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Carnival’s corporate culture assailed by feds as Arison inks new criminal plea deal pledging environmental reforms

caribbean princess
Carnival's Caribbean Princess
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 a second time Tuesday to violating probation stemming from its expensive 2017 felony convictions for environmental crimes and a subsequent cover-up.

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

“Princess admitted that internal investigators had not been allowed to determine the scope of their investigations, and that draft internal investigations had been impacted and delayed by management,’’ according to the U.S. Department of Justice.

Carnival's
Carnival Chairman Micky Arison, right, and Carnival President and CEO Arnold Donald

Under the terms of the plea agreement signed by Carnival’s Chairman and Miami Heat owner Micky Arison and Carnival CEO Arnold Donald, Princess agreed to pay a $1 million criminal fine. Further, the company must quickly “undertake remedial measures” to “establish and maintain” the independent internal investigative office whose function is to monitor a court-approved “environmental compliance plan.”

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

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

OILY POLLUTION FROM CARIBBEAN PRINCESS

Princess was convicted, fined $40 million and placed on probation for five years by Senior U.S. 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 its original plea agreement called “the navigable waters of the United States.”

That is the largest criminal fine ever assessed for intentional pollution from ships, according to the Department of Justice.

Carnival's
Senior U.S. District Judge Patricia Seitz

Carnival bills itself as “the world’s largest leisure travel company” with a fleet of 87 ships with full-year 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.

While on probation, all Carnival-related cruise line vessels trading in U.S. ports were required to comply with the environmental compliance plan, which included audits by an outside and independent third-party auditor, and oversight by a court-appointed monitor.

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

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

CARNIVAL’S CULTURE AT THE TOP

Last October, the outside auditor and court-appointed monitor informed Judge Seitz of a Carnival “culture that seeks to minimize or avoid information that is negative, uncomfortable or threatening to the company, including to top leadership (i.e. the 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 senior Department of Justice environmental crimes prosecutor Richard Udell, asked the court to revoke Princess’s probation.

A “joint 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 lawyers, David Oscar Markus and David N. Kelley – imposes a number of structural changes intended to beef up the company’s investigative office, known as the Incident Analysis Group.

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

“Just 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 corporate defendant here ignored the court, choosing instead to thwart the compliance plan that was put in place to protect our environment.”

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  • When you look back to Arnold Donalds previous employer, Monsanto, the pattern of environmental disregard comes into focus. Coupled with Arison’s behavior during the Costa Concordia incident, you have quite a pair at the helm.
    Judge Seitz has spoken very pointedly in regards to the inherent responsibility Carnival has to protect the oceans, their source of success.

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