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

2. 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)

3. 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

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

5. 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)

6. 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

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

8. 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

9. 1b. Unhealthy / Fraudulent practices
Port related frauds Chartering frauds
Bribery
Cyber Fraud – remember the NotPetya Virus attack in 2017!

10. 1b. Unhealthy / Fraudulent practices
Dilatory tactics to deal with disputes Knowledge gap

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

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

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

14. 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

15. THANK YOU