Carnival Cruise Lines Paying $20 Million Criminal Penalty for Probation Violations

"A corporation is responsible to its shareholders and board of directors to be profitable, but not by breaking the law and destroying the very environment in which it navigates for profit," said Ariana Fajardo Orshan, U.S. attorney for the Southern District of Florida. "Carnival's failure to comply with the terms of its probation and, later, its attempt to drown its deceit goes against the fiber of corporate compliance.

Princess Cruise Lines Ltd. and its parent company, Carnival Cruise Lines & plc, were ordered June 3 to pay a $20 million criminal penalty and will be subject to enhanced supervision after admitting to violations of probation that were attributable to senior Carnival management, in a case in which Princess had already paid $40 million, the U.S. Department of Justice announced.

Princess was convicted and sentenced in April 2017 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. While serving five years of probation, all Carnival-related cruise lines' vessels eligible to trade in U.S. ports were required to comply with a court-approved and -supervised environmental compliance plan, including audits by an independent company and oversight by a court-appointed monitor. DOJ's news release says "numerous violations have been identified by the company, the outside auditor, and the court's monitor during the first two years of probation, including 'major non-conformities' as defined by the ECP."

Carnival has admitted it was guilty of committing six violations of probation. 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. When this was first discovered in December 2017, U.S. District Court Judge Patricia Seitz directed that the practice cease and ordered additional inspections as a consequence. However, without seeking court approval, a second undisclosed program was started shortly thereafter. Documents filed in court showed that a purpose of the vessel visit programs was to avoid adverse findings during the inspections.

"This case demonstrates the importance of identifying and correcting compliance problems at their source. Carnival sought to avoid the discovery of problems during the audits rather than learn from them. Carnival's deliberate deception undermined the court's supervision of probation," said Assistant Attorney General Jeffrey Bossert Clark for the Justice Department's Environment and Natural Resources Division. "I want to take this opportunity to thank and commend the Office of Probation and the court-appointed monitor for the close attention that they have devoted to this important matter post-conviction."

"A corporation is responsible to its shareholders and board of directors to be profitable, but not by breaking the law and destroying the very environment in which it navigates for profit," said Ariana Fajardo Orshan, U.S. attorney for the Southern District of Florida. "Carnival's failure to comply with the terms of its probation and, later, its attempt to drown its deceit goes against the fiber of corporate compliance. The Office of Probation and the court-appointed monitor are to be commended for their attention to this matter."

Carnival's chairman of the board, CEO, and chief financial officer attended the hearing pursuant to the court's order and were asked to personally pledge their commitment to correcting the company's compliance issues and corporate culture.

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The revised sentence imposed by Judge Seitz requires that Princess remain on probation for a period of three years.

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