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The Sunshine Economy

Carnival Corp. Boss: 'There Were Some Gaps' In Environmental Oversight

AP Photo/Lynne Sladky
Carnival Corp. CEO Arnold Donald leaves federal court, Monday, June 3, 2019, in Miami. Carnival Corp. reached a settlement with federal prosecutors to pay a $20 million penalty for violating a pollution probation.

Arnold Donald admits there were gaps in how the world's largest cruise ship operator followed environmental rules.

"Clearly there were some gaps in this system," Donald told WLRN's Sunshine Economy during a recent interview in his office at Carnival's headquarters in Doral. It was Donald's first public comment since agreeing to pay a $20 million fine and plead guilty to six violations of the company's probation in June.

The violations were detailed in a probation report from a court appointed monitor that criticized Carnival’s complex corporate structure with nine cruise brands as a challenge to improving the company’s environmental compliance. The probation stems from a 2017 pollution conviction that included a $40 million fine.

"The [court appointed monitor] and the court didn't believe that we were taking it seriously, that it wasn't a priority," Donald said. "And if somebody from the outside looks at us and says that, then there's obviously some gaps."

In June, Carnival plead guilty to a half dozen probation violations, including sending in its own teams to ships before independent environmental inspections, dumping plastic mixed with food waste in protected waters of the Bahamas, and falsifying training records. Donald and top company executives did not show for an April hearing, leading U.S. District Judge Patricia Seitz to order Donald, Carnival Corp. Chairman Mickey Arison and others to appear before her in June.

You can hear the entire interview with Carnival Corp. CEO Arnold Donald when The Sunshine Economy returns on Monday, September 9 at 9 a.m.

"The court was disappointed in how they felt we were responding to some of those things," Donald said.

In addition to the probation violations, the report criticized Carnival's complex corporate structure with nine different operating cruise brands as a challenge to improving the company’s environmental compliance.

Donald said, "I think that centralization of oversight is definitely the right way to go. And we felt we had that."

Since admitting to the violations, Carnival has created a new job -- chief ethics and compliance officer. It also hired a lawyer, Peter Anderson, who has acted as an outside compliance consultant for the company.

The culture at Carnival will be one area of focus. The probationary report found Carnival to have "a blame culture, with a focus on identifying errors and disciplining individuals rather than also evaluating systemic issues that may need to be addressed."

"We have a large organization and I'm certain in a lot of quarters, they will hear those words and say, 'That doesn't sound like us.' In other quarters they probably hear those words and say, 'That sounds just like us,'" said Donald.

The company or one of its cruise brands has pleaded guilty in two previous pollution cases dating back to 1998. It is about halfway through its current five-year probation for pollution violations.

"This isn't about a period of probation. This is about an instilled, intrinsic behavior that we want to have in our organization, that really strives for and delivers on excellence and safety, environmental protection, and compliance. I don't think the job will ever be done."

Tom Hudson is WLRN's Senior Economics Editor and Special Correspondent.