(www.MaritimeCyprus.com) Princess Cruise Lines has pleaded guilty to a second violation of probation imposed as a result of its "2017 criminal conviction for environmental crimes because it failed to establish and maintain an independent internal investigative office," according to a press release issued by the U.S. Department of Justice (DOJ).
Under the terms of a plea agreement, Princess was ordered to pay an additional $1 million criminal fine and required to undertake remedial measures to ensure that it and its parent company, Carnival Corporation, establish and maintain the independent internal investigative office known as the Incident Analysis Group (IAG), the DOJ said, in a statement.
The 2017 conviction
Princess was convicted and sentenced in April 2017 and fined $40m after pleading guilty to felony charges stemming from its deliberate dumping of oil-contaminated waste from one of its vessels and intentional acts to cover it up. This remains the largest-ever criminal fine for intentional pollution from ships.
While serving five years of probation, all Carnival Corp. ships trading in the US were required to comply with a court-approved and supervised environmental compliance plan, including audits by an outside and independent third-party auditor and oversight by a court-appointed monitor.
2019 probation violations
In 2019, Princess was convicted of six violations of probation, fined an additional $20m, and required to undertake more remedial measures. In that case, two 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. Documents filed in court showed that one purpose of the vessel visit programs was to avoid adverse findings by the independent outside auditors working on behalf of the court. At that time the CEO accepted the blame. The deal required CEO Arnold Donald to personally accept responsibility for the violations in a statement to all employees.
During the hearing, Donald said he regretted the mistakes that were made and told the judge 'We are fully committed' to correcting them.
'The judge and the prosecutors were clearly sending a message that the probation and the original underlying violation were serious and the resolution of the probation violation does send that message without having third parties such as potential passengers suffer due to Carnival Corporation ships being prohibited from calling at US ports,' said a maritime attorney who has represented clients in other cruise line environmental investigations.
DOJ said that beginning with the first year of probation, there have been repeated findings that the company’s internal investigation program was and is inadequate. In November 2021, the Office of Probation issued a petition to revoke probation after adverse findings by the third-party auditor and oversight by a court-appointed monitor.
Company culture faulted
A joint factual basis for the guilty plea was submitted to the court in which Princess and Carnival admitted to the failure to establish and maintain an independent investigative office. Princess admitted 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.
Changes required under a plea agreement with the Department of Justice resolving the probation violation include:
- Carnival must restructure so that its investigative office reports directly to a committee of Carnival’s Board of Directors;
- Carnival’s internal investigative office must be given the authority to initiate investigations on its own and to determine their scope;
- Carnival’s management will be restricted in its ability to remove the head of the “Incident Analysis Group” that performs internal investigations;
- Carnival must conduct an assessment to ensure independent investigators have sufficient resources;
- Carnival must assess the effectiveness of required changes and correct deficiencies.
- 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.
“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. I thank the court, the Office of Probation, court appointed monitor and third-party auditor for the close attention that they have devoted to this important matter.”
“Just like individual defendants, corporate defendants must also comply with court orders. They are not above the law”, said U.S. Attorney Juan Antonio Gonzalez for the Southern District of Florida. “The corporate defendant here ignored the court, choosing instead to thwart the compliance plan that was put in place to protect our environment. As this probation violation proceeding demonstrates, the government will not tolerate defendant’s blatant violation of court orders.”
The plea agreement and factual statement were signed by Micky Arison, Chairman of Carnival’s Board of Directors and Arnold Donald, the Chief Executive Officer and a member of the Board of Directors. Both attended the hearing as they have quarterly status hearings pursuant to court order.
Source: US DOJ