Maritime Fraud: Identify & Report Illegal Activities Onboard

Discover the dark side of the shipping industry and stay informed about the prevalence and harmful impact of maritime fraud.

Discover the dark side of the shipping industry and learn about the prevalence of maritime fraud. From manipulating stores and victualling invoices to selling ship stores or cargo, corrupt individuals can make life miserable for seafarers. Find out how whistleblowers, technology, better regulations, and training can help combat this issue and prevent damage to the industry’s reputation. Stay informed and protect yourself from the harmful impact of maritime fraud.

The dark side of the shipping industry

Are you curious to know about the dark side of the shipping industry? As a seafarer, you might have faced issues like food shortages, salary problems, engine breakdowns, or even been abandoned by your employer. However, one of the most prevalent problems on board is maritime fraud. Corrupt masters, chief engineers, and chief officers, in collusion with other shore-based entities, can make life miserable for their crew. This often leads to obtaining goods or services from other parties unjustly or illegally, which is known as maritime fraud.

Role of the International Maritime Bureau (IMB)

Maritime fraud can occur anywhere on board the vessel, in shipping company offices, or in trading companies transporting goods by sea. Therefore, the International Maritime Bureau (IMB) was initiated in 1981 as a specialized division of the International Chamber of Commerce (ICC) to detect, inform, and combat such frauds. The IMB is a non-profit organization, and the International Maritime Organisation (IMO) has urged governments, organizations, and interested parties to cooperate and exchange information to combat maritime fraud worldwide.

Types of Maritime Fraud

Note that, some of the easily detectable maritime frauds on board include:

  • Master or chief steward manipulating stores and victualling invoices and sharing the loot with the supplier;
  • Senior deck officers or ship’s crew selling ship stores or cargo;
  • Senior ship engineers sell bunkers, and substandard machinery spares, and manipulate the shortage through cargo residues on oil tankers;
  • Senior deck officers manipulating B/L figures;
  • Ship superintendents acting alone or in liaison with senior deck officers inflating invoices with stores/spares and/or repair work not carried out in repair yards;
  • Cargo surveyors in liaison with senior deck officers, manipulate daily outturn figures to boost their ratings. (most common on bulk carriers);

Ship manning agents also play a crucial role in committing maritime fraud. They may manipulate the salaries of the ship’s crew or supply uncertified crew on board for a lower salary using fake certificates and CDCs.

  • Agents, stevedores, and suppliers inflate invoices in liaison with senior officers on board;
  • Senior officers on board alter Oil record book figures to hide deficiencies in ship machinery and pump residues overboard through portable hoses;
  • Deck officers manipulate cargo figures on oil tankers and pumping residues (diesel) to bunker tanks in liaison with shipowner, and managers;
  • Ship’s crew and/or Master illegally carrying stowaways intentionally or contraband on board;
  • Insurance frauds committed by ship owners/Managers by manipulating ship records in liaison with ship officers and Master, which may include death on board (Homicides shown as suicides);
Chief Engineer Sentenced to Prison for Discharging Oily Waste
Chief Engineer imprisoned for discharging oily waste

The US Department of Justice imprisoned a C. Engineer for discharging approximately 10,000 gallons of oil-contaminated bilge water overboard.

Ship Nerd
Detecting & Preventing Maritime Fraud

It is essential to remain vigilant and identify other frauds not reported in this article and bring them to the notice of the port authorities. Seafarers have many choices today to collect evidence against fraud committed on board. These include intrinsically safe cameras for hazardous environments and various spy gadgets for indoor use. Moreover, the crew should never get blackmailed or coerced by seniors for environment-related issues. Report quality issues and shortages to the master, and two or more crew members should counter-sign all the invoices.

Importance of Whistleblowers

Whistleblowers play a crucial role in exposing maritime fraud. They provide the authorities with essential information and evidence that can help bring the culprits to justice. It is important to encourage and protect whistleblowers to ensure that they can come forward without fear of retaliation.

Whistleblowers are handsomely rewarded these days, as happened in the case of a 3rd engineer who provided substantial evidence to the US Coast Guard years ago, causing environmental pollution. While the chief engineer received a long prison sentence, the junior engineer was awarded a million dollars and US citizenship.

Role of Technology

Technology is significantly important in detecting and preventing maritime fraud. Electronic monitoring systems, such as AIS (Automatic Identification System), can help track vessel movements and identify suspicious activities. Smart contracts and blockchain technology can help ensure transparency in maritime transactions, reducing the scope for fraud.

Need for better regulations

Despite the efforts of organizations like the International Maritime Bureau (IMB), maritime fraud remains a significant problem. There is a need for better regulations and stricter enforcement to deter fraudulent activities. Governments and industry organizations must work together to develop effective strategies to combat maritime fraud.

Impact on the maritime industry

Overall, maritime fraud not only harm the seafarers who are directly affected but also has a broader impact on the maritime industry. They erode trust and confidence in the industry and can damage the reputation of legitimate players. It should be in the interest of all stakeholders to work together to eliminate fraud from the maritime sector.

Importance of training and awareness

At last, seafarers must be trained to identify and report fraudulent activities. They must be aware of their rights and responsibilities and understand the consequences of participating in illegal activities. Companies must provide regular training and support to their employees to ensure that they remain vigilant and report any suspicious activities.

See Also
Injury Fatality
What is SIF: Serious Injury and Fatality?

Understanding SIF (Serious Injury & Fatality) which includes investigating incidents, near-misses, and hazardous conditions.

Ship Nerd