Princess Cruise Lines has pleaded guilty to a second violation of probation imposed as a result of its 2017 criminal conviction for environmental crimes.
This was because the cruise line had failed to establish and maintain an independent internal investigative office, the US Department of Justice (DoJ) said.
Under the terms of a plea agreement, Princess was ordered to pay an additional $1 mill criminal fine and required to undertake remedial measures to ensure that it and its parent Carnival Cruise Lines establish and maintain the independent internal investigative office, known as the Incident Analysis Group (IAG).
Princess was convicted and sentenced in April, 2017 and fined $40 mill after pleading guilty to felony charges stemming from its deliberate dumping of oil-contaminated waste from one of its vessels and intentional acts to cover it up.
This was and remains the largest-ever criminal fine for intentional pollution from ships, the DoJ said.
While serving five years of probation, all Carnival-related cruise line vessels trading in US ports were required to comply with a court approved and supervised environmental compliance plan (ECP), including audits by an outside and independent third-party auditor (TPA) and oversight by a Court Appointed Monitor (CAM).
In 2019, Princess was convicted of six violations of probation, fined an additional $20 mill, and required to undertake more remedial measures. In this case, two of the violations involved interfering with the court’s supervision of probation by sending undisclosed teams to ships to prepare them for the independent inspections required during probation.
Documents filed in court showed that one of the purposes of the vessel visit programmes was to avoid adverse findings by the independent outside auditors working on behalf of the court.
Beginning with the first year of probation, there were repeated findings that Princess’ internal investigation programme was and is inadequate.
In November, 2021, the US Office of Probation issued a petition to revoke probation after adverse findings by the CAM and TPA.
In an October, 2021 letter to US District Court Judge Patricia Seitz, the CAM and TPA concluded that the continuing failure “reflects a deeper barrier: a culture that seeks to minimise or avoid information that is negative, uncomfortable, or threatening to the company, including to top leadership (ie, the Board of Directors, C-Suite executives and Brand Presidents/CEOs).”
A joint factual basis for the 11th January guilty plea was submitted to the court in which Princess and Carnival admitted to the failure to establish and maintain an independent investigative office.
Princess also admitted that internal investigators had not been allowed to determine the scope of their investigations, and that draft internal investigations had been impacted and delayed by management.
Changes required under a plea agreement with the DoJ resolving the probation violation, include:
• Carnival must restructure so that its investigative office reports directly to a committee of Carnival’s Board of Directors
• Carnival’s internal investigative office must be given the authority to initiate investigations on its own and to determine their scope
• Carnival’s management will be restricted in its ability to remove the head of the IAG that performs internal investigations
• Carnival must conduct an assessment to ensure independent investigators have sufficient resources
• Carnival must assess the effectiveness of required changes and correct deficiencies
• Failure to meet deadlines in the plea agreement will initially subject the defendant to fines of $100,000 per day and $500,000 per day after 10 days.
“This case shows the importance of addressing issues of corporate culture and structure, and the root causes of environmental non-compliance,” said Assistant Attorney General, Todd Kim of the DoJ’s Environment and Natural Resources Division.
“This was a serious and ongoing violation of probation that reflected Carnival’s failure to prioritise compliance with court orders. I thank the court, the Office of Probation, court appointed monitor and third-party auditor for the close attention that they have devoted to this important matter.”
“Just like individual defendants, corporate defendants must also comply with court orders. They are not above the law,” added US Attorney, Juan Antonio Gonzalez for the Southern District of Florida.
“The corporate defendant here ignored the court, choosing instead to thwart the compliance plan that was put in place to protect our environment. As this probation violation proceeding demonstrates, the government will not tolerate defendant’s blatant violation of court orders.”
Princess’ plea agreement and factual statement were signed by Micky Arison, Chairman of Carnival’s Board of Directors and CEO Arnold Donald. Both attended the hearing as they have quarterly status hearings pursuant to the court order.
This case was prosecuted by Richard Udell, Senior Litigation Counsel with the DoJ’s Environmental Crimes Section and Assistant US Attorney, Thomas Watts-FitzGerald, Environmental Crimes Co-ordinator, Economic & Environmental Crimes Section, for the Southern District of Florida.
