JPMorgan Owned Ship Involved in Cocaine Bust Seized

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Federal prosecutors in Philadelphia have seized a container ship operated by the Mediterranean Shipping Co., involved in 20-ton Philly port cocaine bust from firm with history of hidden drug hauls, reports Markets Insider.

What happened?

On June 18, CBP agents found 39,525 pounds of cocaine stashed in several containers on the MSC Gayane at the Philadelphia seaport. The street value of the drugs was estimated at about $1.3 billion, making it the largest cocaine seizure by the agency. 

In a rare move, US Customs and Border Protection on July 4, seized the container ship that was involved in the largest drug busts in American history. 

Federal authorities said they are weighing forfeiture proceedings against its owner, one of the world’s largest shipping conglomerates.

Seizure of vessel authorized

Court records unsealed indicate that a U.S. magistrate judge authorized the seizure of the MSC Gayane on June 26, a week after investigators discovered its illicit cargo, nearly 20 tons of the drug. It is believed to be worth more than $1 billion. 

Agents delivered the seizure warrant to the ship’s captains on July 4.

It is not indicated whether they will try to take permanent possession of the ship or pursue financial penalties against its owner, Geneva-based Mediterranean Shipping Corp. (MSC).

Who owns the ship?

The ship MSC Gayane is owned by a fund run by banking giant JPMorgan Chase. A source close to the situation said that the ship is part of a transportation strategy fund run for the bank’s asset management unit.

That means JPMorgan Chase (JPM) does not have any operational control of the vessel, a Liberian-flagged ship that is run by the Swiss-based Mediterranean Shipping Company. The bank had no comment.

The Gayane sailed under the flag of Liberia and had previously traveled through the Bahamas and several South American countries, according to an online ship tracker. 

JPMorgan declined to comment. Mediterranean Shipping Co. did not immediately respond to an email inquiry.

Seized and charged

US Attorney William McSwain said the decision to seize the vessel was complicated and unprecedented, but was appropriate as the circumstances also was unprecedented. “We found nearly 20 tons of cocaine hidden on this ship.”

Six members of the crew, have been charged with violations of maritime drug smuggling laws and remain in custody in Philadelphia.

At least two have confessed to helping smuggle the drugs aboard, according to court filings that have since been sealed. 

Prosecutors said that the ship’s legitimate cargo, which was bound for Europe, Africa, and Asia, was not subject to the court’s seizure order and have been sent along to their destinations on other MSC vessels.

Cocaine discovered in MSC ships

So far, prosecutors in Philadelphia have not accused MSC of any wrongdoing. But the seizure of the Gayane is only the latest setback for the company in the United States this year. 

Customs agents discovered about 1.6 tons of cocaine on another of its cargo ships, the MSC Carlotta, in February as it pulled into the Port of Newark.

A month later, law enforcement officials found another half-ton of cocaine in 13 large duffel bags housed in a shipping container off-loaded in Philadelphia from the MSC Desiree.

Authorities touted that bust at the time as the largest cocaine seizure at the city port in two decades. That record lasted for less than three months, with the Gayane discovery on June 16.

Where was cocaine hidden?

The massive cocaine haul was hidden in shipping containers and stashed among wine, vegetable extract, Chilean dried nuts, and scrap metal from the United Arab Emirates.

It is said that the cocaine came from 14 boats that separately approached the Gayane as it journeyed between Peru and Panama while en route to Philadelphia.

Temporary suspension order from CBP

Since then, U.S. Customs and Border Protection has temporarily suspended the company’s participation in a fast-track screening initiative for trusted freighters, a program akin to the Transportation Security Administration’s PreCheck program for frequent travelers at airports.

For now, the Gayane remains anchored in the Delaware River, and its crew’s access to the ship remains restricted, as it has been since agents conducted their three-day search of the ship last month.

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Source: MarketsInsider

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