The Murky History of Carnival Corporation: Costa Concordia Tragedy
In response to the largest passenger ship disaster since the sinking of the Titanic 100 years ago, Carnival Corp (CCL), has placed the blame entirely on Capt Francesco Schettino. A spokesperson for the company stated that Schettino made an “unapproved, unauthorized” deviation in the course of the Costa Concordia whose hull was torn open on Friday 13th when the ship struck rocks off the island of Giglio, Italy.
As survivors speak angrily about their horrifying ordeal, images eerily similar to those seen in the movie Titanic have emerged. Sandra Rogers a 62 year-old grandmother from Minorca told a reporter from the Daily Mail: “There was no women and children first policy. There were big men, crew members, pushing their way past us to get into the lifeboats.”
Carnival Corp (CCL) claims the partial sinking of the Concordia will cost them approximately $85 million to $95 million in lost earnings for the year. When compared to the $6.5 million dollars Carnival paid for their first ship in 1972 one can safely conclude the company which now owns over 100 passenger ships has deep enough pockets and insurance to absorb this loss.
The origin and rise of the largest cruise company in the world is rooted in what some might call murky waters.
Meshulam Riklis and Ted Arison (born Theodore Arisohn) founded Carnival Cruise Lines. The pair became friends in Tel Aviv (the then British Mandate of Palestine) while attending school during the early 1940s. In 1971 Arison approached Riklis who owned, among other businesses, American International Travel Services (AITS) of Boston, to help him get back into the cruise business.
Two previous ventures had soured for Arison. In 1968 the Israeli government impounded his small cruise ship for unpaid fines. Instead of paying the money to retrieve his ship, and because he may not have had the money, he abandoned it. Just as quickly, however, Arison transferred all the passengers onto another ship. The second mishap happened in 1971 after when he had a nasty falling out with his Norwegian Caribbean Cruise Line (NCL) partner Knut Kloster. Kloster canceled his contract with Arison, who had promised profits of at least $1.5 million dollars. When Kloster’s share during the second year of their partnership failed to reach that number, he severed his ties with Arison. He immediately seized the advance money from all the NCL offices across the country and then filed a lawsuit against Klostner. During the time of the lawsuit, Arison used one million of the “seized” funds and began a new cruise line.
Riklis and Arison had more than just a school in Israel in common. They both earned well deserved reputations of being ruthless barracudas in their primal pursuit of financial gain.
The enterprising Riklis/Arison pair purchased “Empress of Canada” from Canadian Pacific for $6.5 million — using Riklis’s money — and renamed the ship “Mardi Gras”. On its maiden voyage it ran aground with approximately 500 people on board before it ever left Miami.
In February of 1973 Riklis used AITS to purchase the Riviera Hotel in Las Vegas for $56 million. The hotel had ties to infamous mobster Meyer Lansky. The Nevada Gaming Commission had Riklis dispose of its interests in Carnival or lose the hotel’s gaming license. Riklis and Arison exchanged a document whereby Riklis sold his 50% share in Carnival for $1. People familiar with the transaction believe the Riklis family still own a portion of Carnival.
Carnival Corp. (as it is known today) became the mega giant it is by registering their ships in foreign countries in order to avoid paying U.S. taxes. The company is also notoriously known to exploit Third World laborers who work on their ships for slave wages. A recent lawsuit by a former employee shows the company paid him a paltry $1.70/hour. Their lobbyists, on the other hand, receive a small fortune to ensure tax laws don’t change in Congress.
On October 8, 1999, almost 10 years after Arison denounced his U.S. citizenship and returned to Israel in an effort to avoid paying estate and inheritance taxes, he passed away of a heart attack at the age of 75.
Arison’s son Micky (owner of Miami Heat) became Carnival’s CEO. In 2012 Micky’s net worth was estimated at $4.5 billion (after dropping $1.3 billion) according to Forbes Magazine.
His daughter Shari Arison inherited one-third of his wealth making her the richest woman in Israel. Among her holdings $3.7 billion from Carnival Corp., $698 million from Bank Hapoalim, $90 million from Housing & Construction holdings, plus a $500 million endowment from the Ted Arison Foundation.
In 2002 Forbes Magazine reported that Meshulam Riklis left his business creditors holding the bag for approximately $4 billion. The companies included the Riviera, McCrory Corp., McCrory Parent Corp., E-II Holdings and Dylex.
In 2010 a then 86 year-old Meshulam Riklis married 51 year-old Tali Sinai. When asked exactly how much he was worth by a reporter, the billionaire replied: “What difference does it make? I can only wear one pair of shoes at a time.”
His son, Ira Riklis, told this writer on numerous occasions that his father worked hard on staying off the Forbes 400.
And confirming speculation that the Riklis family were still co-owners of Carnival Corp, in the mid 1980s Ira Riklis offered me a free vacation on Carnival telling me at the time “you need a vacation and, after all, it’s a family business.”
2012 Copyright Kirby Sommers
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tags: Costa Concordia, Titanic, Carnival Corp, Ted Arison, Meshulam Riklis, Ira Riklis, Micky Arison, Shari Arison, corporate tax dodgers