Rock Center   |  March 29, 2013

Carnival Cruise takes Congressional heat

Rock Center’s Harry Smith investigates the growing outrage swirling around cruise line corporation, Carnival, and its CEO, Micky Arison. A powerful senior senator says that the cruise line is making "treacherous" choices on the seas that are costing taxpayers millions.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> few weeks back when carnival cruiselines could not buy a break. they had more than one disaster at sea and a run of bad pr . put it this way. any time one of your voyages better known for effluence than an ef ffervescent passenger experience have you a problem. your tax dollars helped rescue carnival ships and carnival has found a way to buy a break. the report tonight from harry smith .

>> reporter: miami heat owner micky arison is a local hero , the toast of florida. the heat has made miami proud and there year, more to cheer about. the heat ran off a string of 27 straight wins. but we can't show you video of the streak, because the nba won't sell it to us. and micky arison refuses to speak to us, because our real interest isn't basketball, but the interest that made arison a billionaire. carnival cruise lines and to put it mildly, these days it seems carnival can't win for losing. jim walker is a maritime lawyer, both defended and fought carnival in court. and, in fact, has several cases pending against the cruise line now. he knows carnival , and arison .

>> he is the person that brought the miami heat several nba championships , and the people in miami love him for that.

>> reporter: where do the heat play?

>> in the arena right across the bay. so he's got this beautiful hundreds of millions of dollars arena, paid for by taxpayers.

>> and a wonderful view right here to where the carnival cruise ships come in and out. arison is the riches man in florida. he inherited his father's cruise line and made it entertainment for the masses. adds passengers every year.

>> carnival , the fun ship.

>> reporter: carnival owns almost half the cruise ships in the world, but according to the coast guard , accounts for way more than the problems at sea. the recent losing streak began whether the carnival -owned "kosta concordia" ran aground italy. 32 people died. this february, passengers on the carnival "triumph" stranded for more than four days when a fire caused the ship to lose power. conditions became deplorable.

>> i'm exhausted, tired, fed up, and i hate carnival .

>> you won't see micky arison ever at the scene of an accident, the scene of a fire, scene of a grounding. he didn't go italy. he didn't go down to mobile. you will never see him at any of those types of catastrophes.

>> reporter: maybe that's because carnival ships have been in trouble a lot lately. in one week, the "elation" had steering problems. the "dream" lost power and thousands had to be flown home. and the "legend" had to skip some of its stops. someone in congress has been keeping score. jay rockefeller . does carnival come under your purview?

>> very much so.

>> reporter: how do you regard carnival cruise lines as, say, a corp s corporate citizen ?

>> very poorly. they are blood sucking off the american people and having no second thoughts about it.

>> reporter: rockefeller is steamed, because rescuing carnival ships is costing taxpayers a small fortune. a letter was sent to micky aris arison , saying "the coast guard has responded to a string of 90 marine casualty incidents with passengers on board the carnival ships in the last five years. this needs to change."

>> it's a one-way street, harry. a one-way street.

>> reporter: the coast guard figures the bill for the carnival "triumph" almost was 8.5 million dollars. a fire was $1.5 million, and for the navy, $1.8 million. all picked up by the american taxpayer, not by carnival . carnival corporation headquartered in miami , that's one of their ships right back there. but the company registered in panama. we at "rock center" commissioned s & p capital iq to look into carnival 's taxes. this is what they found. on billions in revenue over the last five years, carnival paid a total in federal, state, local, and even international taxes of 0.6%. that's right. less than 1%.

>> and the tax code , there is a loophole which they legally can use, but it's disgusting that they do, to avoid paying taxes, and i just -- in america, with an industry that makes so much money like that, it's very depressing and it makes one very, very angry. and i think the public is getting sick of it.

>> reporter: if i were micky arison and i were sitting in your office right now, what would you have to say to me?

>> first thing i would ask, why were you at the miami heat game when your -- one of your carnival ships was tubing? because he was. and then i'd go after him on how do you have the guts to smack down fairness to cheat on what is right? you're legally not liable, but what you are doing is treacherous and wrong.

>> reporter: carnival says the 90 coast guard incidents senator rockefeller is so concerned about didn't all reflect problems of carnival 's making and carnival says it creates lot of jobs on shore and pay port fees. other cruise lines exploit loopholes much the same way as carnival . there isn't much money to do much of anything, have you cruise lines paying virtually no taxes.

>> if you ask a cruiser if you go to this cruise ship and ask them will you pay more for a cruise and the cruise lines reimburse the coast guard and the cruise lines pay their fair share of taxes, most people will not pay more. they want things just the way they are.

>> reporter: eyes wide shut.

>> exactly.

>> reporter: they wouldn't be able to pay only 0.6% in taxes unless there were loopholes to drive that ship through. whose fault is that?

>> the congress. and we have to fix it.

>> reporter: from your perspective, you really think anything is going to change?

>> nothing is going to change until the american public shares the same sense of outrage that senator rockefeller has.

>> reporter: but walker says to many, arison isn't the many. in fact, quite the opposite, he's envied.

>> quite often, people contact us and say how can we do that? how can you help us -- how can you help us go offshore and not pay taxes? it looks like a great idea to me. so sometimes there is a big disconnect between what is really happening, what congress could do, and really what the american people will accept as just business as usual .

>> harry smith starting us off from sunny miami .