Amsterdam established a tax on cruise passengers effective January 1, 2019. The new tax of €8 ($9.12) applies to every cruise passenger over 3 years old per 24-hour period.

As reported by the LA Times, two cruise lines have cancelled port visits to Amsterdam because of the nominal tax.  MSC Cruises and Cruise & Maritime Voyages canceled future stops.

The trade organization for the cruise industry, Cruise Lines International Association (CLIA), claims that the tax is “extremely disproportionate.” It threatened Amsterdam with cancellation by cruise lines which could result in a budget deficit of several million euros  as a result of reduced fees collected by the Port of Amsterdam.

However, the only thing truly disproportionate is that the cruise industry pays virtually no U.S. taxes at all.

Amsterdam, like other popular European cities, is struggling with the heavy demands placed on the city by mass tourism. Amsterdam wants tourists to make a fair contribution to the city.  Amsterdam’s website states that:

“. . . companies operating sea and river cruises should pay a tourist tax of 8 euros per passenger. This ‘day tripper tax’ will only apply to cruise passengers who do not live in Amsterdam and are only stopping over, not to passengers who are starting or ending a cruise in Amsterdam.”

Amsterdam is not the only city struggling with the influx of cruise tourism. There has been considerable news coverage of the “increasing hordes of tourists” descending on Venice every year.

Compare the crushing crowd of tourists in Venice which I photographed in 2016 during a family vacation (top) with the photo which I took when traveling alone there in 1977 (bottom).

The NewEurope newspaper states that:

After years threatening to regulate the number of visitors entering the city, which is constantly under the threat of sinking into the lagoon that it sits on, the Venetian government has decided that it will introduce an entry fee, or landing tax, of up to €10, depending on the season, for day-trippers arriving on cruise ships.

CLIA, which of course resists taxes of all types on cruise companies and their customers, expressed its disappointment with the new taxes. It tried to explain its refusal to honor the taxes by waxing historically:

“At the core of its history is Venice’s relationship with the sea. Ships have always been part of its identity and the cruise industry represents the modern manifestation of a centuries-old tradition.”

But the billion dollar monster cruise ships which tower over the city today could hardly have been imagined when Venice was built 500 years ago.

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Read: Are Cruise Ships Ruining Venice Or Just Memories of My Youth?

Photos credit: Top – Venice (2016) –  Jim Walker; middle – Venice (2016); bottom – Venice – Jim Walker (1977).

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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The cruise lines and the cruise industry’s trade organization, the Cruise Line International Organization ("CLIA"), spend many millions of dollars lobbying our U.S. Congress each year.

In 2015, CLIA spent $1,380,000 lobbying Congress. Carnival Corp. spent an additional $898,710, plus $80,000 on behalf of subsidiary Carnival Cruise Line and another $80,000 for subsidiary Holland America Line. Royal Caribbean Cruises spent $464,000 in donations to the U.S. House of Representatives and Senate. These figures are revealed by the OpenSecrets website

Cruise Lines Lobby CongressSince 1997, the cruise industry has spent over $52,000,000 lobbying Congress through 2014, according to cruise expert Dr. Ross Klein. Considering the $3,000,000 in 2015 and the $1,000,000 spent this year, the cruise industry has invested over $56,000,000 into the coffers of Congress. 

I familiarized myself with these donations after reading on Twitter that CLIA is publicizing its annual Congressional Cruise Caucus. This is an event sponsored by CLIA in Washington D.C. where CLIA, its partners and travel agents meet with Congressional leaders to network with Congressmen and Congresswomen and discuss policies which will advance the interests of the cruise lines.   

The cruise industry exists and thrives because of special policies which benefit no one but the billion dollar cruise lines:

  • Because of loopholes in the Federal tax code which excludes taxes income generated by foreign incorporated companies and foreign registered ships, cruise line pay virtually no federal taxes. Carnival Corp., for example, paid taxes of only 0.6 during a five year period
  • The cruise industry uses the infrastructure of U.S. ports, the resources of the U.S. Navy, Coast Guard, Homeland Security, Customs & Border Protection, U.S. Public Health, Centers for Disease Control and Protection and another 20 U.S. agencies for free, although cruise lines pay virtually no U.S. taxes; 
  • The cruise industry does not comply with U.S. labor laws like minimum wage or overtime laws and works their ship employees well past a 40 hour work week because cruise line are incorporated in places like Panama (Carnival) or Liberia (Royal Caribbean). 

All of this special treatment exists because of the reluctance of our U.S. Congress to try and regulate the cruise industry.  The Congressional Cruise Caucus and the millions of dollars spent a year spent lobbying our Congressional leaders help the cruise industry grease the system. 

Photo Credit: Consumerist

This week we have seen the leak of 11.5 million financial documents over a period from the 1970s to December 2015 from the Mossack Fonseca law firm in Panama to the German newspaper Süddeutsche Zeitung and the International Consortium of Investigative Journalists. These documents allegedly reveal the identity of individuals involved in creating shell companies, ponzi deals and tax evasions schemes.

The law firm at the center of the leak is only one of many law international firms involved in setting up off-shore accounts in places like the Bahamas, Panama and the British Virgin Islands. The offshore corporations are not criminal per se in nature but are often used by unscrupulous types to secret away money Panama Papersfor nefarious purposes. 

The leak of the proprietary, sensitive information is remarkable not only in the breadth of the information (estimated to be 1,000 times more megabytes than the Wikileaks data) but in the number of world leaders, political figures and celebrities outed for creating offshore corporations associated with money laundering and other financial mischief. 

At the moment, the major media outlets are reporting on the obvious crooks and scammers, like President Putin and his cronies who reportedly funneled 2 billions dollars through dummy corporations. The vast majority of the massive amount of data is still unreleased to the public. Journalists have said that the next wave of incriminating information and individuals of interest will be released in May.  

The information is organized in a manner like the Wikileaks information that can be searched by offshore entity and the names of the clients and officers. The names of all of the cruise lines, the dummy corporations created to be the owners of cruise ships, and the principals of the cruise-related companies need to be analyzed.

The cruise industry is, of course, essentially an offshore industry designed to avoid U.S. income tax and labor / wage / environmental laws. Corporations like Royal Caribbean, registered in Liberia, and Carnival, registered in Panama, are exactly the type of companies motivated to avail themselves of tax-avoiding mechanisms, or associate themselves with people and companies that do like the Mossack Fonseca law firm and their ilk.

Forbes said today that "the International Consortium of Investigative Journalists and 100 reporting partners around the world started publishing stories on Sunday that tied 140 politicians, 29 billionaires and at least 33 blacklisted people to 214,000 offshore entities. The impact of the leak could reverberate for months."

The cruise industry already has the distinct benefit of large loopholes in the U.S. tax code which permit the major cruise lines to avoid virtually all U.S. taxes. So perhaps nothing of significance regarding the major cruise lines will come from scrutinizing the Panama Papers. But the offshore cruise catering, food and beverage, ship chandler companies and crewing agents which do business with the cruise industry need to be searched in the Panama Papers database. Of course the names of politicians and leaders of Caribbean and Central American countries, which are heavily dependent on income generated by the cruise industry, also need to be scrutinized.

The Nation reported that when asked why none of the information so far seemed to implicate many US-based individuals or businesses, the editor of Süddeutsche Zeitung said, “Just wait for what is coming next.”

People in the cruise industry and doing business with the industry are probably waiting for the other shoe to drop.

The International Consortium of Investigative Journalists (ICIJ) has an interesting and informative web site where you can follow the investigation and also sign up for email updates.

Have a thought? Please join the discussion on our Facebook page.

Image and video credit: International Consortium of Investigative Journalists.

  

https://youtube.com/watch?v=F6XnH_OnpO0%3Frel%3D0

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

Visit NBCNews.com for breaking news, world news, and news about the economy 

Micky ArisonIn an exclusive story, Cruise Law News has learned that cruise industry giant Carnival Corporation plans to incorporate its business in the United States (in Florida). 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 learned of this historic event when high-profile maritime lawyer Jim Walker bumped into Carnival’s Chairman Micky Arison at court side last night when Arison’s basketball team, the Miami Heat, lost to the San Antonio Spurs.  Maritime ace lawyer Walker asked Arison: "Micky, if Dwayne Wade earns several hundreds of million dollars from Carnival and pays tens of millions of dollars in U.S. taxes, don’t you think it is fair that Carnival – which earns over 16 billion dollars a year in cruise ticket sales – pays its fair share of U.S. taxes?"

Perhaps it was the euphoria of Carnival repealing the automatic man overboard safety law, 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, cruise lawyer Walker happened to have Florida 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-Carnival Corporationattacks, norovirus outbreaks and a Jon Secada concert which have ruined the last 100 Carnival cruises. Senator Jay Rockefeller recently called Arison a "scallywag" on national TV. Rockefeller challenged Arison to pay his fair share of Carnival CorporationU.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.

"I want to make certain that Carnival pays one hundred percent 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: "It’s time that poor, over-worked 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.

 

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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." 

Have a thought?  Please leave a comment below or join the discussion on our Facebook page.

 

As promised, Senator Jay Rockefeller announced that he has introduced legislation seeking to eliminate the Section 883 exemption for cruise industry income derived from cruises that embark or disembark passengers in the U.S.  Senator Rockefeller stated in a press release: 

“The cruise industry can’t operate for free here in the U.S. It costs money to send the Coast Guard to tow their drifting ships and it costs money to maintain the ports they use. Cruise lines need to start paying their fair share of taxes and stop expecting everyone else to foot the bill.”

Over the last year, Senator Rockefeller has raised concerns that the cruise industry has used the infrastructure of U.S. ports, the resources of the U.S. Navy and Coast Guard, and  more than 20 U.S. agencies, but has paid virtually no U.S. taxes. At the same time, the U.S. Coast Guard is substantially Cruise Ship Taxesunder-funded and is increasingly called upon to assist cruise lines which are experiencing fires and engine failures.

Efforts to repeal the exception have been a long time coming.  Earlier this year, as the disabled Carnival cruise ship Triumph was being towed back to the U.S. at U.S. taxpayer expense, Forbes published an article: Ship Isn’t The Only Thing That Stinks At Carnival: Low Tax Rate Stirs Ire.   

The cruise industry enjoys a substantial tax advantage over shore-side hotels, restaurants and amusement parks by incorporating their businesses and registering their cruise ships in foreign countries. This permits the cruise lines to sell their cruises at artificially low prices.  Although Carnival and Royal Caribbean are based here in the U.S., they are registered in Panama and Liberia respectively to avoid U.S. taxes.  

Rockefeller’s proposed legislation would eliminate the tax exemption for cruise lines and impose a 5 percent excise tax on gross income if passengers get on or off a ship in the U.S. The tax would be targeted to improve the transportation infrastructure.

Avoiding taxes is a cornerstone of the cruise industry’s business model. Expect CLIA and the cruise lines to mount a heavy PR campaign to try and kill the new bill.  

Interested in this issue? Consider reading:

Over Past 5 Years, Carnival Paid Taxes of Only 0.6% on Billions & Billions

Cruise Lines Depend on U.S. Coast Guard for Safety & Security But Pay Nothing

Under Pressure, Carnival Agrees to Reimburse U.S. for Coast Guard & Navy Costs in Responding to Disabled Triumph & Splendor Cruise Ships

Your Tax Dollars At Sea – Who Pays When Things Go Wrong on Cruises?

Have a thought about this issue?  Leave a comment below or join the discussion on our Facebook page.
 

Below – watch a NBC special where Senator Rockefeller and I are interviewed about Carnival’s avoidance of U.S. taxes: 

  

http://www.msnbc.msn.com/id/32545640

 

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).

NCL Cruise CEO Kevin SheehanIn 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 Royal Caribbean Cruise CEO Richard Fainthat 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?

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 Senator Rockefeller - Micky Arisonfor 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 Micky Arison - Senator Rockefeller 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.