(Reuters) - Carnival Corp’s Princess Cruise Lines will plead guilty to seven felony charges of polluting the seas and trying to cover it up, and pay a record $40 million criminal penalty, the U.S. Justice Department said on Thursday.
The charges against Carnival’s Santa Clarita, California-based unit stem from “illegal dumping of oil contaminated waste from the Caribbean Princess cruise ship,” the department said in a statement on the company’s “deliberate pollution of the seas and intentional acts to cover it up.”
Shares of Carnival, the world’s largest cruise operator, were down 1.8 percent at $50.50 in late-morning trading on the New York Stock Exchange after the announcement. In London, its shared were off 2.8 percent.
Company representatives could not be reached immediately for comment.
The Caribbean Princess had been making illegal discharges since 2005 using bypass equipment - including a so-called “magic pipe” - to circumvent pollution-prevention equipment that separates oil and monitors oil levels in the ship’s water, the department said.
U.S. investigators began to probe the ship’s actions after a whistle-blower engineer reported illegal dumping off the coast of England in August 2013. Two other top ship engineers then ordered a cover-up, called on subordinates to lie and sought to remove the pipe.
“This is a company that knew better and should have done better,” Assistant Attorney General John Cruden said in the statement. “Hopefully the outcome of this case has the potential not just to chart a new course for this company but for other companies as well.”
The Caribbean Princess ship visited ports in ports in nine U.S. states and two territories, including Florida, New York, Maine the U.S. Virgin Islands, the department said.
U.S. investigators found the Caribbean Princess and four other Princess Cruise Lines ships engaged in two other illegal practices affecting water discharge, it added.
U.S. Attorney Wifredo Ferrer in Miami called the company’s conduct overall “particularly troubling,” given its “documented history of environmental violations,” including in southern Florida.
Cruise ship travel has generated concern among environmental groups and governments over water contamination and waste as the industry adds passengers, routes and larger ships.
Some environmental groups have criticized the cruise industry for not being more proactive in reducing air and water pollution, and for not being transparent about their efforts.
Cruise Line International Association, which represents the industry, has pledged to take steps to reduce cruise travel’s environmental impact and has said cruise lines must follow international standards.