actions.”

Sabine Transportation, Inc., according to court documents, was at the time in the business of managing and operating United States flagged oceangoing vessels in the transportation of various dry and liquid commercial cargos. Sabine had previously pled guilty to criminal charges in federal court in Cedar Rapids, Iowa which included the conduct underlying the indictment announced today against the six individuals in Miami. Sabine admitted as part of the criminal conduct to discharging an oily mixture of approximately 440 tons of diesel oil contaminated grain and agreed to pay a $200,000 criminal fine with respect to the dumping incident and an additional $1.8 million as a result of the other charges against it.

The government’s investigation began when the SS Juneau arrived in Portland, Oregon at the end of her voyage and crew members alerted Coast Guard personnel there that a diesel oil leak into one of Juneau’s main cargo tanks was discovered while the humanitarian shipment of grain was being off-loaded in Bangladesh in December of 1998. According to the information provided, approximately 442 metric tons of wheat became saturated with the oil and could not be off-loaded.

Allegedly, over the course of the following month, while in Bangladeshi waters and later during a dry docking in Singapore, company officials and vessel officers discussed various ways of off-loading the cargo legally, but this option was ultimately rejected as too expensive. Instead, company officials intentionally mislead Coast Guard officers in Singapore and Portland by failing to disclose the true nature of the contaminated residue and seeking authorization to discharge the residue at sea under the guise of it merely being an oily waste. Such wastes can ordinarily be processed through an oil pollution prevention device on a ship, which would limit any oily waste discharge to the standards set by U.S. and international law. The Sabine officers and employees were well aware, according to the allegations of the indictment and other court documents, that discharging the oil-laden mixture in this fashion from the SS Juneau was not feasible since the monitoring system was designed to handle liquids and not solids.

Although concealed from the Coast Guard at the time, Sabine’s executives allegedly had decided to hire a team of 15 Bulgarian nationals and several technicians to board the SS Juneau in Singapore and directly discharge the contaminated wheat into the ocean during the return vovage to the United States. During the first week of February 1999, the SS Juneau, while transiting the South China Sea, emptied the contaminated cargo tank and failed to report the discharge to the U.S. Coast Guard as required by law.

The indictment alleges that the defendants engaged in a multi-purpose conspiracy to illegally discharge the oil contaminated grain at sea; to obstruct a proceeding initiated by the United States Coast Guard by presenting the Coast Guard false and misleading statements and records; and to defraud the United States by hampering and impeding the Coast Guard and the Department of Agriculture in their efforts to enforce environmental laws and the laws and regulations governing the carriage and delivery of donated agricultural commodities.

Counts 1 and 2 of the indictment charge felony violations of U.S. law, each of which carries possible penalties of up to five years imprisonment and a criminal fine of the greater of $250,000 per count or twice the gain or loss caused by the relevant conduct. Count 3, charging Michael M. Krider with false pretenses, carries a possible penalty of up to one year imprisonment and a fine of the greater of $100,000, or twice the gain or loss caused by the relevant conduct.

The investigation was conducted by the United States Environmental Protection Agency - Criminal Investigation Division, the Coast Guard Investigative Service, and the Federal Bureau of Investigation. The case is being prosecuted by the U.S. Attorney’s Office for the Southern District of Florida, the United States Attorney’s Office for the Northern District of Iowa, and the Environmental Crimes Section of the U.S. Department of Justice.

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