Carnival's First Compliance Officer Rushing to Prove Value of New Centralized System
Six months on the job, Peter Anderson, Carnival's first chief ethics and compliance officer, is fixing the cruise line's compliance system that was so broken a federal judge once threatened to jail its top executives.
January 10, 2020 at 05:16 PM
6 minute read
The original version of this story was published on Corporate Counsel
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.
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."
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