In a story Monday's Business & Financial section concerning a federal investigation of rebate policies in the maritime industry. Kerr Steamship was mistakingly referred to as a subsidiary of Phoenix Container Liners, Ltd. Kerr is general agent for Phoenix.

Investigations by The Federal Maritime Commission (FMC), the Securities and Exchange Commission and federal grand juries in Newark, N.J., and Cleveland, Ohio, have revealed a pattern of questionable payments of about $100 million by major ocean carriers to shipping agents and import companies over the past five years.

Sources close to the investigations have told The Washington Post that 26 major ocean carriers have been paying the so-called "rebates." Over the last 16 months the Maritime Commission has levied nearly $5 million in fines for the payments, and more fines are expected to be announced soon.

In addition, several carriers have already been forced to disclose their payments in filings.

The problem centers around shipping rates set by the Maritime Commission and international shipping conferences. The FMC regulates rates in an effort to keep the shipping field competitive, because of fears that without regulation only a few large carriers would survive.

But for years it has been common practice for carriers to solicit new business by offering "rebates" that take many forms, investigators say.

In some case, customers would be given free warehousing or free services at the port. In other cases, outright cash payments or bearer bonds were given to company executives. That was the case when an official of Tenna Corp. admitted receiving such bonds from Seatrain Lines, Inc. He resigned after the payments were disclosed.

Trucking costs were also absorbed in some cases and frequently the amount of tonnage shipped was actually more than reported, sources close to the investigations say.

But the whole probe could come to a virtual halt this week if the Justice Department honors a request from two senators and a congressman who asked Attorney General Griffin Bell to halt prosecution efforts against the carriers until they have time to pass legislation providing the carriers with amnesty.

Sen. Daniel Inouye (D-Hawaii), Sen. Ted Stevens (R-Alaska) and Rep. John M. Murphy (D-N.Y.) told Bell that they feared that prosecution of American flag carriers would put them at a competitive disadvantage because foreign carriers are allegedly committing the same crimes but are out of reach of U.S. prosecution.

The legislation, they say, is designed "to encourage everyone who has been involved in rebating to come forward and disclose the nature and extent of his activities, and thereby assist the Federal Maritime Commission in acquiring greater knowledge and familiarity with contemporary malpractices."

Both Inouye and Murphy have been recipients of substantial campaign contributions from maritime unions and executives.

Because of the requests from Congress. U.S. attorneys in Newark and Cleveland have had to hold up their prosecution timetables. Sources close to both investigations reported them to be "very close" to indictments in some cases.

Among the companies said to be investigated for allegedly paying for receiving rebates are Action Industries, Sea-Land, Waterman Line, Phoenix Container and its subsidiary Kerr Steamship, Evergreen Line, Seatrain Line, United States Lines, Kanematsu-Gosho, Zadocorp International, Atlantic Co., Zim Israel Navigation Co., Ltd., and Pacific Far East Lines, Inc. All deny any wrongdoing, and defend the practices in question as legal.

In the course of its investigation, the FMC has issued more than a dozen subpoenas to ocean carriers. Several, including the foreign flag lines that make up the majority of the lines under investigation, have filed motions to squash those subpoenas with the FMC and in federal courts.

The motions claim that the FMC does not have the authority to subpoena the records, the subpoena is "oppressive" and "excessively broad," requiring thousands of documents on file all over the world; the subpoenaed information is "irrelevant," and to provide the information would require the companies to violate approved conference agreements.

In a form 10-Q filing to the SEC last month, Seatrain Lines, Inc., reported that it was being investigated by the FMC and the SEC.

The Washington Post has learned that six months ago Seatrain reported to the SEC that it had made $13.5 million in questionable payments. But it was also learned that the firm is checking with Victory Shipping, Ltd., one of its foreign shipping agents in Hong Kong, about another $4 million that company sources say is still unaccounted for.

Investigators say that in many cases foreign agents have been used as conduits for payoffs, making many of them difficult to trace.

A year ago Action Industries, a Pennsylvania hardware and household products manufacturer, admitted in a filing with the SEC that it received rebates from Sea-Land, Waterman Line, Phoenix Container Lines and Evergreen Lines totaling $419,000 over six years.

In making the disclosure, Action's accounting firm said it didn't "make any determination as to whether or to what extent the rebates were in violation of shipping securities or tax laws."

Also last year the chairman of the board and chief executive officer of Cleveland-based Tenna Corp. resigned following his disclosure to the company that he had accepted $235,000 in kickbacks from a domestic ocean liner later identified as Seatrain Lines.

Earlier this year Sea-Land, Inc., agreed to pay a $4 million penalty to the SEC for making more than $19 million in rebates to customers. It was hailed as the largest civil penalty ever assessed by a transportation regulatory agency in the United States.

Sea-Land did not admit that its payment were illegal.

According to SEC officials, the Sea-Land settlement was designed to punish the carrier and at the same time to provide for some equity between domestic and foreign carriers that are not subject to U.S. regulations.

This article was written and reported with the help of Lowell Bergman.