INSPECTION AND SALVAGE
It is quite usual in cases of marine fraud that many elements of a claimant’s “story” are true, but mixed with untruths, to try and fabricate a supporting feasible account.
In this case, the owner had referred to the cause of the fire as the diesel generator that he had started, to make a cup of coffee. This action seemed odd for someone heading ashore to join his crew for an eating and drinking session.
The generator therefore was our preliminary target for inspection, on the basis that elements of the owner’s account up to this point were probably true.
In his statement to us the owner said that the generator had recently been fully serviced by the manufacturers and although it had been used many times since, it had not been used for a few weeks.
Underwater examination of the diesel generator immediately revealed that the fuel injector supply pipe from the fuel filter to the injector in one of the cylinders had been unscrewed from the threaded fitting and was hanging loosely. It became apparent, following later tests, that there would be substantial fuel leakage from the fuel feed pipe during operation. The generator was removed from the vessel to the shore and retained for forensic examination.
During subsequent days, the salvage team together with our fire experts, carefully removed sections of the wreck under our supervision. We should mention that the hull was constructed entirely of wood.Sections of the wooden hull remains and absorbent materials such as carpets and similar items were first removed and preserved for forensic examination. It was obvious from immediate local examination that an accelerant (believed to be petrol) was firmly impregnated in items removed. This quickly suggested that the fire had been started deliberately. In addition, an empty steel can that was intended to be used onboard for diesel fuel, had contained petrol. The can was found in the accommodation flooring area.
On the basis that diesel fuel has a high flash point between 52 and 96 degrees centigrade and the generator (according to the two witnesses) had only just been started, this tended to suggest that there was no heat in the exhaust.
This therefore eliminated the scenario that the fire had started from a generator malfunction and subsequent leaking diesel fuel. The discovery of an accelerant in the accommodation area and the empty petrol filled can was sufficient evidence to turn the enquiry into a serious fraud investigation.
We obtained all possible evidence on the island and the salvage operation was completed. The physical evidence was packed and transported to the forensic science laboratory in the UK for careful examination. We departed the island and set up an extensive actioned investigation back at base.
Prior to leaving the island the Captain “B” took me to one side and intimated that he had a great deal of information that he wished to impart to us. He declined to discuss this until he had been discharged as a crew member from the vessel, so was then free to obtain employment away from his current employer. We gave him our contact details and asked him to contact us as soon as he was able.
A few days later I received a call from the captain who advised that he had obtained a position on a cruising yacht in the Far East and that he was heading out there to join the vessel. He was unable to set a positive date and promised to email me when he was aware of his movements.
THE CAPTAIN’S SURPRISE EVIDENCE
A couple of weeks passed and we received an email from “B” in which he briefly advised that his yacht would be anchored off a Malaysian island on a given date when he would be available for a few hours to speak to us. We had no telephone contact numbers with which to call him so we agreed that we would meet him there.
My partner and I flew to the Far East and then boarded a small ferry boat to the subject island. The island was small and about 1 mile across from the main harbour to the other side which was a yacht anchorage. We had arrived the day before the appointed date and once we had booked into the only hotel on the island, we set off across to the anchorage bay to try and identify the yacht that “B” was on. There were no yachts in the bay, so we returned to the hotel. The next day we remained in the hotel, hoping that the yacht would arrive and on the basis that there was only one hotel on the island that “B” would have enough gumption to find us.
The day passed without incident and at around 17:00 hours whilst we were in our rooms, I received an internal telephone call, advising me that I had a visitor in the reception. I
summoned my colleague and we eagerly ran down to reception where “B” was standing and greeting us. He was friendly and looked eager to talk. My gut feeling was good.
He said he only had 3 hours before he had to return to his vessel, to then sail to a beach on the island where he intended to arrive in three days’ time. We therefore got straight down to work, choosing a quiet spot in the hotel.
“B” started to tell us that during his employment on the subject yacht he had become quite close to the owner who, from time to time, would discuss his problems with him. One of his problems was that he had run out of funds and needed to do something drastic to obtain money. The owner confided to “B” that he was fed up with his vessel and the overheads it was costing him; that he wished he could dispose of it and obtain its insurance value. He did not go into any details with “B” but was always intimating that the time was getting near and that he could not wait any longer. This was reflected by late payments, outstanding debts, inability to find funds for important items required by the Captain and a general tightening of the finances required to operate the vessel.
The Captain advised that following the grounding, the vessel sailed to a couple of mainland Eastern Mediterranean ports to complete its charter agreements. The damage to the keel was not repaired and the owner sent “doctored” photographs to his insurers, convincing them that he had completed repairs, so they would continue his insurance cover. The submitted photographs were from another maintenance period and made to appear that repairs had been completed satisfactorily.
He went on to explain that the vessel was in very poor condition and required some serious maintenance work and servicing for it to continue as a charter vessel. Such repairs would have cost in the region of Euro 200,000, which the owner was unable to raise. “B” could produce accurately written notes and photographs of all areas that had required serious attention.
During the interview, “B” was asked why the owner had started the generator purportedly to use 220-volt AC power to make coffee. “B” advised that it was absolute nonsense for him to have started a generator for this purpose as the vessel was connected to 220 volts AC shore power. It therefore had sufficient power to use the cooker without the need for the generator operation. This was a fatal mistake made by the owner who when questioned had advised that no shore power was connected. We later proved and supported the Captain’s comments that the shore power was indeed connected during the start of the fire, as it was disconnected by an independent quayside worker during the fire to allow the vessel to depart from the fuel quay.
Three hours had elapsed and the captain needed to return to his vessel. He promised to meet us at the beach rendezvous point in around three days.
We retreated to our rooms, then arranged to travel back to our destination on the main island and onwards to the beach the following day. We located a hotel in the area and rooms that overlooked the bay where we could keep a lookout for the yacht.
Four days passed and the yacht eventually arrived at an anchorage off the beach. “B” kept his word and arrived on the beach in the vessels tender. We retired to a quiet area nearby to talk. He had a full day free this time so we continued with the interview, recording his intermediate written statement. This also referred to photographic evidence he produced, showing the condition of the vessel, coupled with the plans and photographs that we had obtained for reference purposes.
We then learned that the bags which the owner and the crew member “E” had taken ashore, contained personal valuables that the owner had onboard and not carpets and souvenirs as previously stated. The valuables were items that had been displayed throughout the vessel and which had been removed and taken away that day. “B” advised that sometime after the fire, he had been summoned to the owner’s apartment to receive a pep talk and his outstanding salary. He stayed in the apartment for two days and was free to look around during a day when the owner was not there. “B” sighted all the valuables that the owner had removed from the vessel the day before the fire. These were either on display in the apartment or stowed away in drawers and cupboards.
These items had been listed on the insurance policy as the owner’s personal effects and had an insured value of Euro 120,000. “B” now realised that the owner had removed the articles from the vessel to save them from the fire that he had planned and was going to make a claim for them on the insurance policy as having been lost in the fire.
“B” took photographs of every item that had been onboard prior to the fire and was able to produce these photographs in evidence.
“B” also advised us that the crew member “E” was a petty criminal and a man that could not be trusted, but was close to the owner. “E” had stolen a credit card and used this on many occasions to purchase personal items from local shops. He would brag to all crew members about how clever he was. This tended to support our own theories about “E” and coupled to other aspects led to him being discredited as a witness.
Before departing, the Captain confidentially advised us that the owner was aware of his knowledge of the vessel and his intentions and before he left the subject vessel, the owner threatened him and told him that if he revealed any of his knowledge to third parties or the insurance company he would be subject to nasty consequences. The Captain was therefore quite fearful of these threats, especially as it was well known that the owner was involved with the mafia and had world-wide connections.
The Captain’s reasons for informing on the owner were two-fold. Firstly, he was an honest career seafarer who believed in justice and distinctly abhorred the owner’s way of dealing with things, which put lives and property at risk. Secondly, he had lost all his personal belongings and that of his girlfriend (crew member “C”, who served onboard the vessel as cook and stewardess) so he wanted to be compensated for these losses by the insurance company, which was covered under the terms of the policy.
THE ENSUING INVESTIGATION
We returned to base and discussed our findings with the insurance underwriters, outlining our fears that the captain was vulnerable and at some stage in the enquiry he would require protection.
Our enquiries continued with the research into the owner, his assets and connections to ascertain his background and to identify and reinforce his motive for sinking the vessel for insurance.
Enquiries revealed that the yacht value was in serious question, in that a surveyor who had been employed by the owner a few months before the incident had produced a report stating that the vessel was valued at 3 million Euros. From our experience of valuing yachts over decades, we believed the yacht was well overvalued, by as much as 45% on the current market.
We identified the surveyor, traced him to Greece and interviewed him regarding his valuation. It was not long before the surveyor admitted that he had been threatened by the owner to provide an over valuation on a vessel he knew was in poor condition. Also knowing the owner’s connections, he agreed to do this to avoid any bad consequences which he believed the owner was capable of through his connections. The surveyor, knowing the consequences to his career of making false statements and faced with our assessment of the value of the vessel, had no choice than to make a full and frank written admission.
THE TWIST IN THE TALE
Whilst engaged on the enquiry, we received a call from a man in Croatia who purported to have information on the owner in respect of another vessel that had been sunk deliberately for insurance purposes. The informant was anonymous and we were highly suspicious of the call. We suspected it may be a setup and arranged to meet the informant in Croatia the following day.
A team of 3 of us set off for Croatia. We travelled separately and used covert communications. Upon disembarking the aircraft we took up separate positions in the airport, where we could observe each other and the peripherals to enable us to sight anyone that may be following either of us. We had set a rendezvous point at a specific hotel and made our separate ways to the destination. As it evolved nobody appeared to show any interest in either of us.
I had a telephone number for the informant, so called him and set up a meeting at another hotel in town. My operatives kept away from the meeting and set up covert static observation points on the meeting.
The informant arrived and introduced himself as a marine surveyor. He said he had been appointed by a foreign insurance company to investigate the loss by sinking of a 30-metre sailing yacht off the coast of Croatia. It appeared proven through the local preliminary court hearings that the same owner “A” had deliberately sunk his vessel for the insurance pay out and Criminal as well as Civil cases were involved.
Whilst this was a complicated case, it had been proven on motive and from witness evidence that the owner had deliberately sunk the vessel.
Whilst this was most certainly valuable information which could serve a two-fold purpose; i.e. a) to show character and like offences and b) this could be brought to the attention of a European court, it was not deemed sufficient to allow official cross border transfer of the case circumstances and results to our courts for consideration in support of the current claim. This was because it did not form part of the evidence in the current case. Just because the defendant was guilty of a similar insurance fraud, this did not make him guilty of the current suspected fraud for which an independent trial would be held.
THE SILENT WITNESS
Several months elapsed and a major enquiry was ongoing into all aspects of the case. It was decided to approach the crew member “E” to clarify his evidence and involvement. He was known to be a dishonest person and this was proven by visits to retailers where a stolen credit card had been used to purchase goods. The circumstances as described by witnesses indicated that he was probably acting in collusion with the owner and certainly appeared to know more about the incident than he had stated.
We telephoned “E” and requested an interview, which was to take place on board a yacht in the Western Mediterranean. We were by now wary that “E” was on the owner’s “payroll” and therefore had to be careful with our approach. A colleague and I arrived onboard the yacht and interviewed “E” unaware that he had a recording device in place. “E” would not change his story or admit that he had any knowledge of how the fire started or what was in the bags that were taken ashore. He did admit to stealing a credit card and making purchases with same. We told that this latter matter was already in the hands of the Police.
The interview became quite heated. We advised him to take the opportunity to provide a truthful version of the events, being aware that many of his explanations had been untruthful and that we suspected that he was being manipulated by the owner. Despite this he was not co-operative and he was then advised that the matter would be reported to the Police and he would have to face the consequences. He was also told that he would lose the right to compensation for the loss of his personal goods which were purportedly destroyed in the fire.(Note: The tape recording of this interview was later presented in the bundle of evidence provided by the defence lawyers during the disclosure procedure). Whilst the tape recording was inadmissible as evidence in court without my consent, I provided consent for it to be admitted in evidence and this was played to the court during the trial).
“E” acted in a very sullen, cheeky and distrusting manner during the interview which made it even more obvious that he was hiding a great deal of information.
At some later stage, “E” telephoned me and indicated that he was willing to talk about the case and change his story. Arrangements were therefore made and costs were covered with the full knowledge of our legal team to transport him to our base country for further interview. We maintained the suspicion that he may still be manipulated by the owner and that there was a possibility that he may be travelling with the owner, therefore we mounted a surveillance at the airport and sighted “E” together with an unknown male friend arrive and pick up a hire car and drive to a local hotel near to our office.We had made a prior appointment to have him call us when he arrived so that an immediate interview could be arranged. He did not call us and proceeded to book into the hotel with his friend and then immediately leave the hotel on a sight-seeing trip around the town.
We maintained the surveillance throughout that day and evening and apart from them visiting local bars and restaurants no call was received.
The following day “E” arrived at our office, smug and cheeky as usual and when we began to interview him, he merely stated that his story was as before and that he simply wanted a holiday at the insurer’s expense. Unfortunately, he had been paid his costs in advance by the insurance company, therefore there was no way of claiming them back. These circumstances were logged and provided to the legal team.
As time marched on, the enquiry unfolded further and a great deal of more evidence was discovered, too much in fact to list on an article of this nature. Suffice to say that this was all supporting evidence towards the owner’s motive, capabilities and bad character.
To be continued….
Submitted by Full member F2016 - Ray Ashton of RA & A (UK) Ltd. See www.rayashton.eu for further info.