Cruise Law News : Maritime Lawyer & Attorney : James M. Walker : Walker & O'Neill Law Firm : Admiralty Law, Cruise Ship Accidents & Injuries

Cruise lines hate U.S. governmental scrutiny of their business operations.  

The whole purpose of incorporating their businesses and flagging their cruise ships in foreign countries is to avoid U.S. taxes and the scrutiny of federal regulators. This business model permits the cruise lines to pay virtually no U.S. taxes and to avoid U.S. wage, labor and safety laws. Cruise lines often conceal shipboard crimes and the industry's abuse of crew members.

But one U.S. Senator, Jay Rockefeller of West Virginia, is taking the cruise lines' lack of transparency head on. Following Carnival's string of disabled cruise ships and nonchalant attitude towards its quests, Senator Rockefeller sent a letter to Carnival billionaire cruise CEO Micky Arison in March, inquiring into issues pertaining to the cruise line's avoidance of taxes as well as issues regarding the safety of cruise passengers. You can read the letter here. 

Carnival's letter back to Rockefeller dodged and weaved and argued and mostly avoided responding to Senator Rockefeller's concerns. Carnival refused to disclose, for example, the number of victims of sexual assault - a topic that the cruise lines strenuously try to avoid talking about.  We summarized Arison's defiant attitude in our article: Carnival CEO Arison's Letter to Senator Rockefeller: Screw You!

Undaunted, Senator Rockefeller has sent another letter to Arison and has also sent letters to the CEO of Royal Caribbean Cruises (Richard Fain) and Norwegian Cruise Lines (Kevin Sheehan).

In his letters yesterday, the Senator is inquiring into the internal safety audits which the cruise lines and the cruise association are allegedly conducting. At the recent cruise trade show on Miami Beach, the Carnival, Royal Caribbean and NCL cruise executives talked at length about their ability to learn from their own internal investigations but never stated that they would release the reports from the investigations.

This is the usual cruise line ploy: assuring the public that they are busy at work investigating themselves after cruise ships sink or catch on fire; however, they never ever disclose the results of their alleged investigations. Carnival said that it was conducting an internal audit of its operations after the Carnival Splendor was disabled after an engine room fire in 2010.  But Carnival has never released the results of its investigation. The public remains in the dark.

Senator Rockefeller is also again demanding that the cruise lines disclose the number of crimes, particularly sexual assault, on cruise ships. The cruise industry has been notoriously dishonest in revealing accurate crimes statistics. It usually defaults to conclusory, self-serving opinions that crime is "rare" while simultaneously concealing the true crime statistics.

At a prior Congressional hearing, Royal Caribbean responded to a Congressional inquiry by stating that 66 women were raped during a three year period.  But in a court case we handled, the cruise line was ordered to reveal that the actual number of such crimes was much higher.

The LA Times reported on the cover-up in an article: Cruise Industry's Dark Waters.   

Royal Caribbean faced no consequence for misleading Congress back in 2006.  

The cruise lines' response to Senator Rockefeller in due on May 24th.  

Will RCCL CEO Fain and NCL CEO Sheehan be transparent? Or will they join Arison in a game of hide and seek?

• Comments (1)

Under public criticism and pressure initiated by U.S. Senator Rockefeller, Carnival announced today that it will reimburse the federal government for costs of over $4,000,000 incurred by the U.S. Coast Guard and U.S. Navy in responding to its Triumph and Splendor cruise ships. 

Senator Rockefeller set his sights on the cruise industry at a Senate hearing last year following the deadly disaster of the Carnival-owned Costa Concordia cruise ship.  Rockefeller grilled the cruise industry's CEO and questioned why the cruise lines avoided most U.S. taxes and did not reimburse the federal government for the services of some 20 federal agencies.

Senator Rockefeller recently sent a letter to Carnival CEO Micky Arison, who is worth over 5.7 billions dollars, demanding an explanation why Carnival paid virtually no U.S. taxes even though the Panamanian incorporated cruise line uses the services of the U.S. Coast Guard and other U.S. agencies on a daily basis.  Carnival's response was labeled "shameful" by Rockefeller.

NBC aired a special on the story and interviewed Rockefeller (and me) during the program. NBC's Rock Center commissioned an audit of Carnival which revealed that Carnival paid 0.6% in international, federal, national, and local taxes on its many billions of dollars in income over the course of the last 5 years.    

Numerous news sources, including the Huffington Post, published articles highly critical of Carnival. Since then, Carnival has been the butt of "poop ship" jokes and ridiculed for non-payment of U.S. taxes. Carnival has been clobbered in the arena of public opinion.    

Carnival released a statement today saying: “Although no agencies have requested remuneration, the company has made the decision to voluntarily provide reimbursement to the federal government.”

Senator Rockefeller responded by saying: “I’m glad to see that Carnival owned up to the bare minimum of corporate responsibility by reimbursing federal taxpayers for these two incidents. I am still committed to making sure the cruise industry as a whole pays its fair share in taxes, complies with strict safety standards, and holds the safety of its passengers above profits.”

The issue of Carnival's avoidance of paying taxes and for U.S. services has been brewing for years. The International Cruise Victims (ICV) organization, a non-profit organization focused on crimes and disappearances of passengers on cruise ships, has addressed the issue of cruise tax avoidance for years.  ICV CEO Ken Carver sent a Freedom of Information Act (FOIA) request for the costs associated with the U.S. Navy and U.S. Coast Guard responding to the disabled Carnival Splendor in November 2010.

Mr. Carver's investigation led to a response from the Navy which revealed that the Navy incurred $1,884,376.75 in responding to the disabled Splendor which included sending the U.S. aircraft carrier Ronald Reagan and helicopters to the fire stricken cruise ship.

Read: Your Tax Dollars At Sea - Who Pays When Things Go Wrong on Cruises?     

Congratulations to the ICV and CEO Ken Carver for raising this issue over the past years.

• Comments (1)

As I mentioned earlier, Carnival responded to Senator Rockefeller's letter inquiring into the cruise line's avoidance of U.S taxes and its refusal to reimburse federal agencies for services rendered with what I characterized the other day as a "screw you!" letter.

Today news sources are reporting that Senator Rockefeller characterized Carnival's response as "shameful."  

Carnival's letter dodged the central question of exactly what and how much the cruise line pays in taxes.

A recent audit of Carnival's finances on behalf of NBC News revealed that Carnival paid only 0.6% in taxes on the billions and billions of dollars collected from its passengers over the last five years. That's less than 1% in local, state, federal and international taxes. 

One thing is clear to me at this point. Senator Rockefeller is not going to drop the issue after receiving a blow-off letter like this from Carnival's CEO Arison.  

Rockefeller convened a hearing last year after the Costa Concordia disaster and grilled the cruise line's representatives at that meeting about the non-payment of taxes, non-payment for the services of the Coast Guard and other federal agencies, and pollution.

Rockefeller seems likely to schedule another one soon. 

This may be a good time to introduce legislation to create some meaningful oversight of foreign cruise lines given the public's loss of confidence in Carnival following its streak of cruise ship fires and disabled ships.   

• Comments (1)

Tonight Seatrade Insider published an article about Carnival CEO Micky Arison's letter to Senator Rockefeller who has been critical of Carnival cruise line's avoidance of taxes and non-payment of services to federal agencies like the U.S. Coast Guard.

You will recall that Senator Rockefeller, who convened a hearing last year after the Carnival-owned Costa Concordia cruise ship killed 32 passengers and crew members and injured or terrorized thousands of others, sent a letter to cruise tycoon Arison last week. Rockefeller asked Arison whether Panama-incorporated Carnival though it was fair that it paid a pittance in taxes. Rockefeller asked Arison to pay for the considerable services incurred by US federal agencies when Carnival cruise ships caught on fire or were disabled on the high seas.    

You will not find a copy of the letter from Arison to Rockefeller anywhere on line. The only one talking about the letter is Seatrade Insider, because Carnival sent an advance copy of the letter to its friends at that cruise publication. 

Why did Seatrade Insider receive an advance copy? Because that publication is an associate member of the cruise industry trade organization Cruise Line International Association (CLIA) whose goal is to advance the interests of the cruise lines. Seatrade Insider did not bother to publish the letter but obviously supports everything the billionaire cruise CEO said and it summarily dismissed all of Senator Rockefeller's well-founded points.

Arison's letter enclosed responses signed by Carnival vice president for corporate maritime policy James Hunn. Carnival says that is has no intention of reimbursing the U.S for anything. Carnival also does not contest the fact, brought out by a NBC special last week, that over the last 5 years it paid only 0.6% in local, state, national and international taxes on the many billions of dollars in revenues collected each year.  Last year, Carnival collected over $15 billion in revenues.

Earlier today, Carnival lost one of its greatest supporters when the editor of the Cruise Critic cruise fan site, Carolyn Spencer Brorwn, stated that she would not cruise on Carnival and she recommended that the Cruise Critic readers "book elsewhere."

We'll comment further on Arison's letter after it is received by the Senator and released to others outside of the cruise line's cheerleaders like Seatrade Insider.  

April 3 2013 Update: You can read the letter here.   It seems to dodge some of the requests for information and documents. It's argumentative.  And it down-plays the seriousness of most of the 90 incidents involving Carnival over the past several years.   

Photo Credit: Jim Walker

• Comments (3)

In an exclusive story, Cruise Line News has learned that cruise industry giant Carnival Corporation recently incorporated its business in the United States (in the state of Delaware). Carnival intends to announce this historic development tomorrow, April 2nd, at Carnival's headquarters in Miami.

Since 1972, Carnival has incorporated its business and registered its cruise ships in the country of Panama. For over 40 years, Carnival cruise ships have flown the flag of Panama in order to avoid the onerous safety regulations, excessive labor laws, unreasonable environmental laws, and high taxes of the United States of America.

Cruise Law News' discovery of this historic event came about when prominent maritime lawyer Jim Walker bumped into Carnival's CEO Micky Arison at court side when Arison's championship basketball team, the Miami Heat, won another game.  Maritime ace lawyer Walker asked Arison: "Micky, if Dwayne Wade and LeBron James earn several hundred million dollars from Carnival and pay tens of millions of dollars in U.S. taxes, don't you think it is fair that Carnival - which earns over 15 billion dollars a year in cruise ticket sale - pays a few billion dollars in U.S. taxes?"

Perhaps it was the euphoria of the Heat beating the San Antonia Spurs by two points in a close overtime victory, but Micky was ecstatic. "Yes, let's do it!" he said handing maritime lawyer Walker a half-eaten hot dog and three-quarters of a warm Bud Light which a Miami cheerleader handed Micky in the first quarter of the previous game a few days earlier.

While quickly consuming the beer and hot dog in the excitement of the moment, expert cruise lawyer Walker happened to have U.S. articles of incorporation which he handed to Micky to sign as well as U.S. flags to fly on the Carnival fleet of cruise ships.

Arison has been under intense pressure lately following fires, collisions, sinkings, pirate-attacks, flounderings, norovirus outbreaks and a Jon Secada onboard concert which have ruined the last 37 Carnival cruises.  Just last week Senator Jay Rockefeller called Arison a "scallywag" on national TV. Rockefeller challenged Arison to pay his fair share of U.S. taxes on the bounty his foreign-flagged cruise ships collect on the high seas. 

Micky commented that he was embarrassed that his father Ted, the founder of Carnival Cruise Lines 40 years ago, denounced his U.S. citizenship in order to avoid paying some 10 billion dollars in U.S. taxes.

"I want to make certain that Carnival pays one hundred % of our U.S. tax obligations (estimated to be over $5,000,000,000 a year) plus be subjected to the most rigorous U.S. safety, wage,and labor laws and the most stringent U.S. environmental regulations, Micky announced over the arena's PA system! "I want Carnival Cruise Line to be synonymous with Old Betsy - the U.S. Stars and Stripes - what the U.S. stands for! Its time that indigent crew members from India and Nicaragua who earn $500 working 360 hours a month be entitled to the full benefit of U.S. employment laws, a 401(k) retirement fund, severance pay, and a college fund for their children!"

While appreciative of Arison's change of heart, sources say Walker was miffed that Arison demanded that he pay $6 for the remains of the hot dog and $7.50 for the rest of the Bud Light.

April 1 2013 Update: South Florida Business Journal picks up on this shocking development in the cruise industry. Read here.

• Comments (8)

Last night NBC Rock Center with Brian Williams aired a special on Carnival CEO Micky Arison who has a net worth reportedly of around $5,700,000,000.

One of the secrets to Arison's wealth is that his cruise line, Carnival, according to NBC News, paid around 0.6% in taxes at the federal, state, local and international levels over the past 5 years. That's less than 1% tax on all of the billions and billions in revenues collected from U.S. tax-paying citizens. 

Plus Carnival does not pay for the services provided by the U.S. federal agencies such as the U.S. Coast Guard or the U.S.Navy for responding to disasters at sea which disable Carnival cruise ships.

You can watch the video below produced by Tom Bettag and interviews by Harry Smith: 

• Comments (1)

Tonight NBC will take a hard look at Carnival CEO Micky Arison who I have written about on this blog. 

Micky Arison is well liked here in Miami, mostly for bringing a couple of NBA basketball championships to South Florida - first with Shaq and later with D-Wade and Lebron James who he has spent hundreds of millions of dollars on. He is extraordinarily wealthy with somewhere between 5 and 6 billion dollars.

Arison is also extraordinary in his ability to exploit crew members from impoverished countries like India and the Caribbean islands who work over 350 hours a month for as little as $550.

At 10:00 PM EST tonight, NBC's Rock Center television program will air its investigation into Carnival's cruise line business and how Arison has profited greatly from it. 

Carnival's CEO Micky Arison has incurred the wrath of Senator Jay Rockefeller who expressed his outrage to NBC over Carnival’s abuse of the loopholes in the tax system. Rockefller recently sent a letter to Arison which you can read about here.

Rockefeller, chairman of the Senate Commerce Committee, told Rock Center's Harry Smith that he regards Carnival “very poorly” as a corporate citizen. Rockefeller says Carnival's extremely low tax rate is "disgusting" particularly  because of the cruise line's extensive use of federal agencies like the US Coast Guard.

NBC points out that the cost of US assistance to the fire-disabled Triumph cruise ship was $779,914.26. And another Carnival ship, the Splendor, suffered an engine fire two years ago that required assistance from the US Coast Guard and the Navy. That cost each service more than $1,500,000 which Carnival did not pay.

During the program tonight, you will see veteran newsman Harry Smith interview me as well. You can watch the video here or wattch the video below.

Will CEO Arison be on the program? No. He's a no-show, just like he has never appeared at the scene of a cruise fire, collision, or catasrophe involving his cruise line guests.

Interested in this issue?  Here are some other articles I wrote on Micky Arison:

Carnival CEO Micky Arison's Net Worth Increases from $4,700,000,000 to $5,700,000,000, Notwithstanding Costa Concordia Disaster

Hard Times For Carnival? Hardly.

Profits Over People: Carnival's Exploitation of Crew Members is Standard Industry Practice

Cruise Crisis Management FAIL - How Carnival is Ruining its Reputation Following the Costa Concordia Disaster

Is Carnival's Micky Arison a Greedy Corporate Pig?

Art Credit: Nickolay Lamm from MyVoucherCodes.co.uk

• Comments (1)

Twitter Smack Down!

A few minutes ago Senator John Rockefeller tweeted to Carnival CEO Mickey Arison:

".@USCoastGuard responded to 90 incidents with Carnival ships in 5yrs- with passengers onboard. This needs to change" http://1.usa.gov/152nF2x "

Senator Rockefeller linked his tweet to a letter he sent to Micky Arison today expressing his deep concerns regarding the safety of Carnival ships and indicated that he was not surprised by the latest incident today regarding the Carnival Dream.  He also sent the Carnival CEO a list of questions and requested documents.  You can read the remarkable letter here. 

Senator Rockefeller also posted a Coast Guard spread sheet listing a "string of 90 marine casualty incidents with passengers onboard Carnival ships in the last five years." You can see the list here.

Senator Rockefeller wrote "just today, we’ve been reminded of Carnival’s dismal safety record with reports that the Carnival Dream is experiencing problems. The ship is stranded in a Caribbean port with no power and thousands of passengers trapped onboard. Last month, the Coast Guard spent almost $780,000 in responding to the Carnival Triumph incident – costs that are paid by federal taxpayers.” 

Rockefeller held a Commerce Committee oversight hearing in March 2012, following the Costa Concordia disaster, to examine deficiencies in the cruise line industry’s compliance with federal safety, security, and environmental standards and review whether cruise ship industry regulations sufficiently protect passengers and the environment.

We attended the hearing and blogged about the hearing where Senator Rockefeller said to the cruise line representatives: "You Are A World Unto Yourselves."

Senator Rockefeller's stinging rebuke of Carnival comes as the cruise industry just ended its annual cruise convention at the Miami Beach Convention Center.  The cruise executives all touted the safety of the industry and how "rare" cruise mishaps allegedly are.

So far, no tweets by Arison in response to Senator Rockefeller's tweet.

Arison spends most of his time on Twitter tweeting about his Miami Heat basketball team.

• Comments (3)

USA TODAY has an interesting article today entitled "Titans of the Cruise Industry See Net Worth Rise."

Forbes' annual ranking of the world's billionaires for 2013 lists Carnival mogul Micky Arison at No. 211 with a net worth of $5.7 billion, up from $4.7 billion a year ago.  Arison's net worth has nearly doubled from four years ago.

Another Carnival heir, Shari Arison, is now worth $4.2 billion, up from $3.4 billion just three years ago, according to Forbes.

Carnival operates over 100 cruise ship among 10 brands including Carnival, P&O Cruises, Princess Cruises, Holland America Line and Cunard.

How does cruise tycoon Arison get so rich?  

Registering his cruise lines in foreign countries (like Panama) to avoid U.S. corporate taxes, operating foreign-flagged cruise ships filled with employees from around the world who will work long hours for low wages, not reimbursing the U.S. government for millions incurred by federal agencies like the Coast Guard, Navy, etc., and offering peanut settlements to tax-paying U.S. citizens when his cruise ships sink or catch on fire may be part of the explanation. 

Art Credit:  Nickolay Lamm from MyVoucherCodes.co.uk

Leave a comment below or discuss the issue on our Facebook page.

• Comments (2)

Carnival CEO Micky Arison joined Twitter in 2010. I was curious to see how such a big shot cruise executive would interact with the common man on such a popular social media platform like Twitter.

After the Costa Concordia disaster killed 32 of his cruise guests and crew members, cruise CEO Arison made no public appearances. When he was first seen in public it was at the Miami basketball arena here in Miami to watch his Miami Heat play. His first tweet after Concordia sank was "Let's Go Heat." Even when the world press focused on his insensitive and selfish antics, Arison could have cared less it seems. He tweeted away about his celebrity friends and his star studded basketball team as if Concordia never sank.     

Yesterday Forbes published an article how Arison's cruise empire avoids U.S. income tax - "Ship Isn't The Only Thing That Stinks At Carnival: Low Tax Rate Stirs Ire".  

Forbes explains that Carnival collects billions of dollars every year, but pays about a 1% tax rate because the Arison family incorporated the cruise line in Panama. Even though the cruise line benefits from being located here in Miami and uses the services of the U.S. Coast Guard, U.S. Customs and many other agencies, it essentially gets a free ride. 

As Forbes states: "While the U.S. Coast Guard patrols the seas for Carnival’s ships – and, in the case of the Triumph, towed them back to safety – Carnival ducks out on most U.S. taxes."

Carnival's CEO Arison is a shrewd businessman. He know how to work the system.  His cruise ships use the ports in the U.S. and foreign countries for free.  Local citizens like you or me pay for the port terminals. If there is a port fee or head tax, the passengers pay it. When it comes to his basketball team, the local citizens pay for that too.

The Arison family have been gaming the system for 45 years. They will say that they are taking advantage of legitimate tax loopholes in the I.R.S. Code.  But that begs the question of why the federal tax code is drafted as if it were written by Carnival's tax lawyers and why it has not been amended to result in Carnival paying a reasonable and fair shore of its share.  The truth is that Carnival and other cruise lines spend many millions of dollars lobbying Congress while hiring high ranking federal directors of federal agencies to keep the cozy status quo exactly like it is.

But how much is enough for Arison? Fifteen years ago a local journalist asked "Is Micky Arison a Greedy Pig?"  I repeated the question here a few years ago.

Arison is the richest person in Florida, worth over $5,000,000,000. Two months ago, he paid himself a end-of-the-year bonus of $90,000,000 - in the same year where his Concordia killed 32 people. The stricken cruise ship still lies on its side in the waters of Giglio, and the victims of that terrible ordeal were offered only $15,000 by Carnival, but Arison pays himself a $90,000,000 year end bonus.

After the Carnival Triumph ignited off the coast of Mexico last weekend, Arison made no public statements.  Later that Sunday afternoon, there Micky sat at half-court at the Miami Arena watching his Heat beat the Lakers. His last tweet today was an instagram photo of him and Beyonce'.

Just how out-of-touch is this cruise CEO with the reality of the world around him?  Over 4,000 of his guests and ship employees endured a week-long-cruise-from-hell aboard the urine and fecal stained Carnival Triumph but Arison tweets a photo of him hanging with Beyonce'.

The question arises again. Is Micky Arison a greedy pig? In answering the question, consider Arison's bio on his twitter page:

"CEO of Carnival. Owner of your @MiamiHEAT I do not respond to requests for free cruises or tix. Unfortunately we have to pay for fuel, food & players."  

"Unfortunately we have to pay for fuel, food and players?" What a cynical mantra for his luxurious life.

How much greed does it take to turn Arison's enormous prosperity into petty bitterness over having to pay for food for his cruise guests and pay for the salaries of basketball players who bring him so much wealth, power and prestige?

So if you are just arriving home today from Arison's disgusting & disabled cruise ship after another cruise-from-hell, whatever you do, don't ask Micky for a free Heat ticket or a free cruise. He's too busy hanging with Beyonce' to even consider such a request.        

• Comments (6)

The Week magazine in the U.K. reports that Italian lawyers are filing a criminal complaint against Carnival CEO Micky Arison as well as other American and British directors of Costa's dual listed parent companies, Carnival Corporation and Carnival PLC. 

The article written by Andrea Vogt, "Costa Concordia: UK Directors to be Named Responsible for Capsize," explains that lawyers for Costa Concordia victims allege that the Carnival directors "not only tolerated but promoted" the ship salute that led to the disaster in order to entertain the passengers and boost profits. 

Ms. Vogt explains that new evidence to be filed in the case alleges that criminal responsibility for the deadly wreck does not stop with Captain Schettino, "but goes all the way to the top."

The criminal complaint will be filed in Grosseto, Italy, by an Italian law firm in Milan.

It names 14 Carnival directors, including Sir John Parker, chairman of Anglo American plc and vice chairman of DP World Limited; Sir Jonathon Band, former First Sea Lord and Chief of Naval Staff; Arnold Donald, president and CEO of the Executive Leadership Counsel; Debra Kelly-Ennis, former president and CEO of Diageo Canada; and Micky Arison, chief executive of Carnival. 

Arison was roundly criticized for trying to distance himself from the Concordia disaster.  He is photographed above standing in front of the Concordia with Costa CEO Foschi. 

• Comments (3)

The financial cruise news today is all doom and gloom with cruise giant Carnival reporting another major drop in profits which everyone is attributing to the Costa Concordia cruise ship disaster last January. 

Carnival announced today that it made a net profit of $93,000,000 in the three months leading up to November 30th. Now, is 93 million dollars in profits a bad deal?  Well apparently so compared to the $217,000,000 in profits in the same quarter last year.  Carnival's stock dropped 5.4%. 

Carnival honcho Micky Arison lamented that "as a result of the Costa Concordia tragedy in January, the past year has been the most challenging in our company's history."

Sorry, Micky. I don't feel your pain.  

You seemed to be smiling on the front row at your AA basketball arena the other night as the Miami Heat trounced the Minnesota Timberwolves. Yes it was a great game. But $20 to park the car, $14 for a 16 ounce beer, another $14 for a hot dog, and $11 for two tacos seems a bit steep; I'm not going to even mention the ticket prices.   

Didn't you just pay yourself a $90,000,000 bonus a couple of weeks ago?  

$90,000,000 to you.  $93,000,000 to the stockholders.  Seems fair to me.  After all, I'm drinking your $14 beers.

• Comments (4)

Miami's Daily Business Review reports today that Micky Arison paid himself a "special year-end dividend" of $90,000,000. Yes, that's 90 million dollars.

Cruise CEO Arison is not the only executive in Florida lining his pockets, as the Review states that other executives in Florida are paying themselves dividends in the range of $250,000 to around $20,000,000. The newspaper states that the whopper of a dividend was probably paid due to expectations that federal tax rates will jump next year. I suppose that's called the "Romney-didn't-win-dividend."

Arison is already by far the richest person in Florida with a net worth of many billions of dollars. The last time I checked it was over $4,000,000,000, or maybe it was $7,000,000,000. I forget. What's an extra billion or two?

I was thinking of entitling this blog "Micky Arison is a fat greedy pig" but at least one journalist already called him that over a decade ago. So I'll keep what I'm thinking to myself.

But, I have to add that it must be something to be the CEO of a foreign corporation that pays no U.S. federal taxes and owns a $600,000,000 cruise ship which sank (the Concordia operated by subsidiary Costa) and killed 32 people and at the end of the year you pay yourself an additional $90,000,000. Yes, the disaster caused some lost revenue for Carnival for a few months. But by the end of the year, Carnival profits are higher than ever. 32 dead customers and crew are not a problem if you keep them from filing suit in the U.S. 

While Arison pays himself a dividend of $90,000,000, he offered the families of the dead and traumatized Concordia passengers $15,000 each. 

When I think of Arison paying himself an extra $90,000.000, I also think of the 150 waiters from India who worked for P&O Cruises (another Carnival subsidiary) who were fired earlier this year at the instructions of Carnival's executives after they went on strike for about an hour in Seattle over low pay and the non-payment of tips. There are now 150 families struggling in India because Carnival made an example of them to show what happens if crew members in Carnival's fleet of 100 cruise ships complain about low pay.

Earlier this week, Arison's cruise line ignited controversy by issuing a last minute edict that passengers who bought tickets on Carnival's drag queen cruise would not be permitted to dress in drag in order to avoid offending "family values." When a boycott was threatened that might result in Carnival losing millions from the offended LGBT community, Carnival reconsidered and lifted the ban on dressing drag.

Always following the money, Arison obviously thought that paying himself a $90,000,000 dividend was not a drag either.   

I wonder what Arison will do with the extra $90,000,000?  Raise wages for his loyal employees on his cruise ships? Invest in a health clinic in India for Carnival crew? Donate the money to a charity for sick seafarers?  Ha. That's something Bill Gates or Warren Buffett would do.  

Read some of our other articles about CEO Arison and judge for yourself. 

Cruise Line Fat Cat Billionaires    

Breaking News: Carnival Cruise Lines Incorporates in the U.S. and Subjects Itself to U.S. Labor, Wage, Safety and Environmental Regulations

Is Carnival's Mickey Arison a Greedy Corporate Pig?

Consider leaving a comment below or on our facebook page.

• Comments (3)

It's approaching six months since the death of ill fated Costa Concordia.  But it seems like yesterday that the renegade Costa captain crashed the $500 million cruise ship ingloriously into the granite underwater rocks surrounding the little island of Giglio, terrorizing over four thousand passengers and crew and killing innocent souls who were simply trying to enjoy a vacation cruise.   

But the news today is not about the Concordia disaster. Cruise bookings are up for Costa, the travel experts tell us. The reports of the demise of the Costa brand predicted earlier this year, are old and now disregarded. Costa has brought a brand new cruise ship online with great fanfare. Things are looking up for the cruise lines, the cruise lines tell us.

The last thing on the mind of CEO Arison of Carnival Cruise Lines, the owner of Costa, is the death, doom and gloom associated with the Concordia disaster.  Arison is a happy camper. He just celebrated his multi-million dollar Miami Heat basketball team winning another NBA championship.

The champagne is still flowing.

Fat cat cruise CEO's like Arison don't lose sleep over disasters. OK, 32 dead. It could have been worse.  Shit happens.  A 500 million dollar cruise line lying on its side in the water. Thank Poseidon, God of the Sea, that we are fully insured for the hull and lost revenues. I'm still worth billions. Let's move on. Is the Heat going to win the championship?  

That's how billionaire Arison thinks.  He misses no sleep worrying about dead customers.  

But there are people who haven't forgotten the terror of January 13th.  There are passengers and crew members who can't sleep because of the terror of that night.  There are parents, spouses and children who grieve their dead children, soul mates and parents.         

What do the families of the Concordia victims think watching the spectacle of Arison on TV laughing and holding his NBA championship trophy over his head?  

Do the the families of the dead awake in the middle of the night triggered by the thought that those responsible for killing their family members care not an iota for their loves ones' suffering while holding NBA trophies and drinking champagne? 

• Comments (2)

A dozen newspapers in the U.K. have reported on P&O Cruises' decision to pay its crewmembers a basic salary of 75 pence an hour (around $1.20 an hour) which turns out to be approximately $400 a month. Cash tips are being phased out with automatic gratuities being added to the passengers' bills. But rather than forwarding the passengers tips to the crew, the cruise line has threatened to withhold tips if the crewmember's rating falls below 92 percent.

In grade school, a 92 is an "A-."  So if a waiter who works a minimum of 11-12 hours a day (330-360 hours a month) receives a 91 (a "B+"?), management will pocket the tips?  

The Guardian newspaper reports that P&O Cruises justifies the move claiming that it is actually "good" for the crewmembers because many tourists don't tip.  It quotes David Dingle, CEO of Carnival UK, in charge of P&O cruise lines, saying that the crew were allegedly "much happier" and P&O's pay scale is "standard for the industry."

Some passengers reported that many of the crewmembers on a P&O cruise ship, mostly Indians, were at the point of tears upon hearing the news.

Carnival U.K. CEO Dingle tells the Guardian that "we have a manning office in Mumbai. There are queues out on to the street."  Ah, the desperate lining up, praying that Mr. Dingle will bestow them with the opportunity to work 350 hours a month for $400.

This no reason to exploit people.  But it is a revealing insight into why Carnival and P&O exploit their employees. They can and therefore they will. 

The U.N. reports that over 410,000,000 people from India are living below the poverty level.

Dingle is also right about low pay being what he calls "standard for the industry."

Carnival and Royal Caribbean in the U.S. pay cleaners from Jamaica as little as $545 a month. They expect them to grind out 12 hours days for 6 to 8 months straight.  For a 31-day-month, that's 372 hours for $545, less than $1.50 an hour.  And when the crewmembers' bodies break, the cruise lines dump them back home without medical care and treatment. 

Corporate Watch has an interesting article which characterizes the low P&O pay as shameful.  Fares for the Carnival Legend range between $2,798 and $6,458 per passenger for a 12 day cruise around northern Europe. Yet, P&O workers would need to work for 500 days straight to pay for a cruise themselves, assuming that they did not spend a single penny of their wages.

Carnival Corporation has annual revenues of $15.8 billion in 2011 and profits of $2.2 billion.  Micky Arison is Florida's richest person with a net worth of many billions.  But Arison is no Gandhi.  You will find him counting his billions on his 200' super-yacht or on the front row of the AA arena in Miami watching his hundred million dollar super-star basketball players.  Trust me, he's not worried about Indian waiters getting their tips.   

I can't imagine working 350 hours a month for $400, hoping that the guests I slaved away for would reward me a score higher than a 92.  An "A" or no tip?  You would think that a company earning billions a year (tax free to boot) wouldn't jack up a crew member for $150 in tips. But there is no satisfying this type of corporate greed.   

But who cares?  There are many young Indian men in line at the hiring agency in Mumbai hoping to be the next one to be hired to work aboard a P&O cruise ship.  

• Comments (5)

Carnival held its annual meeting this morning at a hotel on Miami Beach. But today was different from the usually dull, self-serving pontificating by cruise line executives when a group demanding that Carnival pay its fair share of taxes appeared on the scene.

An organization called "1Miami" challenged Carnival and its CEO Micky Arison to pay their "fair share" of taxes.  Their presence caused an uproar with shareholders yelling at the protesters to be quiet and CEO Arison apologizing for the clamor.

Cruise lines avoidance of taxes is one of my favor topics.  Cruise lines like Carnival are registered in Panama to escape U.S. taxes.  According to the New York Times, Carnival paid taxes of only 1.1 percent of their $11.3 billion in profits over the last five years.  The issue is a hot one after Senator Rockefeller grilled cruise line executives at a Senate hearing last month why cruise lines use some 40 federal agencies yet avoid all U.S. taxes by registering their businesses and ships in places like Liberia and the Bahamas.

This is a story I have written about a lot: Is Micky Arison A Greedy Corporate Pig?   Nothing subtle here.

You can also check out some other articles No Taxes - The Cruise Line's Dirty Little Secret or Your Tax Dollars at Work - Who Pays When Things Go Wrong On Cruises? 

The "controversy" was caused by the 1Miami grass roots organization simply asking Carnival to pay its fair share of taxes and help keep Miami afloat.

The Miami Herald reported Carnival's claim that it pays "head taxes" to ports around the world.  But this is hardly true; its the passengers who pay the port taxes.  Carnival just acts as a middle man. The Herald also writes that CEO Arison found the tax questions "insulting."  

Ah, a raw nerve.  Arison is very touchy about the issue of taxes. This is probably because he is the richest person in Florida.  And probably because of some slick and embarrassing tax maneuvering by his father, Ted Arison.    

Carnival was created by the senior Arison in the 1960's.  He raked in tens of billions of dollars from tax paying U.S. passengers, exploited the hell out of Caribbean crew members, and lived the good life in Miami. But he registered his Miami-based cruise line and his cruise ships in Panama to avoid U.S. taxes. In 1990, he abandoned Miami, denounced his U.S. citizenship, and returned to Israel with his billions in a ploy to avoid estate and inheritance taxes.

Carnival should have seen the protesters coming from a mile away.  

Earlier in the week the 1Miami group protested about Carnival's non-payment of taxes while in small boats next to Arison's super yacht, the 200 foot Feadship Mylin IV, at the Miami Beach marina.

You can watch the video here.

Arison's personal yacht, by the way, is registered in the Cayman Islands - to avoid taxes.  

• Comments (2)

Let me place my biases front and center.

I am no fan of the Miami Herald.  it's beholden to the cruise industry which pays it for cruise advertising ads.  The Herald's "business" editor, Jane Wooldridge, is the former travel editor for the newspaper. Although she graduated with me from Duke in 1980, she is at the opposite of the spectrum.  She unabashedly praises the cruise lines whether they are right or wrong.  

I have written some unflattering articles about both the Miami Herald and Ms. Wooldridge which you can read here, here and here.

Unlike the L.A. Times, the New York Times, or other newspapers with some sense of investigative journalism and professional integrity, the Miami Herald is a journalistic mistress to the Miami-based cruise lines.

So it was no surprise to me that when Carnival CEO Micky Arison decided to give his first interview after the Costa Concordia disaster, he picked his friends at the Miami Herald.  They were happy to offer up some softball questions for Mr. Arison for him to pitch the cruise industry's talking points.

Arison and the Carnival president Howard Frank touted the wonderful safety record of its subsidiary Costa, saying such unchallenged drivel as: "we as a company do everything we can to encourage the highest safety standards."

Arison whined: “No matter what I would’ve done, I think I would’ve been criticized.” 

He touted Carnival as offering a "great vacation value, a great product, a safe product at a fantastic price.”

The assessment by Arison's next in command Howard Frank was more of the same, referring to Costa as a "great company and a great brand, with a terrific management team and with a great future."

Today, the cheer-leading by the Miami Herald continues in its article "Getting the Cruise Industry Back on Course."

The Herald touched on the recent troubles afflicting the Costa brand with the capsizing of the Costa Concordia and the fire aboard the Costa Allegra, as well as cruise over-boards and norovirus cases. However, it was careful to call upon cruise line executives and cruise lines fans to place the cruise into a positive light.

The article calls upon the usual cruise line shills like Carolyn Spencer Brown, who recently wrote an article for Conde' Nast Traveler.  She falsely represented that no one died on the latest Carnival cruise ships which caught on fire - read my open letter to Ms. Spencer-Brown for the truth - and she blamed the parents of a 16 year old girl who was the fancy of a NCL pedophile child porno collector assistant cruise director in a stairwell of the cruise ship.

The Herald was careful not to include any survivors of the Concordia disaster, representatives of victim organizations or neutral experts to comment on the nasty state of affairs of the cruise industry.

• Comments (1)

Italy announced that it is ending recovery efforts to locate the missing passengers and crew of the Costa Concordia due to the dangerous conditions which surround the stricken cruise ship.

• Comments (1)

It was only a matter of time before the public would realize that the crash of the Costa Concordia involved far more than just the actions of a reckless cruise ship captain.  Costa's quick smack down of Captain Schettino (photo left) was not an impulsive outburst by the Costa CEO Pier Luigi Foschi.  It was undoubtedly a decision carefully thought out with the involvement of the Carnival decision makers in Miami.  

If Schettino had to be lynched by public outrage to save the cruise corporations, so be it.

However, It seems that the much talked about "fly-by" of Giglio may not, after all, have been showboating of an unpredictable captain but initiated and approved by the cruise line itself back in Genoa.  And if Costa knew about and ratified the dangerous maneuvers which took over 4,000 lives perilously close to the rocks, then what does this say about the safe operations of the entire Carnival fleet with its fleet of over 100 ships carrying hundreds of thousands of passengers every day?

The spotlight has now moved from Captain Schettino to Costa in Genoa and now to Carnival Corporation here in Miami.  But where is Carnival's CEO Micky Arison?

Arison is trying to remain anonymous.  But that's hard to do.  After all, he is the smiling face of the Carnival "fun ship" fleet.  He is the big name owner of a high profile NBA basketball team of superstars, seen at court side rubbing elbows with celebrities at the Miami Heat games.  But he obviously does not want to be identified with this mess.  Arison does not want his mugshot to be posted alongside the likes of bad guy Schettino or rat fink Costa CEO Foschi (photo right). 

Two days ago I wrote that Arison and other Carnival cruise executives are ruining their reputations by not flying to Italy and speaking to the surviving passengers  and crewmembers     

Now the international press is calling Arison out.

Cruise writer John Honeywell of the U.K.'s Mirror wrote a strongly worded article today demanding answers from Arison:  Concordia: Arison Must Act Now.

The London Independent followed suit by the article Concordia's Invisible US Owner Branded "A Disgrace."

Independent quoted Italy's La Repubblica newspaper asking: "Who is this mysterious boss and how has he managed to remain like a ghost since the tragedy?" 

Business Insider was to the point with Carnival Is Failing Spectacularly In The Handling Of Its Costa Concordia Crisis.

Where is Micky Arison?" asks The Wall Street Journal in an article Carnival CEO Lies Low After Wreck.

The Miami Herald, which will usually shy away from any critical issues which may embarrass the cruise lines which advertise with the newspaper, published the article Carnival Cruise Lines Faces a Hostile PR Tide. 

The Herald quoted two PR experts saying:

“Micky Arison should come out, and take ownership, and get in front of the story.

"I would have had him go to the scene.  Micky is a likable guy and pretty well known.  This is one of those cases where I think the presence of the CEO would have been helpful.”

These PR experts are right.  Arison is well liked by cruise fans and travel agents.  He is loved by the local NBA fans, particularly after he brought Shaq to Miami from LA and won the NBA basketball championship. 

When the Heat won the NBA, Arison was photographed everywhere and with everyone, holding his prized trophy.  He even took his trophy on a world wide tour, including taking it on Costa cruise ships.  A photo (right) of Arison and Foschi, in happier days, show them with the NBA trophy aboard the Costa Allegra cruise ship.

But now with around 30 dead or missing from the Concordia wreck, Arison is nowhere to be seen.  Arison has never stepped up to the plate to address unpleasant issues, like sexual assaults on his fleet of cruise ships, Carnival's avoidance of taxes, or exploitation of foreign crewmembers.  

I don't see Arison appearing anytime soon before a microphone to discuss the deaths of his cruise guests either. 

Photo credits:

Captain Schettino:  Karl Ritter

Costa CEO Foschi:  Tano Pecoraro / AP

Carnival Ceo Arison:  Reuters

Arison & Foshi with trophy:  NBA.com 

• Comments (2)

A cruise line's reputation in a time of crisis is often formed not by the circumstances which caused the crisis but by the company's attitude, appearance, and action afterwords.

I call this the "three A's" of cruise line crisis management: attitude, appearance & action. 

When disaster strikes and passengers are injured or killed during a vacation cruise, the U.S. public has a remarkable capacity to forgive the individuals and companies involved.  Part of this tendency to forgive, rather than judge, is tied to the Judeo-Christian heritage of our country - where we sacrifice resentment and seek redemption in the process.

In practical terms, Americans understand that accidents are inevitable.  "Sh*t happens," the saying goes.  Bad things happen to good people.  An individual or company should be forgiven if they demonstrate a humble and respectful attitude; they appear on the scene to take stock of the problems they caused; and they take prompt action to help others injured by their conduct.        

So how have the principal actors in this drama performed so far?

Captain Francesco Schettino failed  miserably.  His attitude has been defiant.  His appearance?  None.  He abandoned ship in dereliction of the traditional maritime duty to stay with the vessel dating back to the Medieval Sea codes.  He fled the scene of a crime.  His actions?  Self preservation. Disregarding orders by the Italian Coast Guard to return to the cruise ship and assist in the evacuation.  Lying.  I slipped-and-fell-into-a-life-boat defies reason and belief. 

Costa's chief executive, Pier Luigi Foschi, and parent company Carnival's CEO, Micky Arison, are close behind the disgraced captain in trying to ruin their reputations.

Arison admittedly expressed his condolences from the comfort of his 200 foot luxury yacht in the Miami area.  But carefully crafted corporate PR statements go only so far.  He failed to appear at the scene.  How hard is it to hop in a Gulfstream jet and fly to Rome and then head over to the island of Giglio? 

In Miami, we hear snickering that as the Costa Concordia sits on its side with dead passengers still trapped inside, some of the the Carnival executives have been seen gallivanting around town at black-tie gala parties and even Miami Heat professional basketball games.  (CEO Arison owns the Miami Heat.)  But it was only this weekend, one week after the crisis started, that Arison sent senior executive Howard Frank to Italy.  Even then, Howard appears to be in Genoa where Costa's headquarters are located.  He apparently has no intention of making an appearance at the scene of death and destruction.

Although the physical presence of corporate executives at the scene of a mass disaster may be largely symbolic, such visual images are important to demonstrate the corporation's attitude of concern and compassion.

President George Bush was perceived as demonstrating the right attitude when he appeared at the remains of the Twin Towers following 9/11.  He was photographed (left) standing on a pile of smoking rubble, with his arm around a fire chief, encouraging other fire fighters through a bullhorn.   But when Hurricane Katrina struck New Orleans and images of panicked residents waving to helicopters on the roof of flooded house were broadcast on the cable news stations, the president was no where to be seen.  Photographs of President Bush (below right), later published of him looking from a window on Airforce One 35,000 feet over the disaster below, made him appear aloof and disconnected and did his reputation more harm than good.     

Carnival has managed prior cruise disasters effectively in the past.  When an engine room fire disabled the Splendor cruise ship in 2010, Carnival sent a team of executives from Miami to San Diego where they conducted a highly publicized press conference at the port.  Carnival offered reimbursement of all cruise fares, waived all onboard purchases and promised a free cruise in the future.

Carnival followed the "three A's" of crisis management perfectly.  Its attitude was humble.  It appeared on the scene.  And it took immediate action to solve the problem.

I was so impressed that I wrote an article praising Carnival and providing my opinion why it should not be sued for the accident. 

But Carnival does not seem to know how to act following the Concordia disaster. 

We hear Carnival's CEO Arison finally saying the rights things. Five days after the crisis unfolded later, he finally tweeted "I gave my personal assurance that we will take care of each & every one of our guests, crew and their families"  He included a link to a press release issued by Carnival promising to take care of everyone.  But this weekend, there are news reports that the cruise survivors were stunned and insulted when Costa CEO Foschi offered a 30% discount on future cruises as part of proposed compensation to stave off lawsuits. 

A 30% discount?  Talk about pouring salt into the wound.  The cruise industry collects over $35,000,000,000 (billion) a year mostly from tax paying Americans yet it pays no U.S. federal taxes because it registers it vessels overseas and incorporated itself in Panama to avoid U.S. tax, wage and labor laws, and health and safety laws.  Arison himself is the richest person in Florida with a net worth of over $4,000,000,000.  

Carnival will not hesitate to make a claim against its underwriters for payment of $500,000,000 for its wrecked cruise ship as well as seeking hundreds of millions of dollars for the lost revenue caused by not being able to collect money from passengers sailing on the cruise ship in the future.  It is now rightfully facing public ridicule by offering a discount worth a few hundred dollars to avoid litigation.  I hate to think what the families of the dead loved ones think about taking a discounted Costa cruise in the future.

Carnival and CEO Arison have a mixed reputation in Miami over the years.  Lots of travel agents love Arison.  But Arison has faced more than his fair share of critics for Carnival's avoidance of taxes, exploitation of foreign crewmembers and indifference to the problem of women and children being sexually assaulted on Carnival's cruise ships.  Consider these articles: "Is Mickey A Greedy Corporate Pig?" or "The Deep Blue Greed - The Arison Clan Built Carnival into a Money Machine by Cleverly Avoiding Tax Laws" or Carnival? Try Criminal.   

Carnival has enormous financial resources and insurance proceeds to respond to the disaster and compensate the families who are suffering because of its reckless captain.  It can take care of the mess and salvage its reputation.  But does it have the corporate ethics to do so?  We know that CEO Arison loves the limelight when his businesses are successful. But if Arison and Carnival's executives don't care enough to appear in Giglio to speak with the survivors directly and assess the situation personally, they risk earning reputations no better than that of their arrogant and cowardly Captain Schettino. 

Photo credits:

Top:  News Pictures / Rex Features

Bottom:  ESPN

• Comments (3)

The big news this week in cruise ship social media 2.0 is that no one other than Carnival's CEO Micky Arison just joined Twitter.  You can check out his tweets at @MickyArison.   He has received a warm welcome mostly by cruise fanatics and Miami Heat fans. 

It will be interesting to see if CEO Arison sticks around and really engages on Twitter. He has 4,800 followers.  So far he has followed pretty much just his cruise lines, basketball players and celebrities on Twitter. 

Speaking of CEOs and pro basketball, Mr. Arison's nemesis Dallas Maverick's Mark Cuban has over 637,000 followers on his Twitter account @mcuban, whose in-your-face avatar shows him holding the NBA trophy, smoking a cigar.    Don't let him trash talk you Micky!

When the week started, I could not help but think it only a matter of time that a dissatisfied Carnival customer began a campaign of tweeting Mr. Arison about an unpleasant cruise.  I wondered how this would turn out and whether Arison would ignore the passenger.

Sure enough a very unhappy disabled passenger by the Twitter name @MyLadyGuinevere began tweeting about a horrific cruise experience.  She suffered an asthma attack caused by a smoke filled stateroom.  Carnival's shipboard employees mocked her for using a wheelchair.  She suffered from food poisoning.  Carnival then inadvertently double charged for everything, and  ignored her when she complained.  She inundated the Carnival CEO with a dozen tweets like: 

"@MickyArison - Your cruise line made me ill, mocked me for my disability, doublecharged me and wiped out my bank account . . ."  

You can read about the debacle in an article in the Consumerist entitled Carnival Cruise Becomes Vacation Nightmare.

After a day of tweets, it looks like the Carnival guest now has high praises for Carnival and Mr. Arison.  Her last tweets suggest that everything has been worked out: " A very, very nice person by the name of Alicia contacted us. We now understand things better . . . and feel like we were listened to. Thank you. We really appreciated it."  @MyLadyGuinevere deleted all of her complaints on Twitter and promised to update her story on the Consumerist article.

Did CEO Arison come to the guest's rescue?  Or was this a case where the Carnival customer support team realized that their CEO's debut on Twitter was being spoiled and they gave the guest some extra attention?  Not sure.  But the bottom line is that the dispute is resolved and eveyone seems happy.

Will Mr. Arison stick around on Twitter?  I hope so, for no other reason than I'd like to see him update his Twitter avatar at the end of the NBA playoffs with a photo of him holding the NBA trophy and smoking a cigar on one of his cruise ships.     

• Comments (1)