Princesss fined $40 million for pollution

[chengkp75]

The "big release" of waste oil was on August 23, 2013. The press release announcing the elevation of Jan Swartz to President was on 11/4/2013. Do you suppose that Carnival was aware of what lay in store and made "leadership changes" right from the start?

 

It could very well be so, but my experience is that the hatchet falls first on those most directly involved (fleet managers, technical superintendents), and only when the scope of everything comes out would a President or CEO get axed (or become a felon). I would have expected a top level fall out from this to have happened around 2015 as the investigation and arbitration really gets going.

[Bill B]

Now I wonder if Princess will pass off this $40 million dollar fine on future cruise passengers, this would really be unacceptable.

 

Then prepare yourself for the "unacceptable" - in one way or another, of course they're going to pass off the fine to future passengers!

[chengkp75]

Chengkp75, thanks for your thoughtful reply

It's still very sad anyone or any seafaring team would think this is ok

 

While I don't believe that the officers who did this really think it is okay, they are being pressured between this and losing their job, and that is always a tough decision, and not everyone has the guts to stand up and do what's right when it can affect your loved ones as well. This is just as much a form of harassment as any other type, and is one that maritime officers have had to live with for decades, and it is unfortunate that most of the environmental compliance terms treat the onboard officers as the criminals, making their day to day life more difficult through intense regulation, while the corporate headquarters that forced this behavior typically only has to submit to an annual review of their processes.

[Daisyloo]

It is very disappointing to read about this deliberate pollution and the systemic corruption that allowed it to go on for years.

How many of the other cruise lines are doing the same thing? Do they all do it and Princess was unlucky and got caught?

I feel like we the passengers have been made unwitting accessories to the crime. In the past, people have said to us "why do you cruise: don't you know that cruise ships are terrible polluters?" We have always said (and thought) that the cruise lines were very responsible businesses and cared about the oceans. Looks like we were wrong!!

I have a cruise booked on Princess for next fall. This has me seriously wondering if I want to do this cruise or should I cancel? I feel really let down by Princess. They have damaged the trust that we passengers had in them.

:(

[JimmyVWine]

Then prepare yourself for the "unacceptable" - in one way or another, of course they're going to pass off the fine to future passengers!

 

Yeah, but...consider that Princess operates 17 ships. Assume an average passenger load of 2,700 people per ship (after Majestic replaces Dawn). That means that each and every day of the year, Princess is servicing 45,900 people. Times 365 days in the year, that is 16,753,000 "passenger days" per year. Princess can make up the lost $40 million in a single year by charging each passenger $2.38 extra per day. On a 7 day cruise, that is $16. We may bear the ultimate cost of this fine, but we will never feel the incrementally slow drip from our wallets.

Edited December 1, 2016 by JimmyVWine

[chengkp75]

Chengkp75, thanks for your thoughtful reply

It's still very sad anyone or any seafaring team would think this is ok

 

I don't believe that any of the officers involved really think this is okay, but they are being subjected to a form of harassment as vile as any other out there. They are being pressured to break the law in order to keep their job. It takes a lot of guts to stand up and do what is right when your loved ones will suffer the consequences as well.

[Brisbane41]

I hope the Chief Engineer and Senior First Engineer were fired and banned from holding a similar position on any other cruise line.

Its a close knit community and word travels fast. :mad:

 

I think this is a rather foolish and irresponsible statement. This goes to the very top of Carnival corp and the directors should be removed from their positions and stripped of all shares and entitlements from the company and banned from being in a position of leadership ever again. The chairman arison has to go over this. Ultimately something as serious as this could not happen unless people at the top knew about it.

[Lanwood]

The pressure to KEEP COSTS IN LINE starts all the way at the top... above Princess Executives ... all the way to the parent company.

 

I agree.

 

I am very familiar with executives (being one myself) across a multitude of enterprises who set impossibly low budgets and targets for management and senior staff of companies and business to meet.

 

The pressure on management to meet these targets is so great, that the temptation to resort to "undesirable" solutions to meet these targets is very disturbing.

[Sea Hag]

Then prepare yourself for the "unacceptable" - in one way or another, of course they're going to pass off the fine to future passengers!

 

You are so right! Of course they will.

[jocap]

Hi All,

 

$40,000 000 is a fair bit of money, but what about the folks who make a living

 

out of the seas around the UK, Princess needs to make some form penance to

 

them may be give a few million to fund anti pollution measures, or marine

 

conservation.

 

yours Shogun

Shogun- that's worrying me, too. The small boats out for lobster and scallops; the Dublin prawns; the Caribbean turtles which swim across to our beaches. The destruction of sand eels, thus the failing of puffins to breed, and other rare species.

We picked up a very rare black guillemot which was so completely oil soaked that the vet couldn't deal with it- in fact the bird had ingested too much oil to live already. This was before this reported offence off our coast, but oiled birds keep appearing... and we blame vague ships out there, which are cutting corners. No way did we ever think it could be cruise ships. :(

[RDC1]

Hi All,

 

$40,000 000 is a fair bit of money, but what about the folks who make a living

 

out of the seas around the UK, Princess needs to make some form penance to

 

them may be give a few million to fund anti pollution measures, or marine

 

conservation.

 

yours Shogun

 

To put the size of the fine into perspective, it is a rounding error on the CCL balance sheet.

 

According to CCL's last annual report.

 

40 million is 0.2% of revenue, and 2.2% of annual profits. It would drop earnings per share by 5.1 cents, from $2.26 to 2.21. Not a major impact.

 

Not a major impact. Suspect the impact on stock price might be more what might happen to their Alaska cruises through Glacier Bay.

 

Parts of the fine are going to environmental protection in different areas.

[thinfool]

Did the cost savings of dumping come anywhere near the cost of the fine?

 

My opinion, you can incinerate a lot of waste on land for $40 million.

[SteveH2508]

Yeah, but...consider that Princess operates 17 ships. Assume an average passenger load of 2,700 people per ship (after Majestic replaces Dawn). That means that each and every day of the year, Princess is servicing 45,900 people. Times 365 days in the year, that is 16,753,000 "passenger days" per year. Princess can make up the lost $40 million in a single year by charging each passenger $2.38 extra per day. On a 7 day cruise, that is $16. We may bear the ultimate cost of this fine, but we will never feel the incrementally slow drip from our wallets.

 

Interesting calculation - remind our readers - how much was the recent On-board Service Charge increase and when was it?

 

Coincidence or what?;)

[joepeka]

To put the size of the fine into perspective, it is a rounding error on the CCL balance sheet.

 

According to CCL's last annual report.

 

40 million is 0.2% of revenue, and 2.2% of annual profits. It would drop earnings per share by 5.1 cents, from $2.26 to 2.21. Not a major impact.

 

Not a major impact. Suspect the impact on stock price might be more what might happen to their Alaska cruises through Glacier Bay.

 

Parts of the fine are going to environmental protection in different areas.

And I have to wonder if Princess/Carnival Corp has any "fines and penalties" insurance that would cover the fine. Or perhaps those types of insurance coverages are only for civil fines (this one being a felony offense)?

Edited December 1, 2016 by joepeka

[RDC1]

The phrase "reflects very poorly on Princess’s culture and management" does not mean that management knew. It means that these acts are evidence of ineffective management, which could mean a failure to properly train and supervise. In fact, that is the most common understanding of the phrase "reflects poorly on management". It means that the corporation failed to train, educate and supervise its employees. That is a significant failure of duty, but it is not the same thing as knowing about and being complicit in the acts themselves.

 

There is knowing and "knowing". The fact that it went on for many years, that would have involved several different engineering officers, as well as the fact that it involved several ships, implies that it was a pretty standard practice. I would suspect that it was more of a don't ask don't tell. There is probably not a paper trail to senior corporate management, but clearly their systems avoided looking into the possibility.

 

Often with corporations there is the written rules and the unwritten rules. The fact that it was widespread means that it was clearly a widespread unwritten rule.

 

Now the two things I would look at is how the Engineering Officers were evaluated? How much was budget management part of their evaluation and how their budgets were broken out. Clearly waste disposal costs should be tracked separately and be reviewed if they are either too high or too low.

 

The second item is who does the environmental officer report to? Clearly if this was going on the environmental officer was not effective. Those positions should be under direct reporting of someone at the that reports directly to the President, with dotted line responsibility to the Captain of the individual ship.

 

Either way there will not be a consent decree in place for at least the next 5 years, with lots of outside review.

[RDC1]

And I have to wonder if Princess/Carnival Corp has any "fines and penalties" insurance that would cover the fine. Or perhaps those types of insurance coverages are only for civil fines (this one being a felony offense)?

 

I would suspect not. Even if they had insurance that would cover a criminal act, something this small would fall under self insurance.

 

A more interesting question is their legal fees, both for the corporation and for the individuals involved. That could easily exceed 40 million for a case like this, including both inside and outside legal expertise.

[IndyDenise]

And I have to wonder if Princess/Carnival Corp has any "fines and penalties" insurance that would cover the fine. Or perhaps those types of insurance coverages are only for civil fines (this one being a felony offense)?

 

 

I think Carnival Corp is self insured meaning they don't have it.

 

After the Concordia sank several articles made mention of this fact of no insurance and Carnival had to take the hit.

 

 

Sent from my iPhone using Forums

[CptSticky]

This might explain the CCL stock price drop yesterday. I spent my career and still volunteer working for our environment, this really hurts.

 

Are you discounting the large one day jump in fuel costs?

[Pushka]

thanks for taking the time from the celebrity board to post this. :rolleyes:

 

 

 

http://boards.cruisecritic.com/showthread.php?t=2428028

 

 

[emoji38]

 

It does explain the share price falling when DJIA is up.

Edited December 2, 2016 by Pushka

[joepeka]

I would suspect not. Even if they had insurance that would cover a criminal act, something this small would fall under self insurance.

 

A more interesting question is their legal fees, both for the corporation and for the individuals involved. That could easily exceed 40 million for a case like this, including both inside and outside legal expertise.

 

I think Carnival Corp is self insured meaning they don't have it.

 

After the Concordia sank several articles made mention of this fact of no insurance and Carnival had to take the hit.

 

 

Sent from my iPhone using Forums

That does make sense they would be self-insured given the relatively small size of the fine compared to the overall corporate revenue. The legal fees, yeah, that's another story perhaps. ;)

[chengkp75]

I think this is a rather foolish and irresponsible statement. This goes to the very top of Carnival corp and the directors should be removed from their positions and stripped of all shares and entitlements from the company and banned from being in a position of leadership ever again. The chairman arison has to go over this. Ultimately something as serious as this could not happen unless people at the top knew about it.

 

Unfortunately, both you and Colo Cruiser have unreal expectations. Those at fault in the corporate offices have either been let go, or have been retained and declared convicted felons. That's it, there is no further legal ramification like taking stock shares or banning from the industry. These folks will go on to other positions of authority in the maritime industry or another.

 

Those on the ships will be terminated. There is no international agency that could ban a mariner from ever working again. They can go on and get another job at another shipping company. The decision to proceed against their professional license is up to the nation that issued that license, whether in the mariner's home country or a flag of convenience nation like the Bahamas or Panama. Another unfortunate fact of life is that this kind of thing is so commonplace, that I doubt any nation other than the US (only over the US mariners it has jurisdiction over) would proceed against a license for this.

[cheeseheads4ever]

I too find this disgusting by Princess. Pretty sad that poluting the waters means nothing to them. When you are making billions whats 40 million? I dont get why you would want to do that?

Will think twice before I cruise on Princess. Like others have said..do other cruise lines do this and just havent been caught?

[Colo Cruiser]

Unfortunately, both you and Colo Cruiser have unreal expectations. Those at fault in the corporate offices have either been let go, or have been retained and declared convicted felons. That's it, there is no further legal ramification like taking stock shares or banning from the industry. These folks will go on to other positions of authority in the maritime industry or another.

 

Those on the ships will be terminated. There is no international agency that could ban a mariner from ever working again. They can go on and get another job at another shipping company. The decision to proceed against their professional license is up to the nation that issued that license, whether in the mariner's home country or a flag of convenience nation like the Bahamas or Panama. Another unfortunate fact of life is that this kind of thing is so commonplace, that I doubt any nation other than the US (only over the US mariners it has jurisdiction over) would proceed against a license for this.

 

 

I said they should be, didn't say they would be.

Not an unreal expectation but an opinion.

[chengkp75]

That does make sense they would be self-insured given the relatively small size of the fine compared to the overall corporate revenue. The legal fees, yeah, that's another story perhaps. ;)

 

What this falls under is P&I insurance (Property & Indemnity). Shipowners join together into P&I "clubs" that form essentially a mutual insurance coverage. The shipping companies compare the historic cost of maintenance and repair to the ship, damages to persons, property, and the environment, for all the ships in the "club". They then divide this total by the number of ships, and that's the premium each ship pays. So, if one company has a real bad year, and gets a fine like Princess, the P&I insurance pays it, but the next year the premiums will go up for everyone in the club. If one member consistently performs poorly, so that everyone else is paying for that one member's mistakes, they will kick that member out of the club, and that member will have to find a new club that will take them with their current record, with appropriately higher premiums.

[chengkp75]

I think Carnival Corp is self insured meaning they don't have it.

 

After the Concordia sank several articles made mention of this fact of no insurance and Carnival had to take the hit.

 

 

Sent from my iPhone using Forums

 

See my post about P&I insurance. With the Concordia, there was the hull insurance (which covers the cost of the ship itself), and then there was the P&I insurance which had to cover the cost of indemnity to repair the environment (the salvage operation). Like any insurance policy, there are limits to coverage, and above that limit then Costa picked up the bill exclusively.