By Jim Holt
Senior Investigative Reporter
Princess Cruise Lines Ltd. pleaded guilty Tuesday to violating — for a second time — its probation terms stemming from a conviction over illegal dumping after it failed to establish and maintain an independent internal investigative office.
The company deliberately dumped oil-contaminating waste from one of its vessels and then moved to cover it up, a court ruled in 2017.
Subsequently, under the terms of a plea agreement, Princess Cruises was ordered to pay an additional $1 million criminal fine and required to undertake remedial measures to ensure that it and its parent Carnival Cruise Lines & Plc establish and maintain the independent internal investigative office known as the Incident Analysis Group.
Princess Cruises, headquartered in Valencia, was convicted and sentenced in April 2017 and fined $40 million after pleading guilty to felony charges stemming from its deliberate dumping of oil-contaminated waste and intentional acts to cover it up.
The penalty imposed stands as the largest-ever criminal fine for intentional pollution from ships, according to a press release issued Tuesday by Department of Justice officials in Florida.
When local public relations officials at Princess Cruises were asked for a response, they referred all official comment to their counterparts in Florida.
Roger Frizzell, spokesman for Carnival Corp. and Plc in Florida, issued a formal response for The Signal, stating:
“As the Court has acknowledged, we have been working in good faith through the course of probation and have already implemented a number of the changes in the order, even prior to the order, to improve in the area which is the basis of the proceedings — our internal investigations.
“We will continue to honor our highest commitment to strive for excellence in compliance, environmental protection and the health, safety and well-being of our guests, the people in the communities we touch and serve in which we operate and our shipboard and shoreside personnel.”
Frizzell, in an email explaining the company’s commitment to change, said the company was “working hard and investing heavily across the company in our compliance and environmental efforts.”
Five years’ probation
While serving five years of probation, according to Justice Department investigators, all Carnival-related cruise line vessels trading in U.S. ports were required to comply with a court-approved and supervised environmental compliance plan, including audits by an outside and independent third-party auditor and oversight by a court-appointed monitor.
In 2019, Princess was convicted of six violations of probation, fined an additional $20 million, and required to undertake more remedial measures.
In that 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 purpose of the vessel visit programs was to avoid adverse findings by the independent outside auditors working on behalf of the court.
Beginning with the first year of probation, there have been repeated findings that the company’s internal investigation program was and is inadequate, according to the Florida DOJ.
In November 2021, the Office of Probation issued a petition to revoke probation after adverse findings by the independent third-party auditor and the court-appointed monitor.
Avoiding negative information
In October, both the auditor and the monitor sent a joint letter to U.S. District Court Judge Patricia A. Seitz, telling her the continuing failure “reflects a deeper barrier: a culture that seeks to minimize or avoid information that is negative, uncomfortable, or threatening to the company, including to top leadership.”
When Princess Cruises and Carnival pleaded guilty Tuesday, they admitted having to establish and maintain an independent investigative office.
They also admitted, according to Justice officials, 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 Department of Justice 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 “Incident Analysis Group” 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.
Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division was quoted by the department Tuesday as saying, “This was a serious and ongoing violation of probation that reflected Carnival’s failure to prioritize compliance with court orders.”
The case involving Princess Cruises is being prosecuted by the Environmental Crimes Section of the Department of Justice.
The Environmental Crimes Unit is touted by Florida’s Department of Justice as a “group of specially trained, experienced prosecutors that investigates and prosecutes federal criminal violations of environmental and wildlife protection laws.”