Federal Judge Pushing Carnival To Clean Up Its Act for
3 Years Sets April Hearing
Carnival Cruise Lines $60M Fines & Threats of Jail For Top Execs Over Chronic
Ocean Pollution
Carnival's First Compliance Officer Rushing to Prove Value of New Centralized
System
After
serving as a federal prosecutor, Peter Anderson carved out a successful career
as an environmental and white-collar criminal defense attorney in Asheville,
North Carolina. Then he gave it all up to move in-house.
Miami-based Carnival Corp. offered him a challenge he couldn’t refuse: become
its
first chief ethics and compliance officer and fix the cruise line’s
compliance system that was so broken a federal judge once threatened to jail its
top executives for repeatedly polluting the ocean.
“I’ve never been in-house before,” Anderson told Corporate Counsel in a recent
interview. “But they want me to build a best-in-class ethics and compliance
program. That’s what got me excited about leaving my law practice.”
Carnival also gave the position elevated status. Anderson explained that he is a
senior officer reporting directly to CEO Arnold Donald with dotted-line
reporting to the board of directors. He was also made one of eight executives on
Carnival’s corporate leadership team. Even the general counsel is not a member
of that team.
“We have a seat at the table,” Anderson said. “I was thrilled with the
opportunity.”
Anderson first met the Carnival executive team when he was hired to do a
compliance assessment last spring. After years of legal woes and
multimillion-dollar fines, a federal judge in Miami placed Carnival on
probation and required the cruise line to get its compliance house in
order fast, including hiring a chief compliance officer. Anderson’s assessment
of Carnival’s system was the first step, and he impressed the company enough
that it offered him the chief compliance officer job in August.
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In Miami he joined a corporate parent that has over 120,000 employees and
operates over 100 ships under nine separate brands, licensed in multiple
countries that impose a maze of rules and regulations that Anderson must
navigate. Its cruise lines include Princess Cruise Lines Ltd., Costa Cruises
S.p.A. and Holland America Line N.V.
Anderson said he took over a compliance team whose duties were divided among
departments. “Legal was doing some of it,” he said, “human resources had some,
and environmental was doing some functions. One of the first goals was to
centralize it under my leadership and make sure we are all connected throughout
the nine brands.”
He said he believes the violations occurred not because corporate executives
ordered them, or even wanted them, and not because they somehow saved the
company money. He believes they may have occurred when individuals on ships were
overworked, or poorly trained, or just simply taking shortcuts. Communicating
the importance of compliance to all employees will be key, he noted.
He said the company’s commitment to compliance includes ample resources. He
increased the number of compliance employees from 29 last year to 58 this year.
In November the company announced six new hires and promotions on his team,
including deputy chief ethics and compliance officer Kelly Clark, who is based
in Seattle. Clark previously served in various roles for Carnival’s Holland
America Group, including as vice president, counsel and special adviser to the
CEO; and chief ethics officer and general counsel.
The personnel changes also include three newly promoted corporate compliance
managers: Chris Donald, who formerly worked on policy, internal audits and
investigations, to head environmental issues; Gerry Ellis, a former Carnival
director of compliance, to lead the health, safety and security unit; and Martha
de Zayas, former vice president for ethics and compliance, to handle a broad
range of matters, including codes of conduct, regulatory compliance and the
employee reporting hotline.
“The first two or three months was about getting the organization established,
getting people in place,” Anderson said. “We’ve hired three new investigators.
We have ethics and compliance officers based in each of four operating companies
to implement the goals that we develop collectively. They report to me.”
He said now his team is focused on procedures and communication, with dozens of
activities designed to implement goals for the first year. Those goals include
strengthening the corporate culture; being more proactive and risk-based;
building the program structure; developing a “listening and learning muscle,”
opening up lines of communication among departments and breaking down silos.
A key part of the program, he said, is developing a climate and creating
incentives so that people will speak up if they see something that might be
wrong. In addition, Anderson said, “We have an environmental officer on every
ship, being our eyes and ears, monitoring and assisting.”
He said the team is also working with an outside coach, Pat Harned, chief
executive officer of the Ethics & Compliance Initiative. Harned did not
immediately return a message seeking comment.
While it seems like much has been done in Anderson’s less than six months on the
job, not everyone is pleased with the progress. At a Jan. 8 court hearing,
senior U.S. District Judge Patricia Seitz, who has been pushing Carnival the
past three years to clean up its act, expressed frustration. Seitz set a new
hearing for April, saying she expected Carnival to find better ways to
specifically measure any improvements it is making toward environmental
compliance.
“I’m going to accept for now that you are committed to the long term,” the judge
said, according to an
Associated Press report. “I don’t think this company wants to move this
slowly.”
In response, Anderson told Corporate Counsel, “I understand the court is
frustrated by the pace of the visible progress we are making. We understand the
urgency and are committed to doing even more, and sharing more of our results.”
He added that the challenge remains the same: “to build a program that has a
strong team and foundation, identifies priority initiatives and achieves
outcomes that will be long-lasting.”
Article originally published on
law.com