[Federal Register Volume 62, Number 197 (Friday, October 10, 1997)]
[Notices]
[Pages 53006-53007]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26976]


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FEDERAL MARITIME COMMISSION

[Docket No. 97-17]


Portman Square Limited--Possible Violations of Section 10(a)(1) 
of the Shipping Act of 1984; Order of Investigation and Hearing

    Portman Square Limited (``Portman Square'') is a tariffed and 
bonded non-vessel-operating common carrier (``NVOCC''), located at 
Sixth Floor, Silver Tech Tower, 26 Cheung Lee Street, Chiwan, Hong 
Kong. Portman Square holds itself out as a NVOCC pursuant to its ATFI 
tariff FMC-001, filed January 29, 1996. Emerson Li, a resident of Hong 
Kong, is reported to be Managing Director of Portman Square.
    Portman Square currently maintains a NVOCC bond, No. 102229, in the 
amount of $50,000 with the Intercargo Insurance Company, 1450 East 
American Lane, 20th Floor, Schaumburg, Illinois 60173. Pursuant to Rule 
24 of Portman Square's tariff, Distribution Publications, Inc., 7996 
Capwell Drive, Oakland, California, serves as the U.S. resident agent 
for service of process.
    It appears that in at least forty-one (41) instances occurring 
between January 10, 1997 and March 11, 1997, Portman Square obtained 
transportation on Hyundai Merchant Marine Co. Ltd. (``Hyundai'') 
vessels by accessing a service contract allegedly entered into by Take 
Ace Co. Ltd. (``Take Ace''). Take Ace executed Hyundai SC No. 96-5343 
on April 24, 1996, and certified to Hyundai that it was the cargo 
owner.\1\ There is no indication, however, that the service contract 
has been utilized at any time for the transportation of goods in which 
Take Act retains any beneficial interest.\2\
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    \1\ The Commission's service contract records reflect that 
Emerson Li executed the Hyundai service contract on behalf of Take 
Ace.
    \2\ In fact, the Journal of Commerce PIERS database reports that 
no shipments were recorded on behalf of shipper Take Ace prior to 
May 1996 nor subsequent to the expiration of Hyundai's service 
contract on April 30, 1997.
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    From documents obtained from U.S. consignees, it appears Portman 
Square is in fact the real shipper and party for whose account the 
ocean transportation was provided. During the period May 1996 through 
April 1997, over 230 shipments were transported by Hyundai pursuant to 
service contract No. 96-5343. All of these shipments are believed to 
have originated with Portman Square, and were handled in the United 
States by the NVOCC's regular destination agents. In each of the above 
shipments, Portman Square issued its own NVOCC or ``house'' bill of 
lading, and thus had a direct role in a scheme of misdescribing the 
commodity to the transporting ocean common carrier. These shipments 
originated in Hong Kong and the People's Republic of China, and were 
destined primarily for Los Angeles and New York for delivery through 
Portman Square's U.S. agents.
    In each of the 41 instances cited herein, the commodity was 
described to the ocean common carrier as ``kitchenware'', ``lighting 
fixture'', ``patio furniture'', or ``KD furniture''. Other 
contemporaneous documentation, such as house bills of lading, arrival 
notices, and U.S. Customs entry documentation prepared by the 
customhouse broker, reflect that Portman Square was fully cognizant 
that the shipments actually consisted of footwear, computer parts, 
sunglasses, plastic flatware, polystone figurines, clocks, and used 
household goods. Portman Square or its agents nonetheless made payment 
to the ocean common carrier on the basis of the inaccurate commodity 
shown and declared on the bill of lading when issued.

[[Page 53007]]

    Section 10(a)(1) of the Shipping Act of 1984 (``1984 Act''), 46 
U.S.C. app. Sec. 1709(a)(1), prohibits any person knowingly and 
willfully, directly or indirectly, by means of false billing, false 
classification, false weighing, false report of weight, false 
measurement, or by any other unjust or unfair device or means, to 
obtain or attempt to obtain ocean transportation for property at less 
than the rates or charges that would otherwise be applicable. Under 
section 13 of the 1984 Act, 46 U.S.C. app. Sec. 1712, a person is 
subject to a civil penalty of not more than $25,000 for each violation 
knowingly and willfully committed, and not more than $5,000 for other 
violations.\3\ Section 23 of the 1984 Act, 46 U.S.C. app. Sec. 1721 
further provides that a common carrier's tariff may be suspended for a 
period not to exceed one year for violations of section 10(a)(1) of the 
1984 Act.
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    \3\ These penalties are increased 10 percent for any violations 
occurring after November 7, 1996. See, Inflation Adjustment of Civil 
Penalties, 61 Fed. Reg. 52704 (October 8, 1996).
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    Now therefore, it is ordered, That pursuant to sections 10, 11, 13, 
and 23 of the 1984 Act, 46 U.S.C. app. Secs. 1709, 1710, 1712, and 
1721, an investment is instituted to determine:
    (1) Whether Portman Square Limited violated section 10(a)(1) of the 
1984 Act by directly or indirectly obtaining transportation at less 
than the rates and charges otherwise applicable through the means of 
misdescription of the commodities actually shipped;
    (2) Whether, in the event violations of section 10(a)(1) of the 
1984 Act are found, civil penalties should be assessed against Portman 
Square Limited and, if so, the amount of penalties to be assessed;
    (3) Whether, in the event violations of section 10(a)(1) of the 
1984 Act are found, the tariff of Portman Square Limited should be 
suspended; and
    (4) Whether, in the event violations are found, an appropriate 
cease and desist order should be issued.
    It is further ordered, That a public hearing be held in this 
proceeding and that this matter be assigned for hearing before an 
Administrative Law Judge of the Commission's Office of Administrative 
Law Judges at a date and place to be hereafter determined by the 
Administrative Law Judge in compliance with Rule 61 of the Commission's 
Rules of Practice and Procedure, 46 CFR 502.61. The hearing shall 
include oral testimony and cross-examination in the discretion of the 
Presiding Administrative Law Judge only after consideration has been 
given by the parties and the Presiding Administrative Law Judge to the 
use of alternative forms of dispute resolution, and upon a proper 
showing that there are genuine issues of material fact that cannot be 
resolved on the basis of sworn statements, affidavits, depositions, or 
other documents or that the nature of the matters in issue is such that 
an oral hearing and cross-examination are necessary for the development 
of an adequate record;
    It is further ordered, That Portman Square Limited is designated a 
Respondent in this proceeding;
    It is further ordered, That the Commission's Bureau of Enforcement 
is designated a party to this proceeding;
    It is further ordered, That notice of this Order be published in 
the Federal Register, and a copy be served on parties of record;
    It is further ordered, That other persons having an interest in 
participating in this proceeding may file petitions for leave to 
intervene in accordance with Rule 72 of the Commission's Rules of 
Practice and Procedure, 46 CFR 502.72;
    It is further ordered, That all further notices, orders, and/or 
decisions issued by or on behalf of the Commission in this proceeding, 
including notice of the time and place of hearing or prehearing 
conference, shall be served on parties of record;
    It is further ordered, That all documents submitted by any party of 
record in this proceeding shall be directed to the Secretary, Federal 
Maritime Commission, Washington, D.C. 20573, in accordance with Rule 
118 of the Commission's Rules of Practice and Procedure, 46 CFR 
502.118, and shall be served on parties of record; and
    It is further ordered, That in accordance with Rule 61 of the 
Commission's Rules of Practice and Procedure, the initial decision of 
the Administrative Law Judge shall be issued by October 5, 1998 and the 
final decision of the Commission shall be issued by February 2, 1999.

    By the Commission.
Joseph C. Polking,
Secretary.
[FR Doc. 97-26976 Filed 10-9-97; 8:45 am]
BILLING CODE 6730-01-M