According to WRLN in Miami, FEMA grossly overpaid Carnival Cruise Line to charter the Carnival Fascination to provide housing for FEMA workers following Hurricane Maria. 

According to documents obtained through the Freedom of Information Act (FOIA) by Daniel Rivero, WLRN states that FEMA agreed to pay Carnival $74,700,000 to provide accommodations aboard the Carnival Fascination to house federal aid workers and first responders in St. Croix.  

As WLRN explains, the FEMA-Carnival contract provides that the cruise line agreed to house 2,056 FEMA workers for the length of the four month contract. The average number of nightly passengers for the contract period was around 800 which, given the contract price, turns out to be $834 per person Carnival Fascinationper night, paid by U.S. taxpayers. That’s a staggering rate or well over over $5,000 per week per passenger. 

WLRN calculated the market rate for a cruise on the Carnival Fascination between $370 and $1,200 per person per week, which is a fraction of the rate paid by FEMA. 

I also obtained a copy of the FEMA-Carnival charter agreement pursuant to a FOIA request earlier this year. It revealed that FEMA agreed to pay what turns out to be $18,675,000 a month for the Fascination

This exorbitant amount of taxpayer money is even higher than what FEMA paid Carnival in 2005, to charter three Carnival cruise ships following Hurricane Katrina. FEMA agreed to pay Carnival an average of only $13,111,111 a month (for a total of $192,000,000) to charter the Carnival Sensation, Carnival Ecstasy and Carnival’s Holiday for 6 months (plus $44,000,000 for fuel and other expenses) following hurricane Katrina.

Plus, as I pointed out in the article FEMA Agreed to Pay Carnival $74,700,000 for Charter of Carnival Fascination, Carnival didn’t pay any federal taxes on this income. 

In the WLRN article, cruise expert Professor Ross Klein pointed out that Carnival is registered in Panama and pays almost no U.S. income taxes which he believes is a larger concern for how the contract was handled.

“The US Government hired a foreign registered corporation that uses foreign registered vessels with foreign workers (working in the US but not paying US income tax). And because the corporation is offshore, and the ship is offshore, the company pays virtually no income tax on the contract. Now that is a sweet deal,” Professor Klein told WLRN.

What is even more disturbing is that, as WRLN points out, FEMA first (over) paid Carnival even before it disbursed funds to the survivors in the U.S. Virgin Islands hit by the hurricane. Numerous media sources are also now reporting that the death toll in Puerto Rico due to Hurricane Maria was drastically underestimated. The consensus is that that the actual number of deaths was around 5,000 citizens, compared to official estimates of less than 100.   

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Photo credit: Chrismschurz – CC BY-SA 3.0, commons / wikimedia. 

Last year, following a series of hurricanes which struck the Caribbean, FEMA decided to charter the Carnival Fascination to house relief workers in St. Croix. The news was widely reported last October. Carnival cancelled its sailings of the Fascination from October 2017 through January 2018 with the cruise line planning to return the cruise ship to its regular itinerary from San Juan in February 2018.

Carnival touted the deal as demonstrating its humanitarian commitment to the Caribbean relief efforts.

Carnival told the Miami Herald last year that its “history is deeply linked to the Caribbean and our ships have been sailing within the region for more than 45 years. We are pleased to be partnering with Carnival FascinationFEMA on this charter in support of the ongoing relief efforts in the Caribbean.”

I wondered at the time, what type of sharp deal had Carnival obtained at the expense of the U.S. government? This is, after all, a corporation which was incorporated in Panama and registered its fleet of cruise ships in that country to avoid paying U.S. taxes, as well as U.S. safety and labor laws and regulations. So I made a request pursuant to the Freedom of Information Act  (FOIA) to FEMA, which recently responded with a copy of the Carnival-FEMA charter agreement for the Fascination (which you can see below).

The relevant terms are that FEMA agreed to pay Carnival $74,700,000 over the course of 4 months.

The charter agreement includes $39,700,000 (million) plus “costs” of $35,000,000 (million) for a total of $74,000,000 (million).

This is a whopping amount, even compared to the CCL-FEMA deal made back in 2005 when FEMA paid $192,000,000 to charter the Carnival Sensation, Carnival Ecstasy and Carnival’s Holiday for 6 months, plus $44,000,000 for fuel and other expenses, following hurricane Katrina.

FEMA was criticized for paying a total of $236,000,000 for the three Carnival ship over the course of six months, an amount which the Washington Post called an “exhorbitant price.” The Post commented that if the ships were at capacity for six months, the price per evacuee would total over twice what an average passenger would pay which “would include entertainment and the cost of actually making the ship move.”

In the current CCL-FEMA charter, FEMA agreed to pay what turns out to be $18,675,000 a month for the Fascination; whereas in 2005, it paid an average of only $13,111,111 a month for each Carnival ship.

That’s over $5,500,000 a month more than what FEMA paid back in 2005 for each of the other three Carnival ships, even though the Ecstasy and the Sensation are essentially identical to the Fascination. All are Fantasy class ships with the same number of lower berths (2,056). The Holiday, which is no longer in Carnival’s fleet, had a lower capacity of lower berths (1452).

Most states in the U.S. have anti-gouging laws following hurricanes when a state of emergency has been declared. But post-hurricane gouging appears to be business as usual for Carnival.

In 2005, following hurricane Katrina, the cruise trade organization, CLIA, requested that the U.S. Treasury Department exempt Carnival from paying income tax on the cruise ships it chartered to FEMA, even though the ships were moored in U.S. waters during the entire charter, making them clearly subject to U.S. taxes. In this case with the Fascination, the cruise ship is moored in St. Croix, which is a U.S. territory where citizens are expected to pay U.S. taxes. The monies paid to Carnival for the current charter of the Fascination also should be subject to U.S. taxes. Carnival undoubtedly will seek a similar exemption from the taxes which are owing.

After the charter, the Fascination will undergo a two-week dry dock from February 4 to 17, 2018, in Freeport, Bahamas, prior to resuming its regular seven-day cruises from San Juan, Puerto Rico, beginning February 18, 2018. Carnival plans to install a Guy’s Burger Joint, Blue Iguana Cantina, Red Frog Rum Bar, Blue Iguana Tequila Bar, Cherry On Top, Bonsai Sushi Express, and the Alchemy Bar during the extensive and expensive renovation.

If you decide to sail on the Fascination next month, be sure to thank the U.S. government when you enjoy a beer and burger in the new bars and restuarants on the ship which will essentially be paid for from the excessive price of the no-bid contract with the federal government, which probably will not charge Carnival any U.S. taxes either.

I reached out to Carnival for a comment but have heard nothing to date.

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Photo credit: Verybigfish86 (talk) – Public Domain, commons / wikimedia.

Carnival -FEMA Contract by jim walker on Scribd

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Carnival Cruise TaxesCarnival Corporation announced its second quarter profits today.

Its revenues to date for 2015 (June 30th) were $7,180,000,000 (billion), consisting of passenger fares (tickets) of $5,425,000,000 and onboard purchases (booze, spa, specialty meals, casino) of $1,755,000,000. It’s net income was $271,000,000.

And Carnival paid taxes of?  Nothing.

You have heard me say this before. By incorporating in Panama and registering its cruise ships in third world countries like Panama and the Bahamas to avoid taxes (and wage and safety laws), Carnival enjoys an enormous advantage over land-based business by paying virtually no U.S. taxes.

But Carnival uses our Federal agencies daily: the U.S. Coast Guard, Customs & Border Protection, FBI, USPH, EPA, DOT, Homeland Security and many others. It pays nothing for these services.

Those federal agencies are paid for by U.S. taxpayers, like you and me.

I have paid many millions of dollars in U.S. income over the years.  I’m not complaining. I love the U.S. and know that it takes money to operate a country like ours. 

But there is something fundamentally wrong when Carnival avoids taxes, enriches its executives hundreds of millions of dollars a year and pays its crewmembers around the world only a small pittance for their hard work. 

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Photo Credit: Craig Rubadoux via Florida Today

http://www.nbcnews.com/id/32545640

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Carnival Chairman and major stockholder Micky Arison sold 212,474 shares of Carnival stock on Friday, September 19th at an average price of $40.22 for a total of $8,545,704.28, according to the Securities & Exchange Commission.

Yes, this is a serious amount of money. But its peanuts for this cruise tycoon. 

By last June, Arison had unloaded over $490,000,000 of Carnival stock in a little over 3 months.

Arison is the richest person in Florida. He’s worth between 5 and 6 billion dollars.

I was interviewed in a special about him last year.

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http://www.nbcnews.com/id/32545640

 

KHOU 11 reports that alcohol and cigarettes purchased by cruise passengers, represented by cruise lines as "duty-free products," are being taxed by the Texas Alcoholic Beverage Commission (TABC) once the ships return to Galveston.

The state of Texas will start collecting similar taxes from cruise passengers at the Port of Houston by in October.

The television station says that the state of Texas has collected over $280,000 from cruise passengers since January. 

The cruise lines misrepresent that the liquor and cigarettes are tax free, and then the TABC officials confront the returning cruise passengers as they come through customs.

The station quotes a passenger saying "They advertise it as duty free on the ship and when we get off the ship, to our surprise, it’s not duty free. I think it’s wrong." 

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Multiple sources are reporting that Royal Caribbean entered into an agreement to sell the Celebrity Century cruise ship to a Chinese cruise company. 

The company buying the Century is identified as Exquisite Marine Ltd., a holding company controlled by Ctrip International Ltd.

Royal Caribbean says that the Century will "complete its scheduled sailings through the March 22, 2015, itinerary. The 15-night, Dubai to Rome sailing on April 5, 2015 is being redeployed to a 14-night sailing from Dubai to Singapore. Guests with affected individual bookings and named group bookings Celebrity Centuryon Celebrity Century’s April 5, 2015 sailing from Dubai to Rome have the option to either cancel their booking and receive a full refund or move to an alternative sailing and receive a re-accommodation onboard credit as well as compensation to cover air change fees. Guests with reservations affected by the transition will be proactively contacted by Celebrity Cruises. Guests and Travel Agents with specific questions are welcome to call 1-888-283-7275."

The Century joined the Celebrity fleet in December 1995. 

On of my first cases against a cruise line involved the Century. An elderly woman fell on a worn-out, slippery deck, breaking her hip.    

It was a different era back then. The Century was a 70,00-ton ship carrying only 1,800 guests with 860 crew. We will see more and more cruise ships of this vintage appear in the Chinese and European markets as Royal Caribbean brings its monster ships on line.  

 

Photo Credit: Wikipedia / Riley Huntley (Huntley Photography)

Richard Fain Adam GoldsteonReuters reports that Royal Caribbean’s CEO Richard Fain recently sold 94,850 shares at average price of $62.38 for a total value of $5,916,743.00; and exercised options for 51,143 shares at $7.27 per share for a total value of $3,190,300.00.

CEO Fain holds over a million shares of his cruise line’s stock.  Reuters says he holds 1,380,000 (million) shares for a value of over $86,000,000. Tech Insider says that Mr. Fain owns 1,153,689 company shares for a total value of around $72,000,000. This excludes the shares owned by various trusts for the benefit of of the Fain family.

Earlier this week, we reported that Royal Caribbean Chief Operating Officer (COO) Adam Goldstein unloaded sold 42,152 shares of RCL stock at an average price of $61.68 for $2,599,935.36. COO Goldstein still owns 370,724 shares valued at $22,866,256.

Notwithstanding the vast wealth of these cruise CEO’s, Royal Caribbean has made substantial cut-backs in the salaries of its staff and crew members, increased work, and reduced benefits.

 

Photo Credits: Royal Caribbean Press Center

Media reports say that Royal Caribbean Cruises Chief Operating Officer (COO) Adam Goldstein sold 42,152 shares of his cruise company’s stock yesterday.

The shares were sold at an average price of $61.68 for $2,599,935.36.

COO Goldstein still owns 370,724 shares of Royal Caribbean stock, valued at $22,866,256.

Royal Caribbean announced its earnings results on Thursday. The cruise line reported revenue of $1.98 billion for the quarter. The company’s quarterly revenue was up 5.2%.  

Royal Caribbean We last reported on Mr. Goldstein in February when he sold 44,256 shares of Royal Caribbean stock at an average price of $52.96, for a total transaction of $2,343,797.76.  

What do the hard working crew members and the loyal shore-side cruise employees think of all of the money Mr. Goldstein is raking in? 

The cruise line pays a minimal salary to Royal Caribbean waiters and cabin attendants of only $50 a month; the cruise passengers pay tips to the waiters and stewards but the cruise line is scooping up much of the tips to pay other crew member’s salaries. Employees like utility cleaners earn a pittance of around $550 a month (with no tips) working around 11-12 hours a day, every day of the month during contracts that are 6-8 months long.

In September of last year, Royal Caribbean fired over one-hundred employees in its corporate offices in order to increase profits. You can read about that here: Loyal to Royal? Royal Caribbean Axes 100 Jobs in Corporate Headquarters.

What’s the saying? The rich get richer, the poor get poorer.

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 Chairman 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 Mickey Arison Miami Heat Carnival Cruisemillions 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 sales – pays its fair share of U.S. taxes?"

Perhaps it was the euphoria of the Heat beating the Portland Trailblazers by two points in a close 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, poop-cruises, pirate-attacks, flounderings, Concordia-disasters, norovirus outbreaks and a Jon Secada concert which have ruined the last 37 Carnival cruises.  Senator Jay Rockefeller recently called Arison a "scallywag" on national TV. Rockefeller challenged Arison to pay his fair share of U.S. taxes on the billion-dollar bounty his foreign-flagged cruise ships collect from the U.S. taxpaying citizens 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.

Arison admitted that he felt guilty selling 1% of his Carnival stock for a $395,000,000 profit while suspending the crew member’s retirement benefits.

"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.

Travel Weekly and Skift recently reported that the new CEO of Carnival Corporation, Arnold Donald, will receive the following in compensation:

Arnold Donald - Carnival Cruise Lines Compensation$1 million base salary to start, with reviews by the board of directors to increase or decrease his salary;

A fixed bonus of $1.125 million for 2013;

A one-time award of performance-based restricted stock with a target value of $3 million, although it could be 5 times that depending on company’s performance;

An annual stock award with a fair market value of $3.5 million in long term incentives;

$350,000 to cover relocation and temporary living expenses; and

A bonus for 2014 up to $2.65 million which could go up to $5.3 million in 2015.

You can read the official SEC filing here.

Mr. Donald must be so happy that he feels like dancing. 

The only things missing are a half dozen front row seats to the Miami Heat games.

This news must feel like salt into the wounds of the long term Carnival Cruise Lines crew members who lost their retirement benefits earlier this week. 

 

Photo Image: St. Louis Post Dispatch