Carnival Corp. to pay government for help following Splendor, Triumph fires at sea

04/15/2013 7:52 PM

04/16/2013 1:05 AM

Following harsh criticism over its use of federal resources for ship emergencies, Carnival Corp. said Monday that it would reimburse the U.S. government for costs related to the high-profile fires aboard the Carnival Triumph in February and Carnival Splendor in 2010.

In a statement, the Doral-based parent of Carnival Cruise Lines said that no agencies had requested the money, but “the company has made the decision to voluntarily provide reimbursement to the federal government.” A spokeswoman said the exact amount of payment is still being determined, though a U.S. senator has said the U.S. Coast Guard and U.S. Navy had estimated costs of about $4.2 million for the two incidents combined.

Carnival Corp., the world’s largest cruise ship company, also emphasized in the statement that “at no point in time has Carnival stated it would refuse to reimburse federal agencies if they sought remuneration.”

In both cases, fire knocked out power to the ships, which were slowly towed to land. The U.S. Coast Guard escorted the Triumph and Splendor; the U.S. Navy delivered tons of food and supplies to the Splendor.

A month after the Triumph returned to land, Sen. Jay Rockefeller, D-W. Va. and chairman of the Senate Committee on Commerce, Science and Transportation, wrote Carnival a strongly worded letter outlining the financial impact of that aid at sea.

He said the Splendor incident, which happened in November of 2010, cost the U.S. Coast Guard more than $1.5 million and the Navy nearly $1.9 million. For the Triumph, he wrote, the Coast Guard tally was about $780,000.

“These costs ultimately must be borne by federal taxpayers,” wrote Rockefeller, a frequent critic of the cruise industry, in the March 14 letter. “Given that you reportedly pay little or nothing in federal taxes, do you intend to reimburse the Coast Guard and the Navy for the cost of responding to either?”

According to the New York Times, Carnival Corp. in 2011 had paid corporate taxes equal to 1.1 percent of its profit over a five-year period. Carnival, which is incorporated in Panama, has said it earns the majority of its income outside the U.S. and pays types of taxes other than income tax in jurisdictions globally. Chairman and CEO Micky Arison has put the figure at about $400 million in fees and taxes worldwide.

Carnival’s reply to Rockefeller, penned by senior vice president of corporate maritime policy Capt. James Hunn, did not explicitly refuse to reimburse the costs, but also did not offer to pay: “Carnival’s policy is to honor maritime tradition that holds that the duty to render assistance at sea to those in need is a universal obligation of the entire maritime community.”

That response prompted multiple news stories that said — incorrectly, it turns out — that Carnival would not reimburse the agencies for the aid.

When told about the company’s announcement Monday, U.S. Coast Guard deputy chief of media relations Carlos A. Díaz said he had not heard about the reimbursement offer.

“We’re budgeted to do our mission,” he said. “The American people expect us to go and help them out when they’re in need.”

Rockefeller, in a statement released Monday afternoon, offered faint praise for Carnival’s announcement.

“I’m glad to see that Carnival owned up to the bare minimum of corporate responsibility by reimbursing federal taxpayers for these two incidents,” he said. “I am still committed to making sure the cruise industry as a whole pays its fair share in taxes, complies with strict safety standards, and holds the safety of its passengers above profits.”

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