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ShareThisHorizon Pleads Guilty, to Pay $45 Million
Jones Act carrier changes management; Raymond retires
Horizon Lines agreed to plead guilty and will pay $45 million in fines for antitrust violations in the Puerto Rico trade. The carrier also announced management changes, including the retirement of longtime CEO Charles G. Raymond, and said it is asking lenders to waive a default judgment arising from the guilty plea.
The plea agreement with the Justice Department states that Horizon won't face additional charges related to the Puerto Rico trade and will not be charged with antitrust violations in the Alaska trade. The Justice Department indicated Horizon, the largest U.S. domestic ocean carrier, is not the subject or target of any DOJ investigation in the Hawaii or Guam trades.
Horizon said the Justice Department also agreed not to bring criminal charges against any current director or officer of Horizon, but that the agreement did not extend to Raymond or John V. Keenan, executive vice president.
Raymond, 67, is retiring after 45 years with Horizon and its predecessor company Sea-Land Service. Keenan has been granted a leave of absence, Horizon said.
Alex J. Mandl, a former chairman and CEO of Sea-Land, will become chairman. Stephen H. Frazer will become interim president and CEO. Brian W. Taylor, currently chief commercial officer, will take on the additional duties of chief operating officer. Michael T. Avara will be promoted from senior vice president and chief financial officer to executive vice president and chief financial officer. The changes are effective March 11.
"Chuck Raymond and John Keenan are highly regarded veterans of the industry and have made tremendous contributions to our company over their decades of services," said William J. Flynn, the Horizon board's lead independent director. "Both have been instrumental in the growth of the company and steered it through recent challenges presented by the global economic recession and the Department of Justice investigation."
Three former officials of Horizon and two from Sea Star Line pleaded guilty in 2008 to charges related to a federal investigation of antitrust violations in the Puerto Rico trade. The criminal investigation was followed by dozens of shippers' civil antitrust lawsuits that later were consolidated into a class action in San Juan. Horizon, Sea Star and Crowley Maritime agreed to settle the civil cases for a total of $53.25 million.
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the sad part here is that in the end, a few guys that had SOME blood on their hands went to jail while the guys who should be in handcuffs walk away unhandcuffed and with huge severance packages. this is what is wrong with american business and the shareholders should be screaming at this board of directors and management. in the end, the people that will suffer will be the consumers of puerto rico, this is an unsustainable trade with too much capacity ( especially from the northeast ) and rates that weren't high enough to sustain profits (when they were colluding) to afford to build new jones act vessels ( which is much sooner then later ). PR will be left with fewer carriers to use which will result in much higher rates. after the dust settles from the lawsuits and fines, we will have fewer american jobs and less jones act carriers / capacity while the real croks will be enjoying their severance and free health insurance. really sad!
- By nybco on 2/28/11
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Shameful behavior. Actually much worse than $45 million fine implies as in filing Justice Department said guideline fine was $336 to $672 million but Horizon is in tenuous financial condition and can't pay more than $45 million.