Princess Cruise Lines pleaded guilty for a second time to charges of violating a court-ordered Environmental Compliance Program that was part of the terms of the 2016 conviction for deliberate pollution and intentional efforts to cover up its actions. The charges to which Princess pleaded guilty concerned the Caribbean Princess.
Under the terms of a new plea agreement announced on January 11, 2023, by the U.S. Justice Department, Princess was ordered to pay an additional $1 million criminal fine and once again required to undertake remedial measures to ensure that the program proceeds.
The new agreement is the second probation violation stemming from the 2016 plea agreement. In 2019, Princess and its parent company Carnival Corporation were ordered to appear before a U.S. federal judge in Miami who threatened to suspend the company’s operations from the U.S. due to a previous effort to hinder the Environmental Compliance Program. In June 2019, Princess and Carnival were ordered to pay a $20 million criminal penalty along with enhanced supervision after admitting to violations of probation attributable to senior members of management at Carnival.
A “whistleblowing engineer” reported to the U.S. Coast Guard in 2013 that the cruise ship was using a “magic pipe” to discharge oily waste.
According to papers filed in court, a subsequent investigation determined that the Caribbean Princess had been making illegal discharges through bypass equipment since 2005, one year after the ship began operations and that the engineers were taking steps including running clean seawater through the ship’s overboard equipment to create a false digital record for a legitimate discharge. Investigators also charged that the chief engineer and senior first engineer ordered a cover-up, including removal of the magic pipe and directing subordinates to lie to inspectors both in the U.K. and the U.S. who boarded the ship after the whistleblower report.
In addition to the use of a magic pipe to circumvent the oily water separator and oil content monitor equipment, the U.S. investigation uncovered two other illegal practices on the Caribbean Princess as well as four other Princess ships, the Star Princess, Grand Princess, Coral Princess, and Golden Princess. This included opening a salt water valve when bilge waste was being processed by the oily water separator and oil content monitor to prevent alarms and also discharges of oily bilge water originating from the overflow of graywater tanks into the machinery space bilges.
At the time of the original guilty plea in December 2016, Assistant Attorney General Cruden said “The pollution in this case was the result of more than just bad actors on one ship. It reflects very poorly on Princess’s culture and management. This is a company that knew better and should have done better.”
In June of 2019, Carnival admitted it was guilty of committing six violations of probation. This included interfering with the court’s supervision of probation by sending undisclosed teams to ships to prepare them for the independent inspections to avoid adverse findings. In addition to the $20 million fine, Carnival senior management accepted responsibility, agreed to restructure the company’s corporate compliance efforts, comply with new reporting requirements, and pay for additional independent audits.
“Beginning with the first year of probation, there have been repeated findings that the company’s internal investigation program was and is inadequate,” said the Justice Department as part of the new guilty plea.
The independent third-party auditor and court-appointed monitor reported to the court that 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.” As a result, in November 2021, the Office of Probation issued a petition to revoke probation.
Princess and Carnival admitted in the new plea agreement 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.
Carnival was ordered to again restructure so that its investigative office now reports directly to a committee of Carnival’s Board of Directors. Princess was ordered to pay the additional $1 million criminal fine and required to undertake remedial measures to ensure that it and Carnival Cruise Lines & plc establish and maintain the independent internal investigative office. The court will continue to hold quarterly status hearings to ensure compliance.