Singamas and other alleged container cartel members could face lawsuits from customers

The alleged fixing of container prices by major manufacturers and some of their executives, including Singaporean shipping veteran Teo Siong Seng, may trigger civil claims in addition to the criminal charges that have been announced against them.

Teo, together with four container companies and six other individuals from these corporations, has been accused by the US Department of Justice (DOJ) of colluding to artificially inflate the prices of standard shipping dry containers by limiting output.

The US law has broad extraterritorial reach that provides for America to prosecute alleged price-fixing acts outside the nation, if these behaviours have a direct and substantial impact on its markets.

Several law firms in the US have said that buyers who purchased from Teo’s Singamas Container, China International Marine Containers (CIMC), Shanghai Universal Logistics Equipment and CXIC Group Containers from November 2019 until at least January 2024 may have reason to file civil claims against these makers.

This is the period identified by the DOJ as the time during which the alleged price-fixing took place.

Philadelphia-based Grabar Law Office has urged customers of the accused companies – including shipping and logistics companies, container-leasing firms, importers and exporters, and retailers and wholesalers – to step forward as they might have been affected by the alleged cartel.

Another legal practice, Cotchett, Pitre & McCarthy, commented that those who bought containers from the four accused makers may have potential claims as a prospective class member.

The firm noted that customers could serve as class representatives in federal court on behalf of other affected purchasers.

A significant indictment

Meanwhile, the indictment of the container companies and their executives sets a precedent for the industry, said lawyers.

There have been previous criminal investigations into maritime shipping, most notably one by the DOJ into Maersk, Hapag-Lloyd and Mediterranean Shipping Co in 2017 for suspected antitrust violations. However, the case was not brought to prosecution.

Mark Rosman, a partner at US law firm Proskauer Rose, noted that the indictment of the container makers is the most significant criminal development related to the shipping industry in recent history.

The veteran litigator has represented companies and individuals in connection with national and international antitrust and criminal matters, including cartel behaviour.

Mayer Brown lawyer Kelly Kramer, who often handles international criminal matters, pointed out: “The US has prosecuted several cartels involving the transportation industry, including the air cargo industry and international shipping. I’m not aware of a prior case involving shipping containers, specifically.”

He added that the country has struggled to persuade other nations to enact laws to enable extradition in cartel cases. While several EU countries have complied, most nations in Asia have not.

One of the accused, Vick Ma, who is marketing director of Singamas, was arrested – in France – as he was about to board a plane back to Hong Kong, while all the other individuals are still at large.

Kramer said: “I imagine that the other defendants are on watch lists such that they’d be detained if they travelled to a country with an extradition treaty that covered antitrust crimes.”

Proskauer Rose’s Rosman noted: “The other individuals presumably remain in countries from which the US cannot extradite them – like China – or otherwise their locations remain unknown to (the DOJ).”

But the US has rarely been successful in extraditing individuals based solely on antitrust charges, he added.

Thong Chee Kun, a Rajah & Tann partner and former deputy public prosecutor, pointed out that the DOJ may make a formal request to Singapore under the Extradition Act as the two nations have an extradition treaty.

He provided the view without referencing to the specific facts of this case.

The DOJ declined to comment on extradition matters when queried by The Business Times.

Similarly, Singapore’s Attorney-General’s Chambers would only say that requests for mutual legal assistance and extradition are usually made on a confidential basis.

Thong noted that, in general, the Singapore authorities will consider the merits of the request including whether it satisfies the legal requirements in the city-state.

“One important requirement is dual criminality, which requires that the alleged offence in the US would also constitute an offence of sufficient gravity in Singapore if it had taken place in Singapore,” he said.

If Singapore agrees to the request, the person concerned would be arrested, detained and brought to Singapore courts.

That person may contest the extradition in court or agree to be handed over to the US.

Kramer said that most US criminal cases end in plea agreements. But once a matter goes to trial, it would likely take 12 to 24 months for the case to conclude. Appeals would take another year or two.

BT understands that Teo has hired lawyers from one of Singapore’s leading firms for legal advice.

Neither Teo nor his company Singamas had been served with any legal process or other legal documentation by the DOJ as at May 21. He is the executive chairman of the Hong Kong-listed manufacturer.

Mai Boliang, president and chief executive of CIMC before becoming its chairman in August 2020; Huang Tianhua, vice-president of CIMC; Wan Yongbo, general manager of CIMC’s operation management centre; Li Qianmin, general manager of Shanghai Universal Logistics Equipment; and CXIC Group Containers CEO Zhang Yuqiang are the other individuals named as co-accused in the criminal case. They are all Chinese nationals.

A violation of the antitrust law carries a maximum penalty of 10 years in prison and a US$1 million fine for individuals; for corporations, the maximum penalty is a US$100 million fine.

But the fines could be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.

These individuals and companies are presumed innocent until proven otherwise, and DOJ will need to support their claims with admissible evidence, pointed out Rosman.

Source: The Business Times © SPH Media Limited. Permission required for reproduction.

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