Unhealthy / Fraudulent Practices in Shipping M Jagannath NAU Pte Ltd 07th Dec 2018

Unhealthy / Fraud Unhealthy – antonym of “healthy” i.e. something wrong Fraud – deliberate deception to secure unfair or unlawful gain or to deprive a victim of a legal right Talk on practices which Against the law (fraud) Frowned on (may not be against the law)

Talk will be on four parts Structure of the talk Unhealthy / Fraudulent practices Why do they happen Preventive measures Conclusion Talk will be on four parts

1. Unhealthy / Fraudulent practices 1a.Vessel Related 1b.Trade Related And can be a combination of both

1a. Unhealthy / Fraudulent practices Vessel related: Vessel condition and maintenance Crew competencies Payment of wages to crew Payment of vessel related expenses such as bunkers, repair charges, suppliers, etc Declaration of incorrect specifications Providing incorrect data say for Fuel (concealing the actual fuel used) Weather (to cover underperformance)

1a. Unhealthy / Fraudulent practices Vessel related: Improper operations related to Navigation Cargo stowage Bunkering / supply operations Vessel position – declaring incorrect vessel arrival dates Loading of cargo on deck Cargo pilferage Improper documents Piracy Insurance

1. Unhealthy / Fraudulent practices 1a.Vessel Related 1b.Trade Related And can be a combination of both

1b. Unhealthy / Fraudulent practices Misdeclaration of cargo Custom related DG related Bills of Lading Clean when cargo is damaged Back / Forward dating Fraudulent Bills Contraband cargo Improper pressure say delayed payment, reductions when contract has been completed, etc

1b. Unhealthy / Fraudulent practices Port related frauds Chartering frauds Bribery Cyber Fraud – remember the NotPetya Virus attack in 2017!

1b. Unhealthy / Fraudulent practices Dilatory tactics to deal with disputes Knowledge gap

2. Why does this happen? Competition Short term gains Commoditization of Freight Value proposition Short term gains Knowledge / skills gap System / Subsystem approach

Container Fires! Verified Gross Mass implemented from 01 July 2016 What about verification of cargo? Any criminal sanctions for mis-declaration

3. Preventive measures KYC (Know your customer / counterparty) Develop relationships / partnerships Employ the right people with right knowledge and skills

4. Conclusion Shipping Transcends multiple locations / borders Challenges will remain and it is upon parties to be alert Focus on core competencies Risk management attitude Seek professional expertise

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