First Shell employee pleads guilty over largest marine fuel heist from Pulau Bukom refinery

First Shell employee pleads guilty over largest marine fuel heist from Pulau Bukom refinery

• Sadagopan Premnath aided in the misappropriation of almost S$50 million worth of marine gas oil
• The large-scale scheme started in 2007 and unravelled in early 2017
• The cases of several other employees, including the alleged key masterminds, are pending before the courts
• At least two Vietnamese men working on vessels have been jailed for buying the stolen gas oil

By LOUISA TANG: Published DECEMBER 15, 2020

SINGAPORE — A 40-year-old man on Tuesday (Dec 15) pleaded guilty to his role in the largest theft of marine gas oil, amounting to hundreds of millions of dollars, from Shell Eastern Petroleum’s biggest regional refinery on Pulau Bukom.

Sadagopan Premnath, an Indian national, was among almost a dozen Shell employees charged over the scheme. He is the first among them to admit to his offences.

Through his case, new details have emerged about the misappropriation of gas oil by two syndicates of Shell employees on Pulau Bukom, the scale of which prosecutors said was unprecedented.

Shell operates a refinery on the island, its largest petrochemical production and export centre in Asia Pacific.

Sadagopan pleaded guilty in a district court to four counts of criminal breach of trust. District Judge Christopher Goh will consider another five charges for sentencing on Feb 18 next year.

The employee was involved in the scheme between 2017 and 2018, aiding in the misappropriation of US$36 million (about S$49.1 million) worth of gas oil.

He received about US$150,000 from the criminal proceeds and has not made any restitution to Shell.

Prosecutors said that two other Shell employees started the scheme in 2007 — Juandi Pungot, a shore loading officer from Sadagopan’s team, and Abdul Latif Ibrahim. They then recruited others over the following years.

The police began investigating when a Shell representative filed a report in August 2017, saying that the firm had suffered a loss of fuel worth about S$2.98 million in April that year.

At least two others — Vietnamese ship captain Doan Xuan Than and another ship officer, Dang Van Hanh — have been jailed for receiving between S$3.5 million and S$7.7 million of gas oil.

HOW HE JOINED THE SYNDICATE

The court heard that Sadagopan joined Shell around 2012, working as either a field man or a panel operator. He manually opened or closed heavy-duty valves for the gas oil, and operated control panels that controlled valves.

He earned a basic monthly salary of about S$2,400, but took home about S$4,000 every month after being paid for overtime work.

Juandi recruited him into the syndicate in mid-2017 apparently because another member was acting too frequently as the panel man whenever they misappropriated gas oil. They were worried that Shell’s management would spot the trend and uncover their crimes.

Sadagopan agreed to join partly because he was worried that his more senior colleagues might otherwise treat him with hostility.

His role was to comply with instructions to open and close valves so that ships could receive the stolen gas oil without being detected.

Two other employees — Muhammad Ashraf Hamzah and Muhamad Farhan Mohamed Rashid — did the same.

They were initially set to plead guilty on Tuesday as well, but their cases were adjourned to next year.

When more senior syndicate members told Sadagopan to let one of them take control of the system controlling gas oil outflow, he also complied.

HOW THE SCHEME WORKED

Shortly after cooking up the plan in 2007, Juandi and Latif recruited another key mastermind, shore loading officer Muzaffar Ali Khan.

Shore loading officers would usually be the ones in contact with a ship captain for the sale and purchase of misappropriated gas oil.

They got away with their crimes for about a decade through various methods, such as timing their thefts with the legitimate loading of gas oil and tampering with the orientation of closed-circuit television cameras.

They coordinated their activities through chat groups on mobile phones, even though they were not allowed to use their phones while on duty.

Latif was the primary point of contact with bunker ships willing to participate in the scheme and the operations took a pause in 2013 when he left to join another team in Shell. However, the syndicates resumed their activities in 2014 after finding other willing vessels and recruited other employees into the ruse.

Juandi and Muzaffar became the team leaders from mid-2014, prosecutors told the court.

The pair and another shore loading officer, Koh Choon Wei, directed and led the embezzlement. Among other things, the trio negotiated prices, decided how profits should be distributed within the syndicate and recruited their co-conspirators.

The vessels that bought their misappropriated gas oil were mainly those belonging to a company called Prime Shipping.

Juandi allegedly gave a former surveyor, Nguyen Quoc Tuan, their team duty roster to arrange for Prime vessels to berth at the Pulau Bukom refinery when their team was on duty.

Juandi and Muzaffar also purportedly began bribing independent surveyors whom Shell had hired to inspect the quality and quantity of gas oil being sold to ships.

Separately, two other employees — process technician Cai Zhi Zhong and shore loading officer Tiah Kok Hwee — helped to train others on how to manipulate gas oil movements.

IMPACT ON SHELL

In early 2015, Shell began observing significant unidentified gas oil loss at Pulau Bukom.

A 2015 review did not turn up anything suspicious. Shell then implemented various measures to improve processes but the misappropriation continued.

In early 2017, it engaged a third-party consultant to conduct a review, but the investigation did not yield a conclusive explanation for the high oil losses.

It soon experienced its highest hydrocarbon loss since 2015. Shell then hired a global team of analysts, who detected the misappropriation, and a police report was made.

Shell had since taken various measures to improve its systems and processes, including developing a monitoring software to detect potential thefts.

So far, Shell has incurred about S$6 million in costs to manage the consequences of the misappropriation.

SOURCE

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