In a tough warning to ships entering Bermuda's waters, a magistrate yesterday fined a sea captain a record $40,000 for spilling "hundreds'' of gallons of oil off the Island.

The fine imposed on the captain of the Atlantic Forest was welcomed by Environment Minister Arthur Hodgson, who said magistrates must take pollution seriously because any spillage could be "catastrophic'' for Bermuda and its tourist industry.

Mr. Hodgson told The Royal Gazette : "I am glad the magistrates are taking environmental issues rather seriously. When these spills happen and we have to mobilise people to contain them, it can be very expensive.

"Bermuda has a very delicate balance and it is not only the damage these things can do to the environment, but the impact they can have on the tourist industry if the beaches are soiled. In a country as small as ours, the smallest thing from an oil spill could be catastrophic and it is great to see these things taken seriously.'' Court sources said it was the highest fine for a criminal offence ever handed out by Magistrates' Court in Bermuda. In May, the captain of the Pascale Delmas was fined $30,000 for spilling oil at Murray's Anchorage, off St.

George's, the previous November. It was revealed yesterday, however, that last Friday, Chief Justice Austin Ward -- sitting as a Supreme Court appellant judge -- reduced the fine to $7,500.

Trevor Moniz, lawyer for the captain of the Atlantic Forest , Bengt Magnusson, said he expected to receive instructions to appeal against the $40,000 fine.

Senior Magistrate Will Francis, who handed out the fine, said: "This is a serious offence and as I see it, the penalty must have a deterrent effect.

"It must send a message to ships, shipping agents, ship owners and those in charge of ships to really be careful when coming to such a delicate environment as Bermuda.

"We all care about Bermuda's delicate balance and reefs, and the nature of our economy (is such that) I feel that a fine of $40,000 is warranted.'' Mr. Francis heard that the 862-foot Atlantic Forest was spotted leaking oil and a mixture containing oil at 1.15 p.m. on March 2 when she was anchored at Five Fathom Hole, one and a quarter miles east of St. David's Head.

It was reported at the time that the Liberia-registered ship was reloading cargo from the 34,000-tonne Green Island , which limped into Bermuda for emergency repairs to a corroded hull.

Junior Crown counsel Veronica Daley said the Atlantic Forest had been there for at least three hours when a "large sheen of black oil was noticed''.

Captain fined for oil spill and was down wind of the ship. Because of the vessel's position and the weather, the oil was being driven away from the shore and the mainland was not affected.

She said there was "believed to be hundreds of gallons discharged, continuously every eight to ten minutes''.

Marine Police officers notified Harbour Radio and at 1.45 p.m. they boarded the ship.

Mrs. Daley said the captain at first denied it was coming from his ship, but when he was then taken to the starboard side to witness the spillage, he admitted it was coming from his vessel.

When he was told he was in breach of the 1971 Prevention of Oil Pollution Act, he replied: "I didn't know it was coming from my ship.'' When it became apparent he was unable to stop the spillage, he was instructed to up anchor and depart, which he did at 9.30 p.m. that day. Asking for a heavy fine, Mrs. Daley said: "The Crown takes a very dim view of discharging oil into the sea.'' She noted that in May, the Pascale Delmas , was fined $30,000 for discharging "substantially less'' oil. The owners of the ship also voluntarily paid $30,000 to clean up the spillage.

Mr. Moniz said although his client was charged, the company, the United States-based LCI Shipholdings Inc, accepted responsibility and pleaded guilty to the offence.

Capt. Magusson was not in court. The company does not have an office in Bermuda, but used various local shipping agencies, said Mr. Moniz.

He denied that hundreds of gallons had been spilled and argued that no one could be sure how much oil had leaked out.

"My clients are being good corporate citizens,'' he said. "They have no office in Bermuda but they are taking responsibility for this.

"If they wanted to, they could make it difficult by not being available. But they are coming forward to take responsibility, saying it was an accident.

"In the Pascale Delmas case, the oil was coming towards the shore. There was no risk to Bermuda from this oil.

"In that case there was a clean-up cost of $30,000, but in this case the clean-up costs were zero. The bottom line is, there was no involvement or inconvenience of local people.'' Shortly after the fine was handed out, Mr. Moniz returned to court to inform Mr. Francis that he had just discovered the fine to the Pascale Delmas had been reduced to $7,500.

Mrs. Daley argued against reducing the fine, saying the Supreme Court could decide the matter.

She added: "The Appeal Court may have taken into account that in the last case the company spent $30,000 on a clean-up. In this case, these people fled and nothing was done.'' Mr. Moniz said he "took exception'' to such a suggestion. They'd been asked to leave and did so.

Mr. Francis agreed with Mrs. Daley that Supreme Court probably reduced the fine because of the money spent on the clean-up and he upheld the $40,000 fine.

Mr. Moniz later told The Royal Gazette : "I would strongly anticipate receiving instructions to appeal.'' Fine welcomed: Environment Minister Arthur Hodgson.

ENVIRONMENT ENV SHIPS SHI