Featured Article

Keeping ships afloat: Maritime fraud affects us all

International maritime fraudsters commit insurance fraud, forge bills of lading and invoices, tamper with ship fuels and much more. Maritime fraud slows supply chains and jacks up prices for products around the globe. Here’s how to find it and ameliorate it.



On July 5, 2011, the tanker ship, Brillante Virtuoso, which was carrying 140,000 metric tons of fuel oil, was drifting within Yemeni waters. Later in the day, a small boat with seven armed men approached the vessel. The men, who claimed to be a “security team” to escort the tanker through the Gulf of Aden from the Arabian Sea, hijacked the ship and demanded that the vessel proceed to Somalia.

Within an hour, the ship’s main engine inexplicably broke down, and the armed men set the vessel on fire and left. A U.S. warship rescued the Brillante Virtuoso. The vessel’s owner later sold it for scrap and filed an insurance claim for US$77 million. However, investigators discovered that the vessel’s owner had staged the hijacking to commit insurance fraud. (See “Brillante Virtuoso - an extraordinary attempt at maritime insurance fraud,” by Chris Zavos, Jo Ward, Suzy Oakley and Jacob Hooper, Kennedys Law, May 10, 2019.)

Fraud on the seas

The number of piracy and armed robbery incidents in Asia almost doubled in the first half of 2020, in which 51 incidents were reported versus 28 incidents in the same period a year earlier. (See “Piracy and armed robbery incidents in Asia almost double in H1 2020,” by Marcus Hand, Seatrade Maritime News, July 16.)

Illegal bunkering (“bunkering” is supplying fuel for ships) is estimated to cost companies and governments up to $3 billion a year. (See “Data science project initiated to tackle illegal bunkering,” by Lee Hong Liang, Seatrade Maritime News, Feb. 13.)

Seafarers International Research Centre’s (SIRC) recent research provides insights into many corrupt practices involving port officials, such as demands for cash payments, theft of products and equipment, facilitation gifts and fuel-supply fraud. (See “Film highlights corruption and theft faced by seafarers,” by Marcus Hand, Seatrade Maritime News, Feb. 25.)

These are just a few examples of fraud occurring within the maritime industry.

But why should you care about maritime fraud? Because it disrupts many supply chains and can add unneeded costs to your organization’s balance sheet.


For full access to story, members may sign in here.

Not a member? Click here to Join Now. Or Click here to sign up for a FREE TRIAL.


 Your Rating:
Your Review:
  
Reviews