Carnival corporate culture under assault from feds as Arison signs new plea deal


The oily bilge water illegally dumped by the Caribbean Princess, above, led to felony convictions in 2017 that continue to plague Princess Cruise Lines and its Miami owner, Carnival Corporation.

By Dan Christensen, FloridaBulldog.org

Princess Cruise Lines, wholly owned by Miami-based cruise giant Carnival Corporation & plc, pleaded guilty for a second time on Tuesday to violating probation stemming from its costly environmental crimes convictions in 2017 and a subsequent cover-up.

This time, Princess and Carnival admittedly took a different criminal approach. They breached the court’s previous order to “establish and maintain an independent investigation office” to ensure the company complies with newly imposed environmental rules.

“Princess admitted that internal investigators were not allowed to determine the scope of their investigations, and that plans for internal investigations were impacted and delayed by management,” according to the US Department of Justice.

Carnival
Carnival President Micky Arison, right, and Carnival President and CEO Arnold Donald

Under the terms of the plea agreement signed by Carnival chairman and Miami Heat owner Micky Arison and Carnival CEO Arnold Donald, Princess agreed to pay a $1 million criminal fine. In addition, the company must promptly “take corrective action” to “establish and maintain” the independent internal investigation office whose function is to oversee a court-approved “environmental compliance plan.”

But the new probation violation conviction also served as a tacit indictment of Carnival’s corporate culture under billionaires Arison and Donald.

“This case demonstrates the importance of addressing culture and corporate structure issues and the root causes of environmental non-compliance,” said Assistant Attorney General Todd Kim of the Environment and Natural Resources Division. of the Ministry of Justice. “This was a serious and continuing violation of probation that reflected Carnival’s failure to prioritize compliance with court orders.”

CARIBBEAN PRINCESS OIL POLLUTION

The princess was convicted, fined $40 million and placed on probation for five years by Senior US District Judge Patricia Seitz in April 2017 after pleading guilty to pollution, conspiracy and obstruction charges. for deliberately dumping oil-contaminated waste from the Caribbean Princess into what her initial plea agreement called “the navigable waters of the United States.”

It is the largest criminal fine ever imposed for intentional pollution by ships, according to the Ministry of Justice.

Carnival
Patricia Seitz, Senior U.S. District Judge

Carnival bills itself as “the world’s largest leisure travel company” with a fleet of 87 ships and annual revenue of $20.8 billion in 2019. Its cruise brands include Carnival Cruise Line, Princess , Holland America Line, Seabourn, Cunard, AIDA, Costa , P&0 Cruises and P&O Cruises Australia.

During their trial period, all Carnival-related cruise ships trading in U.S. ports were required to comply with the environmental compliance plan, which included audits by an external, independent auditor and oversight by an appointed monitor. by the court.

But from almost the beginning, “there have been repeated findings that the company’s internal investigative program was and is inadequate,” said a DOJ press release announcing Princess’ latest guilty plea.

In 2019, Princess was convicted of six probation violations and fined an additional $10 million. Two of those violations involved “interfering with the court’s supervision of probation by sending undisclosed teams to vessels to prepare them for the independent inspections required during probation” in order “to avoid adverse findings from external auditors working on behalf of the court,” according to the press release.

CARNIVAL CULTURE AT THE SUMMIT

Last October, the external auditor and court-appointed monitor advised Judge Seitz of a “Carnival culture that seeks to minimize or avoid negative, uncomfortable or threatening information to the business, including the senior management (i.e. board of directors, C-suite executives and brand presidents/CEOs).

In November, the government, represented by Miami Assistant U.S. Attorney Thomas Watts-Fitzgerald and the Justice Department’s lead environmental crimes prosecutor, Richard Udell, asked the court to revoke Princess’s probation.

A “common factual basis” for the guilty plea – the document signed Nov. 23 by Arison, Donald, Carnival board member Stuart Subotnick and two of the company’s attorneys, David Oscar Markus and David N. Kelley – imposes a number of structural changes intended to strengthen the company’s investigation office, known as the Incident Analysis Group.

In addition, the plea agreement includes teeth: “Failure to meet deadlines in the plea agreement will subject the defendant initially to fines of $100,000 per day, and $500,000 per day after 10 days. “

“Like individual defendants, corporate defendants must also comply with court orders. They are not above the law,” Miami U.S. Attorney Juan Antonio Gonzalez said in a statement. “The defendant company here ignored the court, choosing instead to thwart the compliance plan put in place to protect our environment.”

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