- In the aftermath of Hurricane Katrina,
through a hastily arranged deal with Carnival Cruise Lines, $236 million
from U.S. taxpayers will flow to a tax exempt Israeli-founded corporation
registered in Panama. Before federal assistance even reached the victims
of Hurricane Katrina, Carnival Cruise Lines had received a profitable deal
to provide three ships to house evacuees from New Orleans and the Gulf
Coast. The deal, reached on Sept. 2, 2005, will pay Carnival some
$236 million for the use of 7,100 berths for six months.
- This means that each berth will cost
U.S. taxpayers $5,540 per month, or more than $184 per night. The cost
per bed can actually be much higher because not all berths will be occupied
for the entire 6-month period of the contract. The deal, arranged by the
Military Sealift Command of the U.S. Navy at the direction of the Federal
Emergency Management Agency (FEMA), has raised questions in Congress about
excessive profiteering by Carnival Corp., the parent corporation that owns
Carnival Cruise Lines along with 11 other leading cruise brands, including:
Cunard Line, P&O Cruises, Princess, and Holland America Line. Carnival
Corp. operates a fleet of 79 ships.
- Critics in Congress,
however, said the cost of the deal with Carnival was exorbitant. Sen. Tom
Coburn (R-Okla.) said the cost per berth is more than $1,275 a week, while
a 7-day Caribbean cruise costs about $600 per person. "A short-term
temporary solution has turned into a long-term, grossly overpriced sweetheart
deal for a cruise line," Coburn said. Rep. Henry A. Waxman (D-Calif.)
sent a letter to Homeland Security Secretary Michael Chertoff requesting
a copy of the contract and supporting documentation for its cost on Sept.
23. The contract with Carnival includes $44 million for operating costs
and an unknown amount to compensate for corporate taxes that could amount
to tens of millions of dollars.
- The federal department headed by Chertoff
agreed to compensate Carnival for its corporate taxes because, while the
company is headquartered in Miami, Florida, it is exempt from U.S. income
taxes and other taxes because it is registered in Panama and its ship fly
under foreign flags. Carnival Corp. reported net income of $1.904 billion
the nine-month period ending August 31, 2005, but only paid $43 million
in income taxes from its pre-tax income of $1.947, a tax rate of 2.2 percent.
The state or nation to which the taxes were paid was not specified. Carnival
Corp. was started by the Ted Arison, an Israeli veteran of the 1948 war
in Palestine, who came to the United States in the early 1950s, as did
Michael Chertoff's mother, Livia Eisen. In 1990. Arison returned to Israel
and turned control of Carnival Corp. over to his son, Micky.