Judge rules USD77 million insurance claim for torched tanker was fraud

Brilliante Virtuoso. Credit: Dennis Mortimer/MarineTraffic

A British High Court judge has ruled that the Greek owner of the tanker Brillante Virtuoso, deliberately staged a fake pirate attack and torched the vessel using an explosive device and fire accelerants in a bid to claim USD77 million in insurance money.

On 6 July 2011 the Suezmax tanker, filled with fuel oil cargo worth USD100 million, was sailing from Kerch, Ukraine, to Qingdao, China. Following its transition through the Suez Canal, the ship reportedly came under fire from Somali pirates equipped with small arms and a rocket-propelled grenade (RPG) approximately 20 n miles southwest of Aden.

Following the “attack”, a fire initially broke out in the ship’s accommodation block and the 26 Filipino crew abandoned ship with the help of the nearby US Navy cruiser USS Philippine Sea.

According to official court papers, shots were fired on the bridge and an explosive device was detonated in the fuel purifier room, which started the fire that subsequently spread to the engine room with the use of fire accelerants. The assailants then left the ship and an officer at the bridge called for help. The crew were evacuated, and the Poseidon Salvage company was called in to fight the blaze. But the fire raged on, and the ship was quickly declared a total loss.

Upon boarding the vessel, no evidence of pirates was found by rescuers. When the ship was later towed to shore, surveys found no signs of RPG damage or small-arms fire penetration from outside, but there was evidence that AK-47s had been fired inside the ship.

The group of war risk insurance underwriters then alleged that the fire was deliberately started with the owner’s consent. Therefore, they took Greece’s Piraeus Bank, the ship’s mortgagee who had claimed losses over the fire damage from the ship’s insurers, and Mario Iliopoulos’ company Suez Fortune Investments to court over the legality of the USD77 million insurance claim.

Following a 52-day trial that concluded years of legal battles, High Court Judge Mr Justice Teare ruled in favour of the vessel’s insurance underwriters that the so-called pirate attack was in fact fictitious, and that the whole endeavour was a fake, orchestrated, and instigated plan to claim insurance money by the vessel’s beneficial owner, who was at the time experiencing significant financial difficulties, operating at a loss of about USD10 million between 2009 and 2011. Co-conspirators to the fraud were also identified by the court and included the master and chief engineer of the vessel, the local salvors, Poseidon Salvage (in particular Vassilios Vergos), and the hired “pirates”, who were in fact present or former members of the Yemeni coastguard or navy.