Documents show a sweet deal for Carnival Cruise Lines
By KEN SILVERSTEIN
and ALAN C. MILLER, Los Angeles Times

WASHINGTON -- The government's controversial agreement to lease three ships from Carnival Cruise Lines for emergency housing after Hurricane Katrina provided more benefits to the company than have previously been disclosed, according to contract documents obtained by the Los Angeles Times.

But it also includes a clause -- inserted late last week at the company's request -- that calls for returning any excess profit. The clause provides for Carnival to determine voluntarily and "on a good faith basis" whether it has made too much money on the deal and should offer the government a refund.

Among the disclosures, the deal requires the government to pay any additional costs the company incurs by having to hire American workers instead of the foreigners it usually employs.
As previously reported, the contract will give Carnival $192 million over six months for providing about 7,100 berths, originally intended for evacuees but now being used mostly for emergency workers. And the company will be reimbursed for up to $44 million in operating costs to cover its fuel, waste removal and piloting expenses.

Amid mounting criticism from lawmakers, Carnival has maintained it will make no additional profit beyond what it would have earned from the three ships under normal operations. This week, for the first time, Carnival spokeswoman Jennifer de la Cruz said that a provision in the contract calls for it to return "any excess profit" above that amount.

She said this concept "was part of our discussions with the government from the outset" leading to the Sept. 2 deal. But she said final negotiations, including the "profit neutrality clause," were completed only last week.

Timothy M. Boulay, a spokesman for the Navy's Military Sealift Command, which negotiated the deal with Carnival at the direction of the Federal Emergency Management Agency, said that any refund would be voluntary and based on a good faith estimate by the company.
He confirmed that the repayment clause was broached by the company as far back as Sept. 2 and, after working out specific language with the command, was inserted in the contract on Sept. 30 that "finalized all the elements of the original deal." The original contract documents, which include the award notice and Carnival's "final offer," make no mention of the clause.

On Monday, Carnival CEO Bob Dickinson sent a letter to members of Congress saying that after the completion of the charter, Carnival would "review the expenses incurred and will return monies ... if necessary to achieve the goal of profit neutrality."
Faced with a growing crisis as evacuees fled New Orleans and elsewhere, the deal was put together in about 36 hours, Carnival and the government have said.

In the wake of Katrina, the Sealift Command approached 75 different companies or brokers of ships seeking bids on ships with at least 1,000 berths to be available within 10 days. Only Carnival and a Canadian company that provided a single ship met the terms established by FEMA.

"Carnival determined the price for the use of its ships and FEMA ultimately approved the funding for the contracts," Boulay said. "Under the circumstances, it was the best deal the government could get."

Angela Styles, a Republican political appointee who headed the Office of Federal Procurement Policy between 2001 and 2003, questioned the government's handling of the contract. She said she had never heard of a refund clause like the one inserted in the contract, which she described as weak.

Even under circumstances requiring great haste, she said, the government has mechanisms to obtain goods and services at a fair price. For example, she said, a contract can be concluded with the final price to be determined during subsequent negotiations.
"In this case, they executed a contract without ensuring that they had a fair price," she said.

Meanwhile, congressional calls for an investigation of the contract have increased, with Republicans as well as Democrats seeking action.

Three conservative Republicans, Reps. Marilyn Musgrave, R-Colo., Jeff Flake, R-Ariz., and Todd Tiahart, R-Kansas, sent a letter to House Speaker Dennis Hastert, R-Ill., last week calling for "an immediate investigation into all matters related to the contract."
"We have concerns about a broad range of issues," the letter said, citing the total price tag, the economics of housing evacuees under the contract terms and the speed with which the deal was negotiated.
Moreover, two industry experts who reviewed the contract documents for the Times said Carnival received a high rate to lease the ships and would save significantly on expenses via reimbursements for items it would normally have paid itself and through lower than normal operating costs.

That includes reduced expenses for food, crew and entertainment, the experts said.

However, one of the experts, who spoke on the condition of anonymity because of his ties to the industry, said that the inserted clause made it hard to level blame at Carnival.

"There may have been less expensive ways to house evacuees but Carnival simply responded in good faith to a request by the government," he said.

So Which Billionaire Was Ripping Off American Taxpayers This Time?

Sharis Arison
Net Worth: $2.4 bil
Country of citizenship: Israel
Marital Status: divorced , 4 children
University of Florida

Israel's richest resident, Shari Arison, worth $2.4 Billion dollars, had an eventful year. Carnival Cruise, in which she inherited a stake from late father Ted Arison, is close to becoming the largest leisure cruise line in the world. No small feat: Carnival chief executive, Micky Arison (Shari's brother) beat out Shari's fellow Israeli billionaires, the Ofer brothers, in a quest to buy P&O Princess Cruise. Newly divorced, Shari also holds a stake in Bank Hapoalim, Israel's biggest, where she retains a seat on the board. Also owns an interest in Eurocom, Nokia's exclusive distributor in that country. Arison's holding company is being bandied in the press as a possible buyer of Bezeq, Israel's state-owned phone company, which has toyed with privatization for years. Her most active role is in Matan, a charity she founded modelled after the United Way.

Friday October 8, 1999

Ted Arison, world's wealthiest Jew, dies in Tel Aviv

AMOTZ ASA-EL
AND DAN GERSTENFELD

Israeli billionaire Ted Arison died last Friday of a heart attack at his Tel Aviv home. He was 75.

Born in Zichron Ya'acov in 1924, Arison moved to the United States in the 1950s and made his fortune through Carnival cruises.

He was reportedly the world's wealthiest Jew and made Forbes magazine's list of the world's 400 richest people with a personal fortune estimated at $6 billion to $10 billion.

Arison gave up his American citizenship and returned to Israel in 1990, where his investment group became a leading economic influence.

Arison, who fought a long battle with throat cancer, was chairman of the Arison Investments consortium that in 1997 purchased a controlling share in Bank Hapoalim, Israel's largest bank.

He entered the American University in Beirut in 1940 to study engineering before joining the British Army in World War II. He fought in Israel's War of Independence as the Seventh Brigade's communications officer.

In the early 1950s, however, a bitter Arison immigrated to the United States, saying the Israeli government was obstructing free enterprise.

Within two decades he became a world-class shipping tycoon, entering the holiday cruise business with his 1972 launch of Carnival Cruise Lines.

He returned to the Israeli business scene in 1994, when he purchased from the Histadrut a controlling share in the Shikun Ufituah construction company, now the largest such firm in Israel.

Two years ago, his investment group purchased a 43 percent stake in Bank Hapoalim for more than $1 billion -- the largest privatization deal ever done in Israel.

The purchase of Bank Hapoalim, Israeli socialism's flagship and largest business entity, by a man who at least in his own view had been a victim of an anti-capitalistic government was a rare kind of poetic justice.

His road to purchasing the Shikun Ufituah construction firm is believed to have been at least partly paved by a close relationship with then-Histadrut Chairman Haim Ramon.

Though a natural ally and close friend of free-market champion Benjamin Netanyahu, Arison recently told the Jerusalem Post he was careful to contribute to Labor-associated causes no less than to ones identified with the Likud.

Arison's business activities will be inherited by his son and daughter, Micky and Shari, with the former heading the Miami-based Carnival, and the latter, who is a Hapoalim board member, taking over the Israeli operations.

Arison was extremely active on Israel's philanthropic scene, donating among other things Ichilov Hospital's helicopter landing pad.

Prime Minister Ehud Barak and his wife, Nava, sent a condolence telegram to the Arison family, in which Barak praised Arison as an example to Jews across the world for returning to Israel and investing in its economy and culture. He also remembered Arison as a commander in the War of Independence.

"Arison's contribution shall be remembered for generations," Barak wrote.

Likud leader Ariel Sharon mourned Arison as "a precious human being, a proud Jew and Zionist, who connected his own lot with that of the state of Israel and the Jewish people in all walks of life."

In addition to his two children, Arison is survived by his wife, Lin, and nine grandchildren.

Carnival Cruise Lines: SLAVE WAGES

Deck Department.

Captain (responsible for the entire operation of the vessel). Captain's licenses and all applicable certifications by a recognized maritime government body required. Extensive experience with minimum five to eight years in subordinate positions on board ships and solid experience in all navigational electronic and computerized equipment required. Diploma from an accredited maritime training school or facility and fluent English Language skills required. Salary range: 5800-9800 U.S. dollars a month, depending on the cruise line.

Staff Captain (second in command, oversees day to day operations and management as directed by the captain). Captain's licenses and all applicable certifications by a recognized maritime government body required. Extensive experience with minimum five to eight years in subordinate positions on board ships and solid experience in all navigational electronic and computerized equipment required. Diploma from an accredited maritime training school or facility and fluent English Language skills required. Salary range: 5000-7800 U.S. dollars a month, depending on the cruise line. Possibilities for promotion to Captain.

First Officer (designated navigation officer and supervises the bridge operations). All applicable certifications by a recognized maritime government body required. Extensive experience with minimum three to five years in subordinate positions on board ships and solid experience in all navigational electronic and computerized equipment required. Diploma from an accredited maritime training school or facility and fluent English Language skills required. Salary range: 3700-4300 U.S. dollars a month, depending on the cruise line. Possibilities for promotion to Staff Captain.

Second Officer (designated navigation officer). All applicable certifications by a recognized maritime government body required. Extensive experience with minimum two to three years in subordinate positions on board ships and solid experience in all navigational electronic and computerized equipment required. Diploma from an accredited maritime training school or facility and fluent English Language skills required. Salary range: 2800-3300 U.S. dollars a month, depending on the cruise line. Possibilities for promotion to First Officer.

Third Officer (designated navigation officer). All applicable certifications by a recognized maritime government body required. Extensive experience with minimum two to three years in subordinate positions on board ships and solid experience in all navigational electronic and computerized equipment required. Diploma from an accredited maritime training school or facility and fluent English Language skills required. Salary range: 2500-3100 U.S. dollars a month, depending on the cruise line. Possibilities for promotion to Second Officer.

Junior Third Officer (designated navigation officer in training). All applicable certifications by a recognized maritime government body required. Extensive experience with minimum one to two years on board ships and solid experience in all navigational electronic and computerized equipment required. Diploma from an accredited maritime training school or facility and fluent English Language skills required. Salary range: 1900-2200 U.S. dollars a month, depending on the cruise line. Possibilities for promotion to Third Officer.

Chief Radio Officer (responsible for the entire communication center of the ship, skilled electronics and telegraph repairs and operations of satellite hook-ups, faxes, Marisat communications). All applicable certifications by a recognized maritime government body required. Extensive experience with minimum one to two years in subordinate positions on board ships and solid experience in all communication, electronic and satellite equipment required. Diploma from an accredited maritime training school or facility and fluent English Language skills required. Salary range: 2500-3100 U.S. dollars a month, depending on the cruise line.

Radio Officer (maintains radio communications between ship and ship, ship and shore, skilled electronics and telegraph repairs and operations of satellite hookups, faxes, Marisat communications as directed by the Chief Radio Officer). All applicable certifications by a recognized maritime government body required. Extensive experience with minimum one to two years in subordinate positions on board ships and solid experience in all communication, electronic and satellite equipment required. Diploma from an accredited maritime training school or facility and fluent English Language skills required. Salary range: 1900-2500 U.S. dollars a month, depending on the cruise line. Possibilities for promotion to Chief Radio Officer.

Security Officer (handles all shipboard security for the vessel , drugs interdiction). All applicable certifications by a recognized maritime government body required. Extensive experience in security and firearms handling required. Military background preferred. Fluent English Language skills required. Salary range: 2200-2600 U.S. dollars a month, depending on the cruise line.

Security Personnel (handles all shipboard security of the vessel as directed by the Security Officer). Extensive experience in security and firearms handling required. Military background preferred. Salary range: 1600-1800 U.S. dollars a month, depending on the cruise line.

Safety Officer (responsible for passenger and crew safety drills, abandon ship procedures, crew safety training, supervision of ships tenders). Extensive experience with minimum one to two years in subordinate positions on board ships required. Diploma from an accredited maritime training school or facility and fluent English Language skills required. Salary range: 2400-3100 U.S. dollars a month, depending on the cruise line.

Bosun (responsible for supervising general maintenance of assigned stations, assist in tender operations as directed by the Safety Officer). Experience with minimum one to two years on board ships required. Tender Captain's license and good English Language skills required. Salary range: 1600-1800 U.S. dollars a month, depending on the cruise line.

Carpenter (responsible for all carpentry and woodwork on board). Skilled carpenter experienced in related background field required. Entry level position. Basic English Language skills required. Salary range: 1700-1900 U.S. dollars a month, depending on the cruise line.

Seaman (responsible for cleaning, painting, general maintenance of the vessel). Entry level position. Very basic knowledge of English Language required. Salary range: 1400-1700 U.S. dollars a month, depending on the cruise line.

Deck Attendants ( keeping the open decks in order-lounge chairs etc.) - No experience required. Very basic knowledge of English Language required. Salary range: 900-1200 U.S. dollars a month, depending on the cruise line.

CARNIVAL CORPORATION & PLC

Name of Ship...Number of Souls Aboard

Carnival Cruise Line (Miami, FL)
Celebration, 1,486 pax
Destiny, 2,642 pax
Ecstasy, 2,040 pax (Chartered to the Military Sealift Command for six months as part of Hurricane Katrina relief efforts)
Elation, 2.040 pax
Fantasy, 2,044 pax
Fascination, 2040 pax
Holiday, 1,452 pax (Chartered to the Military Sealift Command for six months as part of Hurricane Katrina relief efforts)
Imagination, 2,040 pax
Inspiration, 2,040 pax
Paradise, 2,040 pax
Sensation, 2,040 pax (Chartered to the Military Sealift Command for six months as part of Hurricane Katrina relief efforts)
Triumph, 2,758 pax
Victory 2,758 pax
Spirit, 2,124 pax
Pride, 2,124 pax
Carnival Legend, 2,124 pax
Carnival Conquest, 2,974 pax
Carnival Glory, 2,974 pax (Photo by Jack White)
Carnival Miracle, 2,124 / 2,680 pax
Carnival Valor, 2,974 pax
Carnival Liberty, 2,974

Dec. 13, 2005 — Lawmakers are set this morning to investigate the potential dangers to vacationers cruising the high seas.

Two congressional committees will hold a joint hearing focusing on cruise-ship disappearances and crimes. The hearing comes on the heels of another cruise-ship disappearance in recent months, this one aboard Royal Caribbean's Jewel of the Sea, which returned to Florida on Sunday with one less passenger than when it departed.

Related: New Details In Case of Honeymooner Lost at Sea

New Details In Case of Honeymooner Lost at Sea
Danger Adrift: Modern-Day Pirates Threaten More Than the High Seas

Congress Looks at Cruise Dangers

Canadian Jill Begora, 59, was last seen by her husband on Saturday morning as the ship approached the port of Nassau in the Bahamas. A search by a U.S. Coast Guard ship and the Bahamian Navy found no trace of her.

"It's just too much to comprehend," said Thomas Begora, a relative. "I hope everything's all right, but you know how these things are some times."

It is estimated that in the past two years, about a dozen people have disappeared while aboard cruise ships.

"The bottom line is we are suspicious, candidly, that there's some huge problem in the cruise industry," said Rep. Chris Shays, R-Conn. "We think that people are not aware of some of the challenges and some of the potential problems they encounter."

In another high-profile case, George Smith disappeared while on his honeymoon in the Mediterranean last July aboard a Royal Caribbean ship. His family is convinced that Smith was killed because witnesses heard screaming and there was blood on the ship's deck. Smith has not been found. Now his family is planning to sue Royal Caribbean, accusing the cruise line of hindering the investigation.

"We can't hold a funeral, and, you know, as far as Royal Caribbean is concerned, they would merely have another drunk falling into the water, nothing we could do about it," said Bree Smith, George's sister. "That's not good enough and we're going to make changes so this does not happen to another family."

Royal Caribbean says that it has cooperated fully with the FBI in the Smith case and that passenger safety is its priority. In the case of Begora, the company says the ship retraced its path the morning of the disappearance. Because Begora is Canadian and the incident happened in the Bahamas, the FBI is not involved.

The congressional hearing will also touch on last month's pirate attack on a cruise ship off the coast of Somalia.