Exclusive: Norwegian Cruise Line’s Former CEO Was Removed Over Misconduct, Lawsuit Claims

When Kevin Sheehan abruptly stepped down as the CEO of Norwegian Cruise Line Holdings in early 2015, the announcement came without warning or explanation.

And his surprise exit followed a series of big moves for the company: Norwegian went public in 2013, and then acquired the high-end Prestige Cruise Holdings in late 2014 for $3 billion.

Frank Del Rio, who had overseen Prestige and planned to stay with the merged company through the end of 2015, instead took over as CEO. About the reason for Sheehan’s surprise departure, he would only say: “It’s a matter of policy we don’t comment on personnel matters.”

But a lawsuit filed in Miami-Dade Circuit Court by Sheehan’s predecessor at Norwegian, Colin Veitch, includes incendiary accusations about alleged impropriety that led to departure. The complaint — alleging breach of contract and libel — was filed in late November, but escaped media attention until now. Sheehan denied the claims in a response filed in January.

A flurry of motions filed in recent weeks show the cruise company and Sheehan are eager to remove those allegations from the public record and track down the source of the information.

According to the suit, Sheehan resigned after a monthlong investigation that revealed “a long pattern of personal and professional misconduct and recklessness, stunning in its scope and hubris, corrosive and detrimental in its impact on the company, and deeply undermining of the workplace culture” that Veitch had established during his tenure.

The suit claims: “Mr. Sheehan abused his position of power as CEO of the company, violated numerous company policies, and placed the company at great risk of civil liability, based on his longstanding improper relationships with numerous crew members, shoreside staff, staff of affiliated companies, and other travel industry-related personnel.”

It alleges that Sheehan moved employees between ships to coincide with executive visits, coordinated their availability on shore before and after their contracted times, and promoted people on the basis of their relationship with him.

“The board, with full knowledge of its CEO’s behavior, persisted in employing him, before terminating him in December 2014,” the suit says. Sheehan actually resigned Jan. 8, and ultimately received a $13.4 million severance package, according to a regulatory filing.

He has recently returned to the cruise world, investing in the one-ship Bahamas Paradise Cruise Line in Palm Beach County and serving as non-executive chairman for the online travel agency CruisingStore.com. He was named president and CEO of the gaming company Scientific Games Corporation in August. Sheehan filed a response to the suit denying the allegations without elaboration.

In a text message to Skift late Friday, Sheehan wrote: “Mr. Veitch’s claims are meritless and will be proven so in court.”

Attorneys representing Sheehan and Norwegian could not be reached to comment on the suit Friday. A spokeswoman for Norwegian said the company does not comment on pending litigation.

An attorney for Veitch, who led Norwegian from 2000-2008, declined to say anything for the story and said Veitch would not comment.

The Response

Norwegian’s attorneys have sought to strike the allegations, seal the complaint and force the filing of a new version without the accusations. In court records, attorneys called the claims “scandalous, wholly irrelevant, and immaterial” — and also apparently unlawfully obtained.

Norwegian is also seeking to depose Veitch to find out who told him about the allegations, what they told him, which documents formed the basis for those allegations, and any public information he had about the claims.

But a motion filed this week by Veitch’s attorneys claims that “practically everyone inside NCL, and most people outside NCL in the broader cruise industry, were aware for many years of Mr. Sheehan’s indiscretions, and the board’s toleration of same.”

The claims about Sheehan’s departure are only tangential to the core of the lawsuit, part of which claims that a complicated change in a complex profit-sharing mechanism caused Veitch between $10-20 million in damage.

The suit — a recitation of years-old slights and score-keeping — also accuses Sheehan of libeling Veitch by disparaging him in a message to the industry publication Travel Weekly and, over the years, to banks, shipyards, a private equity firm, and others. Sheehan denies those charges. The suit claims the company did nothing to stop Sheehan from making “gratuitous, disparaging, and derogatory statements” about Veitch over many years.

Sheehan’s email to Travel Weekly followed a laudatory December 2014 story in the publication that called Veitch a “visionary” and said a case could be made that he was “the most influential and creative cruise CEO of the past decade,” according to the complaint. In his response, Sheehan said “the ‘Sheehan Email’ speaks for itself.

Veitch was “elated” by the story, especially as he was preparing to take legal action against Richard Branson’s Virgin Group for allegedly stealing his ideas for a cruise line.

Sheehan was less pleased, the complaint says, and responded to the piece with a skewering of Veitch’s tenure at the cruise line. The suit claims Sheehan responded to the story because he was jealous of Veitch’s reputation.

“He found that his predecessor’s good reputation impeded his own aspirations and his jealousy of Mr. Veitch was further fueled by his own poor reputation at NCL that developed after he engaged in numerous acts of misconduct and ultimately led to his unceremonious termination by the NCL Board of Directors,” the complaint says. Again, Sheehan denied that claim.

The Travel Weekly story was taken down at some point.

Last year, Veitch reached a settlement with Virgin Group over his lawsuit claiming the company stole his ideas. In a statement released with the cruise company, he said that he looked forward to seeing what the Virgin brand would deliver to the cruise industry.

“Virgin and Virgin Cruises thank Mr. Veitch for his contribution during the early phases of the project, given his long record of innovation and industry insight,” the statement said. “They wish him well for his future endeavors.”