Saturday, November 17, 2012

BP gets record US criminal fine over Deepwater disaster

The fire at the Deepwater Horizon oil rig 

BP has received the biggest criminal fine in US history as part of a $4.5bn settlement related to the fatal 2010 Deepwater Horizon disaster. Two BP workers have been indicted on manslaughter charges and an ex-manager charged with misleading Congress.

The Department of Justice (DoJ)  said BP must hand over $4bn. The sum includes a $1.26bn fine as well as payments to wildlife and science organizations.  As part of the agreement, BP will also plead guilty to 14 criminal charges. The company apologized for its role and said it regretted the loss of life.BP will also pay an $525m to the Securities and Exchange Commission over a period of three years.

The resolution with the DoJ includes a record criminal fine of $1.26bn, as well as $2.4bn to be paid to the National Fish and Wildlife Foundation and $350m to be paid to the National Academy of Sciences, over a period of five years.
DoJ Attorney General Eric Holder said its resolution "stands as a testament to the hard work of countless investigators, attorneys, support staff members, and other personnel".

Attorney General Eric Holder said the oil spill was ''an unprecedented environmental catastrophe''
He went on: "In addition to the charges filed against BP, a federal grand jury returned an indictment charging the two highest-ranking BP supervisors, who were on board the Deepwater Horizon on the day of the explosion, with 23 criminal counts - including 11 counts of seaman's manslaughter, 11 counts of involuntary manslaughter, and alleged violations of the Clean Water Act.
"The grand jury also charged a former BP executive - who served as a deputy incident commander and BP's second-highest ranking representative at Unified Command during the spill response - with hiding information from Congress and allegedly lying to law enforcement officials."

The executive, David Rainey, is alleged to have intentionally under-estimated the amount of oil spilling from the well. The two oil well supervisors accused of manslaughter were named in the indictment as Robert Kaluza and Donald Vidrine, according to the news agency Associated Press.
They were accused of negligence in the way they oversaw safety tests on the Deepwater Horizon rig before the accident, and failing to alert onshore engineers to problems with the drilling.

As a result of the settlements, the company said that it was setting aside an additional $3.85bn on top of the $38.1bn it has been raising to cover its liabilities from the incident. The UK-based oil giant has been selling assets to raise the funds.

"All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region," said Bob Dudley, BP's chief executive.
"From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf. We apologize for our role in the accident, and as today's resolution with the US government further reflects, we have accepted responsibility for our actions."
BP added that the resolution allowed the company to vigorously defend itself against the remaining civil claims and to contest allegations of gross negligence in those cases.

BP has agreed to plead guilty to:
  • eleven felony counts of Misconduct or Neglect of Ships Officers relating to the loss of 11 lives
  • one misdemeanour count under the Clean Water Act
  • one misdemeanour count under the Migratory Bird Treaty Act
  • one felony count of obstruction of Congress
The resolution is subject to US federal court approval.

The 2010 Deepwater Horizon disaster killed 11 workers and released millions of barrels of crude into the Gulf of Mexico over 87 days. Stuart Smith, a Louisiana lawyer representing some of the businesses affected by the accident, said the deal was far from over.
"They have not settled with the state of Louisiana for the natural damages... they haven't settled with Florida, Alabama or Mississippi yet."

He added that there were other significant claims still to be settled, including offshore oil and gas industry damages as a result of the moratorium on deepwater drilling put in place after the accident, casino losses, fisheries, financial institutions and real estate developers.
"So I think they're still looking at billions of dollars in exposure even with this settlement," he said.
The company is expected to make a final payment of $860m into the $20bn Gulf of Mexico compensation fund by the end of the year.
It has also reached a $7.8bn settlement with the Plaintiffs' Steering Committee, a group of lawyers representing victims of the spill.
Case study

Dean Blanchard
Dean Blanchard is a shrimp distributor in Lousiana.
"I believe the settlement's a joke. BP have got to be held accountable for what they're doing over here.
"We basically don't have no business. Where I live it's a dead zone. The shrimp still don't have no eyes, we got shrimp with tumours, we got crabs with holes in them, fish with holes in them.
"It's unbelievable - we got people sick, we got people dying.
"It's nothing like the BP commercial you see. BP's doing an effective job of fooling the American public. They don't fuel America, they fool America.
"I know we've been forgotten. BP is trying to make a one-size-fits-all and there are certain areas that were destroyed more than others."

Mr Blanchard proves that BP is not being sensitive to the real victims of the spill or to different degrees of need. And their most abject appologies are not restoring health to the waters of the Gulf or the aquatic species living there.

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