BP has spent years waiting to hear its punishment for the Gulf of Mexico disaster. On Thursday, the verdict it regarded as its worst case scenario landed with thudding predictability.
The oil giant was found guilty of “wilful misconduct”, “reckless” behaviour and “gross negligence”. It is the last two words which packed the most powerful punch: they are enough to nearly quadruple BP’s fine from $1,100 to $4,300 for every barrel of oil spilled in the 2010 disaster.
If we accept the US government’s estimate that 4.1m of tarry liquid spewed into the ocean, that is the difference between $4.6bn and $18bn.
To add insult to injury, the judge presiding over the case also argued that BP should accept two thirds of the responsibility for the catastrophe, presumably paying accordingly.
Meanwhile, Transocean and Halliburton, the two American companies which also worked on Deepwater Horizon rig, were respectively apportioned just 30pc and 3pc of the blame, and told that they would be covered by indemnity clauses in their original contracts with BP.
It was unclear at time of writing whether that meant BP would have to pick up their shares of the fine as well as its own. The oil giant’s share price dropped 6pc on the news of the verdict, but it says a lot that this thoroughly damning indictment didn’t send it plummeting further.
Anyone who has been following the company’s US trials with so much as a passing interest knew that it was always going to be this way. Justice is supposed to be blind, but in America, it was looking at BP askance from the start.
The disaster became a political issue almost as soon as it happened. Eleven men died in the accident, and businesses along the Louisiana coastline suffered billions of dollars’ worth of damage. Those affected rightly needed to know who to hold to account.
President Obama went for the obvious choice of kicking the foreigner. He insisted on calling BP “British Petroleum”, even though it hadn’t gone by that name for years, and vowed to find out just “whose ass to kick”.
Meanwhile, Ken Salazar, the US Interior Minister, promised simply, “we will keep our boot on their neck until the job gets done.” It was in that atmosphere that BP came to trial – or rather trials, in a string of parallel lawsuits designed to ensure it paid the fines it ought to, and directly compensated those affected.
None of the cases has felt entirely straightforward. Earlier this week, the oil giant filed a motion to have the man in charge of awarding pay-outs to spill victims removed from his post, after he failed to disclose a “clear conflict of interest”.
Patrick Juneau, who was appointed claims administrator in 2012, told a judge at the time that he “didn’t have any involvement in anything in the spill….didn’t represent any claimants in the spill, wasn’t representing any defendants in the spill, had really had no connection with the spill per se.” In fact Mr Juneau had a very clear connection.
In 2010 and 2011 he worked for the state of Louisiana, one of the major government bodies battling BP in court over the spill, and lobbied directly for larger pay-outs for victims. The paper trail is there. It is hard to see how the court can legitimately keep Mr Juneau in his $3.3m-a-year post.
As BP pointed out on Tuesday, there needs to be a change of guard to keep up the appearance of justice, if nothing else. But then again, the US courts appear to have thrown out the rule book when it comes to BP. Consider the history here.
The oil giant’s motion to have Mr Juneau removed is not the first battle it has waged against him; they have been at loggerheads since late 2012, when it became apparent that they have rather different interpretations of the terms of BP’s catch-all compensation agreement.
In one instance, Mr Juneau awarded $252,000 to a restaurant 180 miles from the Gulf Coast, even though its owner had shut up shop three months before the disaster, and didn’t reopen until 2011.
In another instance, the committee awarded $9.7m to a construction company 200 miles away from the coast, which in 2010 enjoyed its best year ever. In the words of one unscrupulous lawyer trawling for business, "the craziest thing about the settlement is that you can be compensated for losses that are unrelated to the spill."
Unsurprisingly, the flood gates opened and up to 10,000 new claims were lodged every month. BP has been forced to recalculate its bill several times, to at least $9.2bn. The whole thing is so Alice in Wonderland absurd that it would be funny, were it not for the painful real-world consequences.
The oil giant should of course compensate people for the damage it caused, but fraudulent claims are not a victimless crime; every time someone receives a pay-out they don’t deserve, it comes straight from BP shareholders.
BP tried to overrule Mr Juneau of course, but it lost in front of a panel of 13 judges in another court in New Orleans. Afterwards, one of the few judges to vote in BP’s favour broke ranks and came as close as anyone official has done to saying the system was rigged.
Judge Edith Clement admitted that the appeals court had made itself “party to the fraud” and would “funnel BP’s cash into the pockets of undeserving non-victims”.
These judgments obviously have grave consequences for BP and its already suffering shareholders. But there is also another, larger issue at stake here. America has a longstanding reputation as reliable place to do business, with a legal system that is predictable and rigourous.
By continually siding against BP, the US courts are putting that reputation in danger. The beaches of Louisiana have been cleaned up after the spill, but the Gulf of Mexico disaster has left the American justice system looking like an inky mess.
telegraph.co.uk
The oil giant was found guilty of “wilful misconduct”, “reckless” behaviour and “gross negligence”. It is the last two words which packed the most powerful punch: they are enough to nearly quadruple BP’s fine from $1,100 to $4,300 for every barrel of oil spilled in the 2010 disaster.
If we accept the US government’s estimate that 4.1m of tarry liquid spewed into the ocean, that is the difference between $4.6bn and $18bn.
To add insult to injury, the judge presiding over the case also argued that BP should accept two thirds of the responsibility for the catastrophe, presumably paying accordingly.
Meanwhile, Transocean and Halliburton, the two American companies which also worked on Deepwater Horizon rig, were respectively apportioned just 30pc and 3pc of the blame, and told that they would be covered by indemnity clauses in their original contracts with BP.
It was unclear at time of writing whether that meant BP would have to pick up their shares of the fine as well as its own. The oil giant’s share price dropped 6pc on the news of the verdict, but it says a lot that this thoroughly damning indictment didn’t send it plummeting further.
Anyone who has been following the company’s US trials with so much as a passing interest knew that it was always going to be this way. Justice is supposed to be blind, but in America, it was looking at BP askance from the start.
The disaster became a political issue almost as soon as it happened. Eleven men died in the accident, and businesses along the Louisiana coastline suffered billions of dollars’ worth of damage. Those affected rightly needed to know who to hold to account.
President Obama went for the obvious choice of kicking the foreigner. He insisted on calling BP “British Petroleum”, even though it hadn’t gone by that name for years, and vowed to find out just “whose ass to kick”.
Meanwhile, Ken Salazar, the US Interior Minister, promised simply, “we will keep our boot on their neck until the job gets done.” It was in that atmosphere that BP came to trial – or rather trials, in a string of parallel lawsuits designed to ensure it paid the fines it ought to, and directly compensated those affected.
None of the cases has felt entirely straightforward. Earlier this week, the oil giant filed a motion to have the man in charge of awarding pay-outs to spill victims removed from his post, after he failed to disclose a “clear conflict of interest”.
Patrick Juneau, who was appointed claims administrator in 2012, told a judge at the time that he “didn’t have any involvement in anything in the spill….didn’t represent any claimants in the spill, wasn’t representing any defendants in the spill, had really had no connection with the spill per se.” In fact Mr Juneau had a very clear connection.
In 2010 and 2011 he worked for the state of Louisiana, one of the major government bodies battling BP in court over the spill, and lobbied directly for larger pay-outs for victims. The paper trail is there. It is hard to see how the court can legitimately keep Mr Juneau in his $3.3m-a-year post.
As BP pointed out on Tuesday, there needs to be a change of guard to keep up the appearance of justice, if nothing else. But then again, the US courts appear to have thrown out the rule book when it comes to BP. Consider the history here.
The oil giant’s motion to have Mr Juneau removed is not the first battle it has waged against him; they have been at loggerheads since late 2012, when it became apparent that they have rather different interpretations of the terms of BP’s catch-all compensation agreement.
In one instance, Mr Juneau awarded $252,000 to a restaurant 180 miles from the Gulf Coast, even though its owner had shut up shop three months before the disaster, and didn’t reopen until 2011.
In another instance, the committee awarded $9.7m to a construction company 200 miles away from the coast, which in 2010 enjoyed its best year ever. In the words of one unscrupulous lawyer trawling for business, "the craziest thing about the settlement is that you can be compensated for losses that are unrelated to the spill."
Unsurprisingly, the flood gates opened and up to 10,000 new claims were lodged every month. BP has been forced to recalculate its bill several times, to at least $9.2bn. The whole thing is so Alice in Wonderland absurd that it would be funny, were it not for the painful real-world consequences.
The oil giant should of course compensate people for the damage it caused, but fraudulent claims are not a victimless crime; every time someone receives a pay-out they don’t deserve, it comes straight from BP shareholders.
BP tried to overrule Mr Juneau of course, but it lost in front of a panel of 13 judges in another court in New Orleans. Afterwards, one of the few judges to vote in BP’s favour broke ranks and came as close as anyone official has done to saying the system was rigged.
Judge Edith Clement admitted that the appeals court had made itself “party to the fraud” and would “funnel BP’s cash into the pockets of undeserving non-victims”.
These judgments obviously have grave consequences for BP and its already suffering shareholders. But there is also another, larger issue at stake here. America has a longstanding reputation as reliable place to do business, with a legal system that is predictable and rigourous.
By continually siding against BP, the US courts are putting that reputation in danger. The beaches of Louisiana have been cleaned up after the spill, but the Gulf of Mexico disaster has left the American justice system looking like an inky mess.
telegraph.co.uk
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