Tuesday, 4 December 2012

BP to plead guilty to Deepwater Horizon charges

‘Profit over Prudence’ allegations may result in record $4 billion fine

US Attorney General Eric Holder announced late last month that BP has agreed to plead guilty to felony manslaughter, environmental crimes and obstruction of Congress in connection with the United States biggest environmental disaster - the Deepwater Horizon incident. BP has apparently agreed to pay a record $4 billion in criminal fines and penalties- the largest in US history. More than half of this amount will directly benefit the region that was devastated by the explosion and the massive pollution that subsequently followed. 

 The explosion of the rig was a disaster that resulted from BP’s culture of privileging profit over prudence,” according to Assistant Attorney General Lanny Breuer. “We hope that BP’s acknowledgment of its misconduct – through its agreement to plead guilty to 11 counts of felony manslaughter – brings some measure of justice to the family members of the people who died on board the rig.” 

BP has reportedly admitted that the action of its “Well Site Leaders” negligently caused the deaths of 11 men and caused the catastrophe- despite knowing that the ‘Macondo’ well was not secure, no corrective steps were taken. Additionally, a senior BP employee has been charged with obstruction of Congress and with making false statements to officials after the incident. Some of these officials could well face long jail terms. 

The outcome of other widespread allegations- notably, that BP was grossly negligent, that it lied about the extent of the oil spill that was much larger than reported and that it obstructed a US Congress enquiry into the matter- is still to reach a final conclusion, but BP has reportedly admitted that it withheld documents, provided false and misleading flow-rate information to the government and manipulated or withheld internal data that proved that the leak was much larger than BP claimed. Later reports showed that up to 60,000 barrels of oil a day was leaking into the Gulf, much more than what BP officials were saying at the time.

About $2.4 billion of the $4 billion fine is slated to be spent on ecosystems and bird and wildlife habitat in the Gulf of Mexico directly hit by the disaster. Additionally, $350 million will be spent on improved oil spill prevention and response efforts in the Gulf.

 As part of the deal, BP has reportedly agreed to retain a process safety and risk management monitor and an independent auditor, who will oversee BP’s process safety, risk management and drilling equipment maintenance with respect to deep-water drilling in the Gulf of Mexico. It was also retain an ‘ethics monitor’ to improve BP’s code of conduct in its future dealings with the US government. .
This will not be the end of BP’s troubles, though. The company still faces massive liability claims in addition to the 4 billion fine. Trial to decide those is set to commence in February 2013; BP could be asked to shell out billions more if gross negligence is proven. And, of course, some of its senior officials may be going to jail.


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