The nature of the shipping industry includes many players and jurisdictions involved in a single shipment of goods. This situation presents a myriad of potential pitfalls where the unscrupulous criminal lurks and seeks to take advantage of the unprepared. The fraud may come in the form of minor cheating or a multi-million dollar scam.
During the recent past, maritime commerce has encountered a sharp increase in the number of fraud cases, as well as the methods in which they occur and are carried out. With the increased use of technology in our daily lives, the methods used to carry out fraud have become more sophisticated in their design and execution. Although technology has caused a change in the types of fraud, we are still seeing many methods of fraud that are the old-fashioned, hardcopy document fraud in the maritime industry. Types of maritime fraud include but are not limited to:
- Cargo and documents
- Fake jobs
- Information phishing
- Workers’ compensation
An Example of Fraud: Bunkering
According to the Corrupt Practices Investigation Bureau, bunkering refers to the actual pumping of fuel into ships. Each bunker barge has a bunker surveyor responsible for keeping the records to reflect the amount and grade of fuel that has been supplied to the vessel. The company then bills the owners of the vessels based on the records submitted by the bunker surveyors. As a result of "Operation Debunk," the Bureau uncovered a large-scale syndicated bribery scam involving 70 people from a bunkering services company who were bribed to falsely declare the quantity and quality of fuel supplied to the ship. They cited an example: a director of Navi Marine Services Pte Ltd., a company that supplies marine fuel to vessels, gave bribes of $109,804 to 42 bunker surveyors in return for favors. The bunker surveyors would confirm that the fuel supplied was of a higher grade and helped to short-supply the fuel to the ships. This is an excellent example of the cost of maritime fraud. After investigations, the director was sentenced to 10 months' imprisonment and fined $410,000.
How Can We Decrease Fraud?
Combating fraud starts with top management and includes educating the industry. Management must become aware of the risk of fraud likely to occur in their specific setting. A firm that is well prepared and alert is less likely to become a target of fraudsters. It is important to remember that complacency is the best ally of fraudsters. Preventing fraud is not an easy undertaking, and it requires continuous involvement on the part of the entire industry. Those who take this problem lightly will most likely be the biggest losers. It is incumbent upon our maritime community to begin to develop informed strategies and safeguards to combat this crime in the workplace. Routine audits, “secret shoppers,” covert cameras, anonymous reporting, and unwavering prosecution of any cases are just a few ways to help mitigate fraud.
About the Author
Charles E. Ciccotti, a registered private investigator since 2004, is the Director of Investigations at Coastal Virginia Investigations. His prior experience includes 27 years of service with the Virginia State Police, most recently as a Sergeant. He is the also the founder of Ciccotti Enterprises, Inc., Private Investigation and Consultant Services. Charles earned a degree in governmental administration from Christopher Newport University and obtained a post-baccalaureate certificate in criminal justice administration from Virginia Commonwealth University. He can be reached at (757) 251-7000 or firstname.lastname@example.org.
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