Representatives of Carnival Corporation (“Carnival”) appeared in Miami federal court yesterday for a hearing on a proposed resolution of new pollution charges pending against the giant cruise company. The federal court judge, Patricia Seitz, accepted the settlement deal recently reached between the U.S. Government and Carnival, which the parties filed into the court record literally at the last minute before the hearing.
Carnival pleaded guilty to six charges of violating probation at the hearing on Monday.
A copy of the settlement agreement which was approved in its entirety by the Court is available (via the Miami Herald) here.
A Slap on the Wrist for Ongoing and Widespread Environmental Crimes?
Judge Seitz accepted and approved the fine reached between the parties without comment.
A second judge who presided over the hearing, Ursula Ungaro, took a more serious tone throughout the hearing. Judge Ungaro will be taking responsibility for the case later this year. Judge Seitz explained that Judge Ungaro heads the district’s high-risk recidivism program and commented that “Carnival is a perfect candidate” for such a program.
Judge Ungaro commented that illegal discharges by Carnival and subsidiary Princess has been going on since 1993 when Princess first pleaded guilty to dumping plastic bags into the oceans. She stated “This has been going on since 1993 and we’re sitting here talking about food waste mixed with plastic, it’s incredible.”
Judge Ungaro asked federal prosecutor, Richard Udell, how he came up with the monetary fine. He vaguely responded that it’s “complicated” and suggested that the fine was in line with unspecified “sentencing guidelines.” Judge Ungaro asked him what percentage the fine represented of Carnival’s net worth. Remarkably, he stated that he did not know and suggested that Carnival would have to respond to that question. The Court then made no further inquiry. (According to the New York Times, Carnival’s stock market value is estimated to be nearly $35 billion alone. A fine of only $20,000,000 turns out to be just 0.00057142857 of this amount).
Judge Seitz previously intimated at an earlier hearing in April that Carnival’s ongoing pollution warrants an additional fine of a substantial nature and/or other punishment including potential jail time for the executives and possibly barring Carnival-owned ships from U.S. ports. She characterized her previous sanction of $40,000,000 as just a “drop in the bucket.” Her disinterest at the hearing yesterday in learning the reasons for the minimal fine was, therefore, baffling.
Judge Seitz rhetorically asked how she could impose personal sanctions against Carnival’s senior management. Initially Judge Seitz suggested that penal or personal financial consequences may be imposed against the senior Carnival executives if there were additional future environmental violations . But she quickly dropped the issue, stating that such personal fines would be unprecedented.
Federal prosecutors previously accused Carnival of violating the terms of probation arising from Princess Cruises’ ships use of “secret bypass pipes” to illegally discharge oily waste around the world, and then covering it up and lying about the widespread pollution. In 2016, Carnival pleaded guilty to the pollution, conspiracy and obstruction of justice. It was Carnival’s disregard of the terms of its probation which brought it to the hearing yesterday.
The Court Refused to Consider the Victims’ Accounts
The Court denied motions filed on behalf of four individual parties who sought to intervene in the case. These individuals included Fortini (“Sam) Duncombe, the co-founder of a Bahamas Environmental group called “reEarth;” Eric Forrer, a fisherman working in Alaska; Theodore Thoma, the head of a environmental group called “Responsible Cruising in Alaska;” and Kathy and Ed Hansen who operate a family fishing business in Alaska. None of these individuals were permitted to speak in court and were not even introduced to the Court.
Their attorney, Knoll Lowney, contended that they qualified as victims under the Crime Victims Rights Act (CVRA) and he requested an opportunity for them to inform the Court on a first hand basis the effect of Carnival’s pollution on their businesses and personal lives.
Mr. Lowney protested that there was an obvious lack of transparency in the settlement process which was first disclosed to the public only an hour or so before the hearing. He questioned why there were no public charges of environmental crimes which Carnival admitted committing since it was placed on probation several years ago. He asked the Court to slow down the process and provide the victims (primarily environmental groups) with an opportunity to be heard.
The Government opposed the victim’s involvement in the case and Judge Seitz denied their motions to intervene in the case. Lowney further advised the Court that she should ban Carnival from cruising in Alaska’s Glacier Bay given its crime of discharging grey water into the pristine waters of this National Park. He also suggested that the Court should prohibit Carnival from burning heavy fuel oil in U.S. waters and using using single-use plastics. Mr. Lowney suggested that an environmental auditor should also be present and monitor the operations of the cruise company on every cruise.
Mr. Lowney also urged the Court to reject the parties’ proposal to reduce the use of single-use plastics only by 50% over the next three years. A more aggressive plastic reduction program was necessary in light of the ongoing problem with discharging plastics mixed together with food on Carnival’s fleet of ships. For example, the Government introduced evidence that pulper systems on numerous Carnival-owned cruise ships contained items such as plastic dish pads, straws, plastic gloves, and other non-food items which cannot be legally discharged under any circumstance. During a period of six week in April and May of this year, there were over 175 incidents of inadequately sorted food waste and over 125 incidents where plastic were identified in the food waste systems on Carnival-owned ships.
Judge Seitz did not respond to any of Lowney’s concerns.
The Court spent significant time questioning whether Carnival’s senior management was really committed to make the protection of the environment a “core and inherent value,” aside from just making money. She questioned whether CEO Arnold Donald had any genuine interest in environmental issues. Mr. Donald, a former CEO of chemical giant Monsanto, admitted that he had no such interests lately.
A Packed Courtroom Filled with Silent Millionaire and Billionaire Cruise Executives
The hearing was packed. Chairman Micky Arison, Carnival’s largest shareholder with a net worth of over $8,500,000,000 was present (as ordered by the Court) but he did not speak (and was asked no questions by the Court). Five additional corporate board members were present in the courtroom in addition to Chairman Arison and CEO Donald. The CEO’s of Carnival’s cruise brands HAL, Princess, Costa, Carnival Cruise Line, AIDA, P&O, and Seabourn were present. The criminal defense lawyer for Carnival, David Oscar Markus, informed the Court that Carnival cruise executives from all of the brands were present and seated in the gallery; they had flown to Miami to attend the hearing from around the world; and allegedly were “taking this very seriously.” None of them spoke (other than Arnold Donald) except to exchange pleasantries with the Court.
Instead Seitz accepted the agreement in its entirety.
Environmental group were not impressed with the decision.
— CLEANFISH🌹 (@CLEANFISH) June 4, 2019
BREAKING: @CarnivalPLC must pay $20M in a plea deal for violating its probation, despite earlier threats of significant legal action. @standearth calls the ruling a ‘backroom deal’ with little regard for communities impacted by cruise ship pollution. https://t.co/dK6UhFrvLz
— Stand.earth (@standearth) June 3, 2019
Kendra Ulrich, a senior campaigner at Stand.earth (photo left), stated: “There was a lot of talk in this case about taking significant legal action to ensure Carnival Corporation ends its criminal behaviour. Instead, the communities and individuals impacted by the environmental crimes from this multi-billion dollar corporation ended up with more empty words and another backroom deal that cannot even be characterised as a slap on the wrist, Today’s ruling was a betrayal of the public trust and a continuation of the weak enforcement that has allowed Carnival Corporation to continue to profit by selling the environment to its passengers while its cruise ships contribute to the destruction of the fragile ecosystems they visit.”
Social media also pointed out that the fine was around what Carnival Chairman Micky Arison, who owns the Miami Heat professional basketball team, is paying as a salary to one of its players.
Still less than what the Heat are paying Hassan Whiteside per season https://t.co/hT7UgnaQeg
— Martin Vassolo (@martindvassolo) June 3, 2019
The out of court settlement documents which the Court approved was signed by Mr. Arison, Mr. Donald, and long term director Stuart Subotnick. CEO Donald was required to take an oath and admit that “the company” (Carnival) committed the six environmental crimes and was guilty of the crimes.
In addition to the meager monetary fine, the settlement agreement obligated Carnival to:
- Agree to and pay for additional Third Party Audits and Court Appointed Monitor visits to its ships;
- Make a statement to all of its employees accepting responsibility for the probations violations;
- Restructure the company’s corporate compliance efforts, by appointing a new chief Corporate Compliance Officer (CCO), create an Executive Compliance Committee and add a new member to the Board of Directors with corporate compliance expertise;
- Notify the government and the court of future environmental violations, including discharges in non-U.S. waters and identify the country affected; and
- Change its waste management practices regarding how the company uses and disposes of plastic and other non-food waste to reduce its illegal discharges of plastic mixed with other garbage.
Conclusion: Business as Usual?
Carnival claims that it wishes to be a leader in protecting the environment, but in reality it has demonstrated contempt for the oceans ever since subsidiary Princess was first placed on probation for dumping plastic bags of garbage over 26 years ago.
Carnival enjoys a huge financial advantage not only because it pays no U.S. taxes and complies with no U.S. labor laws, but because it has avoided the considerable costs of legally storing and properly disposing of waste oil over the years. It has not come close to satisfactorily addressing the ongoing problem of discharging plastic and non-food waste mixed with food. Recent findings of the Court Appointed Monitor (CAM) disclosed well over one hundred cruises in just the last couple of months where the CAM found food mixed with plastic and other non-food waste which is strictly prohibited from being discharged by MARPOL
The settlement deal which it struck with the U.S. Government to reduce its use of “single-use plastics over the course of the next three years” is an-uninspired joke. If Carnival really pretends that it will be a leader in protecting the environment, it should have readily agree to a more ambitious goal. The U.S. Government should have demanded it. And the Court should have ordered it.
Carnival, a giant corporation incorporated in Panama to avoid all U.S. taxes and U.S. labor laws and led by a former CEO of chemical giant Monsanto, has no intuitive ability to naturally protect the water and air.
It seems that at the end of the day, collecting huge sums of money is Carnival’s “core and inherent” goal. Although initially threatening to bar Carnival-owned ships from U.S. ports and sentence Carnival executives to jail, Judge Seitz simply slapped Carnival’s wrist with just a $20,000,000 fine. CEO Donald was smiling from ear to ear as he was the first to exit the courtroom.
If a $40,000,000 fine was a drop in the bucket as Judge Seitz expressed just 30 days ago, a fine of one-half of that amount is literally just a half-drop in the bucket.
Environmental groups are criticizing the weak sanctions entered yesterday as the result of a backroom deal dominated by Carnival’s interests which was rubber-stamped by the Court with little regard for the affected communities. They are absolutely correct. The lawyer for the victims, Knoll Lowney, said it best when he urged the Court “not to consider another compromise between the U.S. Government and Carnival without “meaningful participation by the victims of Carnival’s environmental crimes . . . [because] . . . the lack of transparency could cast a shadow over the legitimacy of these proceedings.”
The Court had an opportunity to right Carnival’s ship with a meaningful fine which is the only thing the Carnival executives understand; but, ultimately, she looked the other way.
Have a thought? Please leave a comment below or join the discussion on our Facebook page.
Photo credit: Ruby Princess, April 2019 – Kathy and Ed Hansen; Carnival food chutes with plastic items & silverware mixed with food – Court Appointed Monitor and anonymous Carnival crew member; Kendra Ulrich, of Stand.earth – Lynne Sladky (AP) via Time; Micky Arison and Arnold Donald – local10.com.
“Donald said on Monday that the company has plans to fix what he called the ‘problems,’ but I’m skeptical. What incentive do Carnival executives have to undertake what will surely be an expensive and tactically challenging change in on-board practice when they can simply admit to fouling the seas and walk away with no jail time or loss of personal fortune?”