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Matson fined for
falsifying ship’s log

The company agrees
to pay $3 million to
the federal government

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By Russ Lynch
Star-Bulletin

Matson Navigation Co. was fined $3 million by the federal government after pleading guilty to six felony charges of falsifying a ship's pollution records.

Matson said today the admission doesn't mean it discharged polluted water into the ocean but it did accept responsibility for the fact that employees falsely reported that a final oil-separation cleanup process had been used, when in fact it had not.

The charges related to actions aboard the 38,000-ton container vessel Lihue, between August 1996 and April 1998, according to the U.S. attorney's office in Los Angeles.

Matson will pay fines of $500,000 each for offenses in San Francisco and Seattle and $2 million for a Los Angeles case. Of the $3 million total, $1.5 million will be used for West Coast environmental and law enforcement programs.

"We accept responsibility for it. There's no doubt that the records were falsified," said C. Bradley Mulholland, Matson president. "We're sorry this happened. We have a good policy. It's a shame that a few employees on one ship in the middle of the ocean can get us so blemished like this."

Mulholland said the fine will show as an expense on Matson parent Alexander & Baldwin Inc.'s financial report for the final quarter of 2000.

Those numbers are not yet published. In the final quarter of 1999, Matson had an operating profit of $18.3 million.

Legal expenses in dealing with the case have been accounted for as it went on, through nearly two years, Mulholland said.

"The oil record book is an official Coast Guard document, so if you make a false entry into that book it's a criminal act," Mulholland said.

The employees made entries saying that a final step required before discharging bilge water, running it through an oil-water separator, had been carried out when it had not, he said.

Shares in Alexander & Baldwin closed today at $27.81, down $1.13 from yesterday.

In a formal statement, Matson said it has been part of the Pacific shipping community for more than 118 years and regrets that its excellent operating record has been blemished.