Thefts and misappropriations are very common in any industry. Marine industry is certainly no different. At various times, incidences of frauds, thefts, misappropriations of funds and manipulations come forth. Some are minor while others really make an impact on the world. Sometimes, we come across frauds of a scale that has made economists and experts of the marine industry sit and think about the technical aspects, needs and circumstances of such frauds. Here is a sneak peek into what probably goes on behind such frauds.
Frauds that occur most commonly in marine world are thefts on ships and other ocean going vessels. Stealing of cargo, especially during times of high fuel cost is common. Such thefts can be appropriated by the owners or the clients.
Either way, the frauds and thefts continue to get more technical and treacherous but good thing is that the vigilance for the same has also been increasing immensely.
Owners’ mediated thefts
Thefts by owners are often related to cutting down costs of running the ships. This mainly comes in the form of saving or misappropriating fuel costs. The owners generally have a program for recovering slops and ROB cargo for use as a fuel. However, this otherwise legal procedure becomes a theft when the cargo becomes unsafe for use or the quantities of ROB are artificially being increased on the ship.
This can be done using poor discharge techniques. The owner is responsible for such a theft by encouraging the ship’s crew to increase the amount of ROB at completion of the discharge. Sometimes, they also edge the crew to sell off the cargo en route. And the benefits for the crew for such misappropriations come in form of promises for employment extension, better facilities and cash payments.
Sure, some thefts like these might pay off or look promising to begin with. But they always run a short course. Such tasks are often easily picked up by the vigilance authority and a suitable action against the owner always ensues.
Another clever way of cargo theft is to manipulate cargo calculation on board to be able to wade of a subsequent theft. Crew members pull this theft off by preparing a separate set of ullage tables for the ship’s tanks. These tables necessarily show lesser amount in the tanks than the true quantity. At the discharge port, these tables are presented for cargo calculation. This makes it appear that no cargo has been taken off the tanks when in reality it is being concealed. Clever as this feat might be, port vigilance staff can easily prevent such a theft by ensuring an imprint of independent petroleum inspection companied or other such authorities on the ullage tables.
Crew mediated thefts
Sometimes crew members can also mix up their intentions leading into crimes. Thefts by crew members are just as common. Many times, master and officers of a tanker sell off a cargo while en route without authorization from the owner.
This makes for a serious crime and can easily be detected by owners or the managers. Besides, the money made this way is barely enough to grease palms of all those involved. That too, makes it much easier to detect such thefts.
Careful crew selection is fairly important to be able to prevent being skimmed off by crew in charge of the tanker. This is often contradicted by the recruitment policy that focuses more on getting the cheapest employment available.
In such circumstances, it comes as no surprise that employees turn to not so justified means for some extra money. As such, it becomes necessary to carefully select the staff before they are made responsible for anything at all. And since this kind of theft directly hampers with the company and the owner’s image too, it becomes further more important for proper employment practices t be used.
Detection and the aftermath
As it has been made clear, detection of any of these thefts is fairly easy and quick. With improving vigilance, theft and fraud detection has only become quicker and more efficient. Besides the owners’ discretion, independent surveyors and out-turn audit specialists are also involved on a routinely basis for close inspection of cargo shipment. The performance is closely watched, noted and evaluated to spot any anomaly in the functioning.
Computers have made this job further easier as they are now capable of performing extremely detailed ship analysis. With help of these computers and automation systems, performance of everything from individual fleet to a particular company can be evaluated uniformly. Under these evaluations, outrun results of same cargoes going over the same routes are closely monitored. The institute of Petroleum guide had earlier set an allowance limit between 0.5% to 0.63%. But this limit is no longer acceptable by most cargo owners and clients.
With increased knowledge of risks involved in the same, both owners and clients are aware of the extent of damage that can be expected on a typical cargo voyage. Anything outside that limit can be claimed for. At present, these voyage losses have been placed between 0.35% to 0. 15%. The amounts available between best outrun performance and acceptable loss allowance lies around 2000 bbl on a 250,000 DWT tanker. A crew can make a maximum of $20,000 by sneaking this much cargo. Compared against the odds of losing their job, reputation and seriously jeopardizing all future prospects, the sum turns out to be quite negligible.
Since the detection of such cons is extremely easy now, the aftermath is not pretty at all. A cargo theft can lead to loss of career to loss of life in some cases. When crude oil is diverted for use as fuel, the low flash point can lead to engine room fires along with explosions. Such a ship, if in port, will be evicted from the port and the fuel will be removed. This is followed by cleaning the tanks of any remnant fuel or gas. Such an incident leads to strict action against the chief engineer who was in charge of the ship carrying low flash point fuel.
Similar actions are taken against crew involved in cargo theft or fraud. The action involves suspension or revoking license of the engineer, not to mention serious damage to his position in the industry. Penalties are also imposed in case a ship with false cargo ullage tables is found. But here, depending on the members involved, responsibility may be borne by the owner of the crew members. In case the chief officer is found guilty of the crime, an arrest can be made for the same. Besides, a fine of USD 250,000 can be imposed on the owner for carrying ullage tables on board that did not belong to that ship.
Even though at times, thefts and fraud may seem like the easier way out, it becomes clear now that they run an extremely short course. The prudent thing to do will be to stay clean from such thefts. It’s always better to shut a business that no longer is beneficial instead of having to resort to such thefts to cover losses because what remains in end is only the mess to deal with and certainly no gains.