BP {Guilty} Hit With Largest Fine in History } David Rainey VP Indicted
BP will pay the biggest criminal penalty in US legal history by some distance after reaching a $4.53bn (£2.9bn) settlement with American authorities over the Gulf of Mexico spill.
Two men who worked for the oil giant at the time of the disaster are, meanwhile, facing involuntary manslaughter charges, while a third was yesterday charged with lying to federal investigators and obstructing an enquiry into the spill by the US Congress.
 |
Penalties agreed as part of the deal will see BP paying $4bn to the Department of Justice and $525m to the SEC and will increase the charge it is taking to cover the costs of the spill to $41.95bn. The fine dwarfs the previous record US criminal penalty when Pfizer, the pharmaceutical company, paid $1.3bn in 2009 for marketing fraud relating to pain medicine.
Bob Dudley, BP's chief executive, said: "We apologise for our role in the accident, and as today's resolution with the US government further reflects, we have accepted responsibility for our actions."
The deal does not cover federal civil claims, including damages from the Clean Water Act, federal and state natural resources damages claims or outstanding private civil claims.
Separately, a federal inducement unsealed in New Orleans charged the two highest ranking BP supervisors who were on board the ill-fated rig on the day of explosion with 23 criminal counts, according to US Attorney General Eric Holder.
Speaking in New Orleans, he said: "I want to be absolutely clear that today's resolution [with BP] does not mark the end of our efforts. In fact, our criminal investigation remains ongoing – and we'll continue to follow all credible leads and pursue any charges that are warranted."
The Department of Justice named the two supervisors as BP well site leaders Robert Kaluza and Donald Vidrine. They are alleged to "engaged in negligent and grossly negligent conduct", violating, according to the Department, statues related to involuntary manslaughter and seaman's manslaughter, and the Clean Water Act.
David Rainey, a former BP executive who was vice president of exploration for the Gulf of Mexico, was also charged yesterday in a separate indictment. He allegedly lied to investigators and obstructed a Congressional inquiry. In its settlement, BP admitted that the 58 year old "manipulated internal estimates to understate the amount of oil flowing from the well," according to the Department. The company further admitted that, while Mr Rainey was preparing manipulated estimates, its internal teams were reporting what were said to be "significant higher estimates"
As part its agreement, BP is pleading guilty to 11 felony counts of "misconduct or neglect of ships officers" relating to the lives lost. It is also pleading guilty to one misdemeanour count under the Clean Water Act, one misdemeanour count under the Migratory Bird Treaty and one felony count of obstruction of Congress.
BP has also agreed to take actions to improve the safety of its drilling operation in the Gulf of Mexico, which is enforceable by court. These include third-party auditing and verification of its risk management process, extra staff training and measures to improve the functioning of blowout preventers and cementing.
The deal is a relief to BP, removing a key uncertainty over how much the spill will cost the company. However, it falls short of BP's hopes that it could resolve all of its outstanding civil and criminal actions, including damages claims or outstanding private civil claims. BP could be liable for a maximum penalty of $5.4bn under the Clean Water Act alone, a figure which could rise to $21bn if the company is found to be grossly negligent, a claim it has denied. If that happened, the total cost of the spill to BP could soar way beyond $41 bn since the group has only set aside $3.5bn to cover penalties relating to the Clean Water Act.
The fines announced yesterday far outstrips outstrip BP's last major settlement with the Department of Justice in 2007 when it paid out about $373m to resolve three separate inquiries into a 2005 Texas refinery explosion, an Alaska oil pipeline leak and fraud for conspiring to corner the US propane market.
BP's shares fell by 0.35p to end the day at 425.4p.
Comments