The DOJ has a history of not arresting cruise executives notwithstanding how widespread the dumping of oil or chemicals in the nations's waters may be. Will the most recent dumping incidents by Carnival's subsidiary, Princess Cruises, culminating in a $40,000,000 fine be any different?
Throughout the 1990's, Royal Caribbean engaged in repeated dumping of everything from oil to chemicals, including dry-cleaning fluid, printing press solvents and photographic chemicals, into the waters from here in Miami all the way to Glacier Bay in Alaska. The Coast Guard and DOJ caught it using "magic pipes" and falsifying oil logs. The cruise line nonetheless continued to dump oil, lie to the Coast Guard and flaunt the authority of the former head of the DOJ, the late Janet Reno, until the agency leveled increasingly stiff fines of $1,000,000, $8,000,000 and $18,000,000.
Royal Caribbean fought the federal government fiercely back in the late 1990's, arguing that because it was a Liberian corporation, it was not subject to U.S. environmental laws - an argument rejected by the U.S. courts here in Miami. The cruise line's dumping was so pervasive and defiant that many joked back in those years that the executives could see Royal Caribbean cruise ships dumping oil right outside of the executives' windows at their headquarters at the port of Miami.
But the DOJ arrested no one at Royal Caribbean headquarters in Miami; instead, the DOJ focused its prosecution efforts on a Greek engineer who worked on one of the cruise line's ships. But, some say, it was a half-hearted effort by the DOJ. The engineer eventually walked out of a hotel in Miami when the FBI wasn't paying attention and flew out of the jurisdiction back to Greece. (He remains technically on the top ten most wanted list of the U.S. Environmental Protection agency).
The New York Times wrote an article Sovereign Islands: Gaps in the Sea Laws Shield Pollution By Cruise Lines. The Times wrote that each Royal Caribbean ship was spending around $380,000 per year in operating an oil water separator ("OWS") and disposing of the waste ashore. "By saving this money, a ship's officer could receive bigger year's end bonuses. The savings was the government's strongest evidence that senior management may have known of the conspiracy . . . "
If any cruise executives should have been arrested for the environmental crimes, many say that the executives at Royal Caribbean were the most likely culprits. But it didn't happen.
Carnival Corporation also has a checkered history of widespread use of "magic pipes" and falsifying oil logs on its cruise ships. It was particularly bad in the 80's and 90's and culminated in 2002 when the DOJ announced that Carnival had pled guilty to dumping oil and lying about it. Carnival's guilty plea revealed that the corporation used the same tricks that the engineers on Princess ships more recently used. Over 15 years ago, the DOJ concluded that on numerous occasions from 1996 through 2001, Carnival's "engineers intentionally flushed clean water past the sensors of the (OWS) meters. By doing this while discharging was in progress, the engineers tricked the meters to register the oil content in the clean water (0 ppm), instead of the oil content in the bilge waste. The control valves thereby remained in overboard positions, and oily waste was dumped into the sea without regard to the 15 ppm oil content legal limit."
This is the same methods as what the DOJ recently found on Carnival's ships operated by Princess Cruises.
Back in 2002 the DOJ stated that "overboard discharges of oily waste while clean water was being flushed past the meter sensors occurred on several ships, including the TROPICALE, SENSATION, FANTASY, ECSTASY, PARADISE and IMAGINATION. Carnival Corporation also admitted that this conduct, which allowed engineers to knowingly dump oil into the sea in quantities that exceeded the legal limit, was intentionally misrepresented in the oil record books of the ships."
So are we to conclude that the exact same widespread illegal practices used in the late 1990's, including the same "magic pipe" and flushing-the sensors-with-clean-water methods, which occurred as late as 2013, took place without any knowledge by the cruise executives at the helm of Carnival Corporation for almost a fifteen year period of time?
Who were the cruise executives who should have known about the wrongdoing? Of course, Micky Arison was the CEO of Carnival from 2003 until July 2013. He collected around $75,000,000 in compensation during this period. In 2012, Arison paid himself $90,000,000 as a bonus. So, in total compensation and bonuses, Arison received over $165,000,000 while the illegal dumping at Princess Cruises continued. Forbes places Arison's current net worth at $7,800,000,000 (billion).
Travel Weekly reported that as of the end of 2014, "the five mostly highly paid executives at Carnival Corp. earned a combined $32.7 million (in compensation a year), including $6.5 million for Costa Group CEO, Michael Thamm, $6.1 million for departed Carnival Cruise Lines President and CEO, Gerry Cahill, $6.1 million for Chief Operations Officer Alan Buckelew (who was the former CEO of Princess), and $5.2 million for CFO, David Bernstein."
Carnival generated $134,899,000,000 (billion) in income from 2004 through 2013, and netted $17,202,000,000 (billion), according to its annual statements. Consider that Carnival and the other cruise lines pay virtually no international, federal, state or local taxes on their cruise ship profits.
So were the cruise executives concerned that their fabulous wealth would be touched? Hardly. This is an industry of fat-cat executives who know that they are untouchable. It is fundamentally different from other industries where racketeers are prosecuted or where the top dogs will eventually do the right thing for the shareholders when the corporation is caught doing something wrong. Consider what Wells Fargo & Co. Chief Executive John Stumpf recently did when his company was caught opening millions of checking, saving and credit card accounts for customers without their knowledge. Stumpf agreed to forfeit compensation worth about $45 million from around 910,000 shares in un-vested stock awards, and agreed to forego his bonus this year. Another executive who was in charge of the division where much of the illegal activity took place, will give up about $19 million worth of stock. Wells Fargo’s board of directors also said that other executives could lose stock awards or even other compensation already paid to them.
But there is no way the wealthy cruise executives are going to voluntarily let loose of a single dime of their ill-gotten profits. The tax-paying public will just have to pony up a little more to cover the difference, is what they think.
The cruise executives' greed is staggering. The $40,000,000 fine, after all, is just a drop in the ocean of wealth enjoyed by Carnival executives. Consider that Caribbean Cruise Line, and related marketing and timeshare development companies, agreed to settle a class-action lawsuit to the tune of up to $76,000,000. This case (involved the nuisance of millions of robocalls in violation of the Telephone Consumer Protection Act) involved nothing comparable to discharging oil around the world.
Yes, the latest pollution scandal earned Princess Cruises and Carnival a certain amount of bad press, but the cruise industry has always been able to navigate through criticism that it is a dirty industry at its core. The only difference that the environmental fines will make is if it deters the misconduct of those who benefited the most from the deliberate pollution. Unfortunately, a $40,000,000 fine to executives who collected many times that amount in compensation and bonuses is meaningless.
It is well past time that corporate activists demand disgorgement of executive bonuses and resignation of executives who have caused harm to corporate shareholders. Likewise, the DOJ needs to wake up. Cruise lines will continue to pollute unabated, as they have done since the1990's (or earlier), unless and until corporate executive are held personally accountable.
The DOJ and state prosecutors have levied a total of over $90,000,000 in fines against the cruise industry over the last twenty years. The fines are always accompanied with press releases discussing years of probation imposed on the companies which, in the case of Carnival, was quickly violated back in the early 2000's without any real consequence. The magic pipes, rigged OWS sensors and falsified log books from the 1990's continued until the mid-2010's. Carnival and Princess executives have again pointed their crooked fingers at shipboard employees while disavowing any knowledge of what was happening on their ships. With a collective sigh of relief that the DOJ again didn't arrest a single cruise executive for involvement in the scandal, they quickly agreed to pay the fine.
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Read our other articles about the Princess Cruises deliberate pollution and cover-up:
Princess Cruises Pollution Cover-Up: What Did the Executives Know?
Deliberate Dumping, Cover-Up and Lies: DOJ Fines Princess Cruises $40,000,000.
Michael Evangelos Psomadakis, Chief Engineer Nordic Empress - Environmental Protection Agency Most Wanted Poster.
Micky Arison - Steve Mitchell - USA TODAY Sports via 7500toholte.sbnation.com/