Hudson, which the FMC said profited US$20 for each container it allowed other forwarders to book in its name, was also fined for operating as an Nvocc without a financial guarantee on file with FMC for 208 days from September.

'Hudson violated the Shipping Act and these contracts by permitting other Nvocc to use its service contracts in order to obtain transportation for their shipments at rates less than those that should have been applicable,' the commission said.

'This was accomplished through a scheme initiated by Hudson whereby Hudson deceived the [shipping lines] as to the true identity of the shipper.

'Hudson received compensation from the Nvoccs for each instance in which the Nvoccs assumed Hudson's identity and used its service contracts. In addition, as a result of allowing other Nvoccs to use its service contracts, Hudson avoided the payment of liquidated damages for failure to ship the minimum quantity required under one service contract.'

However, Hudson Shipping founder Sunny Ng Chi-kwan told the South China Morning Post yesterday that his company would not be able to make the payment and had stopped taking cargo bound for the US.

Mr Ng said the Taiwanese forwarders, in respect of whom he had been fined US$2.7 million for allowing them to use Hudson's bills of lading, were long-time agents of his company and that all he was initially guilty of was not having enough money to defend his case.

Mr Ng claimed to have signed the service contracts as far back as in 1988 when his company was established.

'We told the carriers they were our agents and it is normal practice for agents to use your service contracts,' he said. 'The fact that the carriers had allowed these companies to book under our contracts for so many years is clear evidence the carriers accepted they were our agents.'

Also fined in the decision were two Taiwan firms, Transglobal Forwarding and Green Master International Freight Services, US$1.4 million and $1.5 million, respectively.

The FMC found that the two operators used Hudson bills of lading 120 times between May 1998 and April 1999 to enjoy its preferential rates, with shipping lines Hyundai Merchant Marine and Senator Lines, which lost US$1.2 million in revenue as a result.

According to Mr Ng, the Taiwanese are appealing their fines. 'They are appealing, but I cannot afford to,' he said. 'I cannot carry on.'

In the judgment, administrative law judge Michael Rosas said Hudson's lack of co-operation with the FMC and incomplete filing during the appeals process were contributing factors in the fine's size.

But Mr Ng said the limitations of his small business - Hudson had about HK$8 million in sales last year - left him unable to co-operate fully with the appeal process.

'They asked me for all the paperwork - bills of lading, contracts credit-debit slips and all correspondence between my company and the carriers and agents - for the past five years. Who can produce that? No one can,' he said. 'I don't have that kind of manpower.'

When the appeal period expired the FMC ordered Hudson's insurers in September to cancel its bond, a financial guarantee which allows it to trade in the US market.

The FMC said Hudson continued to work the US trade lanes, an act Mr Ng admits and for which Hudson was fined US$5.2 million.

'I knew I didn't have a bond, but how can I stop immediately? I need to eat. Every man has a right to eat. I'm not a millionaire,'' he said. 'In a legal sense I was wrong, but this was not the case in the beginning.'

Mr Ng said he had spoken to lawyers, but they all wanted US$100,000 in advance, a fee he could not afford.

'In most countries you are innocent until proven guilty; with the FMC you have to prove your innocence,' he said. 'The Americans have the right to accuse you, but you don't have the right to defend yourself if you can't afford it.'

Mr Ng said the fine's size this time had no precedent. In 1999, Hudson was fined US$30,000 for falsely describing the commodities it was shipping to pay lower tariffs and freight rates.

Hudson paid the fine but did not admit to the violations. 'My staff made a mistake. But this time it is not my mistake,' Mr Ng said. 'This is totally unfair. If you look at the other fines for similar offences, they are nowhere near this. [The FMC's] revenues quite obviously come from the penalties they hand out. These people are crazy.'

Mr Ng said Hudson had been forced to stop accepting or booking cargo bound for the US, but would continue operating.

'We can no longer do business in America. It is a terrible country,' he said. 'I guess we'll have to find some more business in China.'