BP (LON: BP) Agrees to $4.5 Billion Deepwater Settlement
Three Employees Criminally Charged
A long-running story came to a tentative conclusion yesterday when BP (LON: BP) was ordered to cough up $4.5 billion in settlement fees to the U.S. government over the Deepwater Horizon disaster in 2010. Moreover, three BP employees were charged, with two cited for manslaughter.
The Deepwater oil spill and explosion took 11 lives and was the biggest such incident in national history; it attracted worldwide criticism not only for BP’s ham-fisted handling of the situation but also for the systemic flaws it exposed in the oil industry’s operations.
The sentence and settlement accounts for $1.3 billion in fines and other payments; BP is also expected to plead guilty for all 11 deaths and for lying to Congress.
From the Chicago Tribune:
“We believe this resolution is in the best interest of BP and its shareholders,” said Carl-Henric Svanberg, BP chairman. “It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims.”
The two BP employees charged with manslaughter are Robert Kaluza and Donald Vidrine, both well site leaders; they are accused of ignoring what should have been viewed as dangerously high pressure readings.
BP’s ex-vice president for exploration in the Gulf of Mexico region, David Rainey, is cited for obstructing Congress and making repeated false statements, particularly with regard to the exact extent of the oil spill.
Other notable parts of the settlement include $2.4 billion to the National Fish and Wildlife Foundation, $350 million to the National Academy of Sciences, and some $500 million to the SEC.
Nevertheless, the settlement fails to account for billions in civil penalties that the government is slapping BP with under various environmental laws.
It also doesn’t factor for numerous claims brought by states, businesses, and individuals against BP—which collectively amount to several billions more. A New Orleans federal judge, for example, is presently considering a $7.8 billion settlement that’ll affect more than 100,000 businesses and individuals claiming damages against BP.
For the terms of the settlement, BP is to plead guilty to 11 counts of misconduct, one count of obstruction of Congress, and one misdemeanor count under both the Migratory Bird Treaty Act and the Clean Water Act. The deaths were adjudicated under the Seaman’s Manslaughter Act.
Although this may seem like a big deal, it should be noted that BP’s profits for the latest quarter amounted to $5.5 billion. That perhaps explains why Greenpeace has lashed out against the decision, denouncing its mildness.
The Deepwater spill had momentous consequences for a global audience. The incident lasted more than 85 days, flooded the Gulf with more than 172 million gallons of crude oil, severely affected regional wildlife, beaches, and the entire local ecosystem, and exposed the sheer extents of BP’s mismanagement.
In response, the government stepped up oversight of such operations and temporarily banned deep-water drilling immediately after.