By Jonathan Weisman
Washington Post Staff Writer
Wednesday, September 28, 2005; Page A01

On Sept. 1, as tens of thousands of desperate
Louisianans packed the New Orleans Superdome and
convention center, the Federal Emergency Management
Agency pleaded with the U.S. Military Sealift Command:
The government needed 10,000 berths on full-service
cruise ships, FEMA said, and it needed the deal done
by noon the next day.

The hasty appeal yielded one of the most controversial
contracts of the Hurricane Katrina relief operation, a
$236 million agreement with Carnival Cruise Lines for
three ships that now bob more than half empty in the
Mississippi River and Mobile Bay. The six-month
contract -- staunchly defended by Carnival but
castigated by politicians from both parties -- has
come to exemplify the cost of haste that followed
Katrina's strike and FEMA's lack of preparation.

To critics, the price is exorbitant. If the ships were
at capacity, with 7,116 evacuees, for six months, the
price per evacuee would total $1,275 a week, according
to calculations by aides to Sen. Tom Coburn (R-Okla.).
A seven-day western Caribbean cruise out of Galveston
can be had for $599 a person -- and that would include
entertainment and the cost of actually making the ship
move.

"When the federal government would actually save
millions of dollars by forgoing the status quo and
actually sending evacuees on a luxurious six-month
cruise it is time to rethink how we are conducting
oversight. A short-term temporary solution has turned
into a long-term, grossly overpriced sweetheart deal
for a cruise line," said Coburn and Sen. Barack Obama
(D-Ill.) in a joint statement yesterday calling for a
chief financial officer to oversee Katrina spending.
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http://www.washingtonpost.com/wp-dyn/content/article/2005/09/27/AR2005092701960.html

ATTN ALL MARINERS

To All Mariners:

To some, the indictments of Michael and Robert McKay may appear to be an attack on organized labor, however, allow me to assure you, it's not. Michael and Robert McKay have allegedly--there's my little disclaimer--"sold out" their Members at the negotiating table for years, that's fairly obvious from the massive difference in pay between AMO officers and MM&P officers, SIU sailors and MFOW/SUP sailors.
With them gone, or at least going fast, now AMO Members will be able to vote in Officials who have their interests in mind at the negotiating table, and I strongly encourage them to do just that. This time, however--and, yes, this is my opinion--the Membership must put limitations on how long any given official can remain in office. Otherwise, criminals can assume power, and they will run their unions less like Republics than Fascist dictatorships for LIFE.
Too, the AMO Membership must prevent Officials from profiting off the Union after they have left Office, voluntarily or involuntarily, and take measures to prevent them from drawing massive annual salaries for remaining "consultants" for life. If the Membership requires their counsel on any given matter, then these "consultants" can be hired--and fired. The President of the United States can be impeached. It is, without question, time to implement a similar measure within our own unions. If, for whatever reason, the Membership decides that any given official is not performing adequately, then they should have the power to oust that union official at, say, the next Union meeting.
Also, if government bodies, such as the Department of Justice, prove beyond a reasonable doubt that Officials have been engaging in any illegal/unethical activity, such as racketeering, in this case, while in Office, then those union officials should pay for their own legal defense (at $274,000 per year, not to mention perks, Michael McKay can certainly afford it). If they are found innocent, then, perhaps, the Union should reimburse their legal costs.
As for permitting the Starfleet Center to be whored out to foreign- and American-owned Companies, like NCL, that fly "flags of convenience," to train their officers, isn't that a lot like arming your enemy? The alternative is simple: if they want access to American markets, insist these Companies fly the American flag, hire American officers, abide by American laws, pay American taxes, and agree that, in return, they shall have access to an able labor pool trained at the Starfleet facility; otherwise, they can fund the construction of your own facility in Monrovia (or wherever).
Some might argue that the alternative would reduce Union revenue, but let's not forget that the AMO Membership hardly benefited from that revenue anyway. Michael and Robert McKay benefited immensely, there's little question in my mind about that, but not the Membership--and AMO is the Membership's union!
The AMO Membership must establish direct accountability over the Leadership via face-to-face contact in Union Halls. It's easy for someone to lie to a Member over the phone. It's not so easy when that Member is staring them in the eye, and who knows what he's got tucked under his shirt in his belt? Seriously, though, without Union Halls of some sort, the AMO Membership is virtually powerless to demand full accountability and transparency of their Leaders.
Most importantly, however, all Members, in every maritime union, must create some means by which to contact one another en masse outside the Leadership's control--like the internet. What we all need is a data base with email addresses that we could use to contact one another, at home or underway. This way, if we, the Members, are not happy with a particular official, or a particular Company, we have a means by which to voice our grievances and opinions. Do I expect to agree with everyone’s' opinion all of the time? Of course not, but I most certainly want to hear them. Do I expect everyone to agree with my opinions? Of course not. But I figure it's safe to put them on the table, and let my fellow Union Brothers decide for themselves. Establishing a means to communicate outside our Leaders control would without question redistribute political Power back to the Membership. Seajustice.org is one means to conquer this goal.
These are simply my opinions, of course, and only some of them. The AMO Membership--all Union Memberships--must decide how best to govern themselves.
Even if you disagree with everything I have to say, I encourage you to save my email address in your buddy list. Together, we can combine our resources and communicate with one another, at home and abroad, and as Union brothers we can take our Unions back from corrupt union officials, whether government bodies intervene on our behalf or not.
I firmly believe that the entire American maritime industry, from Ship owners and operators, to the greenest Wiper, will ultimately benefit from the ousting of Michael and Robert McKay.
Still, we all know there's plenty of corruption in our midst, but together we can raise our voices as one and kick those corrupt union officials back to Brooklyn (or prison).
As a rank-and-file Member of SIU, SUP and MM&P, I'd like to welcome all AMO officers to my table. There may be difficult times ahead, but we're all Working People, and now is an opportunity to stand shoulder to shoulder with one another--the way Union Brothers should.

God bless Organized Labor!
P. R.
(COPY OF INDICTEMENTS BELOW!!! PLEASE FORWARD TO ALL MEMBERS!!!)

U.S. Department of Justice
R. Alexander Acosta
United States Attorney for the
Southern District of Florida

99 N.E. 4th Street
Miami, FL 33132
(305) 961-9001
PRESS RELEASE

FOR IMMEDIATE RELEASE For Information Contact Public Affairs
September 14, 2005 Yovanny Lopez, Public Affairs Specialist, (305) 961-9316

BROWARD UNION OFFICIALS CHARGED IN LABOR RACKETEERING CASE
R. Alexander Acosta, United States Attorney for the Southern District of Florida, and Gordon S. Heddell, Inspector General, United States Department of Labor, announced the unsealing of a thirteen-count (13) labor racketeering Indictment returned by a federal grand jury sitting in Miami, Florida. Charged in the Indictment are defendants, Michael McKay, 58, of Dania Beach, Robert McKay, 55, of Dania Beach, Phillip Ciccarelli, 64, of Delray Beach, and James Lynch, 55, of Dania Beach.
Count 1 of the Indictment charges Michael McKay, the National President of the American Maritime Officers (“AMO”)Union, Robert McKay, the National Secretary-Treasurer of the AMO Union, Phillip Ciccarelli, a former employee of the AMO Benefit Plans, and James Lynch, an employee of the AMO Union, with conspiring to participate in the affairs of a racketeering enterprise by committing multiple acts involving theft and embezzlement from the AMO Union and the AMO Benefit Plans, graft, obstruction of justice, witness tampering, mail fraud, and honest services fraud. Michael McKay is further charged with embezzlement from the AMO Benefit Plans (Count 2), mail fraud (Counts 4, 9, and 10), falsification of records pertaining to the AMO Benefit Plans (Count 11), and failure to maintain records required by the Labor Management and Reporting Disclosure Act ( “LMRDA”) (Count 12). Robert McKay is further charged with mail fraud (Counts 4 and 9), embezzlement from the AMO Union (Count 8), failure to maintain records required by the LMRDA (Count 12), and falsification of records required by the LMRDA (Count 13). Phillip Ciccarelli is further charged with witness tampering (Count 3), mail fraud (Count 5), and graft affecting the AMO Benefit Plans (Counts 6 and 7).
AMO, headquartered in Dania Beach, Florida, represents approximately 4,000 licensed maritime officers serving aboard vessels in the United States-flag merchant fleet, including ocean-going, Great Lakes, inland waters, military support, and cruise vessels.
According to the racketeering conspiracy charged in the Indictment, Michael and Robert McKay conspired to rig AMO Union elections in 1993 and 1996, and AMO Union constitutional referendums in 1995 and 1999, by stuffing the ballot box and stealing and destroying ballots cast for their opponents and against the referendums that they supported. The Indictment charges the defendants with conspiring to embezzle money from the AMO Benefit Plans to pay for hockey tickets, cigars, commemorative china, and personal boat repairs. The Indictment also charges that the defendants conspired to embezzle money from the AMO Benefit Plans by approving free housing and room stays for themselves, their family members and guests, and other AMO Union employees and officials, in houses and rooms leased by the AMO Benefit Plans at the AMO Union complex in Dania Beach, Florida. The Indictment further charges the defendants with conspiring to embezzle AMO Union and Benefit Plans funds by paying cash and bonuses to reimburse AMO Union and Benefit Plans officials and employees for political campaign contributions made to local and federal candidates designated by Michael McKay. Defendants Michael McKay, Robert McKay, and James Lynch are also charged with conspiring to embezzle money from the AMO Union and Benefit Plans by submitting fraudulent expense vouchers.
United States Attorney R. Alexander Acosta stated, “Protecting the integrity of our unions promotes the welfare of American workers. We will continue to aggressively prosecute those individuals who abuse their positions of trust for their own personal and financial benefit.”
Department of Labor Inspector General Heddell said, “Control of unions by corrupt leaders results in the victimization of its members. This indictment reinforces our efforts to abate the longstanding domination of the American Maritime Officers Union. We will continue to work closely with other law enforcement agencies to expose and bring an end to union corruption and labor racketeering.”
If convicted, the defendants face twenty (20) years’ imprisonment on Counts 1 and 3, and a fine of $250,000 per count; five (5) years’ imprisonment on Counts 2, 4, 5, 9, 10, and 11 and a fine of $250,000 per count; three (3) years’ imprisonment on Counts 6 and 7 and a $250,000 fine per count; five (5) years’ imprisonment on Count 8 and a $10,000 fine; and one (1) years’ imprisonment on Counts 12 and 13, with a $10,000 fine per count. In addition, upon conviction, the Government will seek forfeitures of at least $528,098, and any rights, titles, memberships or interests in the AMO Union and each of the AMO Benefit Plans.
Mr. Acosta commended the investigative efforts of the Office of Inspector General, United States Department of Labor Racketeering and Fraud Investigations. This case is being prosecuted by Department of Justice - Organized Crime and Racketeering Section, Trial Attorney Robert S. Tully and Assistant United States Attorney Robert J. Lehner.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Return to Press Release Page

Technical comments about this website can be e-mailed to the Webmaster. PLEASE NOTE: The United States Attorney's Office does not respond to non-technical inquiries made to this website. If you wish to make a request for information, you may contact our office at 305-961-9001, or you may send a written inquiry to the United States Attorney's Office, Southern District of Florida, 99 NE 4th Street, Miami, Fl. 33132.

Ships' Housing Deal Is Under Scrutiny
Carnival Cruise Lines' contract to provide emergency lodging after Katrina could cost taxpayers $236 million. Many berths are empty.

By Alan C. Miller, Ken Silverstein and John Hendren, Times Staff Writers

WASHINGTON — When Carnival Cruise Lines agreed to lease three ships to the government for Hurricane Katrina evacuees, the company president portrayed it as an act of compassion to "provide desperately needed housing for thousands of individuals." Now two lawmakers are questioning the hastily negotiated deal, which could give the company as much as $236 million.

Rep. Henry A. Waxman (D-Los Angeles) sent a letter Friday to Homeland Security Secretary Michael Chertoff requesting a copy of the contract and documentation supporting its cost. Rep. Marilyn N. Musgrave (R-Colo.) said she intended to ask for an investigation of the Sept. 2 deal.

"In emergencies, strange things happen, but this raises a lot of red flags," Musgrave said. "We need to shine some light on this and see if the deal was proper."

Said Waxman: "We seem to be paying a heck of a lot of money for these ships. I'm trying to determine if this is a wise use of resources."

Carnival says it will earn no more on the deal than it would have received if the three vessels had remained in regular service.

But the pact, made by the Navy's Military Sealift Command at the direction of the Federal Emergency Management Agency, has raised questions about whether the payments are excessive.

Neither Carnival nor the government will release details about how they arrived at the contract numbers.

The deal calls for Carnival to be paid $192 million for providing about 7,100 berths, originally intended for evacuees but now being used mostly for emergency workers, for six months. Carnival is also being reimbursed for up to $44 million in operating costs, including charges assessed at ports for fuel, water, electricity and waste disposal.

In addition, Carnival's contract includes compensation to the company for corporate taxes that experts say could amount to tens of millions of dollars.

The government agreed to this because Carnival, though based in Miami, is exempt from U.S. income taxes and some other taxes because it is registered in Panama, its ships fly foreign flags and the vessels operate primarily in international waters.

The trade association that represents cruise lines is seeking a Treasury Department waiver to exempt vessels under government contract from federal corporate income taxes and withholding taxes for crews.

Carnival has said that if the waiver is approved, it will reduce the amount of its contract payment.

Navy Capt. Joseph Manna, who negotiated the contract at the Military Sealift Command, said nothing was inappropriate about the process or outcome. The Carnival deal was comparable to the cost of "a hotel and three meals a day," he said, which is "in a reasonable area of price."

But, he added, if he'd had more time "I might have been able to get a better price…. When you do it fast, sometimes you pay a little more."

The Military Sealift Command is primarily charged with arranging for private shipping companies to transport fuel and cargo to war zones. Spokeswoman Trish Larson said that "Carnival determined the price for use of their ships" under a competitive bidding process.

She said the command routinely reimbursed the port expenses included in Carnival's contract.

A Canadian company that is providing a fourth ship under the same contract is also being reimbursed for its expenses.

Less Than Half Capacity

"The deal is designed so that Carnival does not make any money beyond what it would have made if these ships had been kept in service," said Carnival spokeswoman Jennifer de la Cruz.

She said the company was being reimbursed for "any costs incurred in excess of our normal vessel operating costs."