US cruise operator Princess Cruise Lines has pleaded guilty to a second violation of probation imposed as a result of its 2017 criminal conviction for environmental crimes because it failed to establish and maintain an independent internal investigative office, the US Department of Justice said in a statement on Tuesday, January 11.
Under the terms of a plea agreement, Princess was ordered to pay an additional US$1 million criminal fine and required to undertake remedial measures to ensure that it and its parent Carnival Cruise Line 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 US$40 million 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. The Justice Department said this was and remains the largest-ever criminal fine for intentional pollution from ships.
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 US$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. In November 2021, the 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 A. 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 (i.e., the Board of Directors, C-Suite executives and Brand Presidents/CEOs).”
A joint factual basis for 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 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 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 US$100,000 per day, and US$500,000 per day after 10 days.
Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division said the incident was a “serious and ongoing violation of probation that reflected Carnival’s failure to prioritise compliance with court orders.”
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