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BP Hit with Indictments, $4.5B Fine

Friday, November 16, 2012

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British oil giant BP will pay the largest criminal penalty in U.S. history and plead guilty to 14 criminal charges, including manslaughter, in the April 2010 explosion that killed 11 workers and triggered a three-month-long oil spill in the Gulf of Mexico, the Justice Department announced Thursday (Nov. 15).

Three BP employees were also charged with crimes in the disaster.

The Justice Department unveiled a 23-count criminal indictment—including charges of seamans and involuntary manslaughter—against the two top-ranking BP supervisors on the Deepwater Horizon drilling rig where the deadly blowout occurred. A BP vice president was also charged with lying to law enforcement and hiding information from Congress after the accident.

BP Deepwater Horizon
U.S. Coast Guard

Eleven workers on the Deepwater Horizon were killed, and five million barrels of oil spilled over 85 days.

In the settlement announced Thursday, BP agreed to pay $4 billion over five years to the Justice Department and $525 million over three years to the Securities and Exchange Commission. The SEC fines related to fraudulent oil flow rate claims the company made after the accident.

“This marks both the single largest criminal fine—more than $1.25 billion—and the single largest total criminal resolution... in the history of the United States,” Attorney General Eric Holder said during the announcement in New Orleans. “I hope this sends a clear message to those who would engage in this wanton misconduct that there will be a penalty paid.”

BP has already paid billions of dollars to settle civil claims arising from the disaster and said in a statement Thursday that it would “vigorously defend itself against” the many remaining civil claims it faces.

‘Deeply Regret’

“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 Group Chief Executive.

BP Deepwater Horizon - NASA image
NASA

A NASA satellite captured this image of the spill May 24 in the Gulf. The spill continued for 50 more days.

“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 U.S. government further reflects, we have accepted responsibility for our actions.”

The guilty plea will shield BP against further criminal charges based on the accident. “We believe this resolution is in the best interest of BP and its shareholders,” said Carl-Henric Svanberg, BP’s Chairman. “It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims.”

Felony Pleas

Under the settlement, BP agreed to plead guilty to 11 felony counts of Misconduct or Neglect of Ships Officers relating to the loss of 11 lives; one misdemeanor count under the Clean Water Act; one misdemeanor count under the Migratory Bird Treaty Act; and one felony count of obstruction of Congress. The agreement is subject to U.S. federal court approval.

Thirteen of the 14 criminal charges pertain to the accident itself and are based on what BP called "the negligent misinterpretation" of the negative pressure test conducted on board the Deepwater Horizon.

“BP acknowledged this misinterpretation more than two years ago when it released its internal investigation report,” the company said.

The obstruction-of-Congress count pertains to two BP communications made to a member of Congress during the spill response about flow rate estimates.

BP will also pay a total of $2.394 billion to the National Fish & Wildlife Foundation (NFWF) over five years and $350 million to the National Academy of Sciences (NAS) over five years. The company will also serve five years of probation.

Monitoring Agreement

An additional critical component of the agreement is the appointment of two monitors who will be scrutinizing BP’s processes and ethics over the next four years.

A process safety monitor will review, evaluate and provide recommendations to improve BP’s process safety and risk management procedures concerning deepwater drilling in the Gulf of Mexico. And an ethics monitor will review and provide recommendations to improve BP’s Code of Conduct and its implementation and enforcement.

Still unclear is BP’s fate on future federal contracts. The company has been a major supplier of fuel to the Defense Department. Under U.S. law, companies convicted of certain criminal acts can be debarred from contracting with the federal government. However, BP said Thursday that it had “not been advised of the intention of any federal agency to suspend or debar the company in connection with this plea agreement.”

Personal Indictments

BP well site leaders Robert Kaluza and Donald Vidrine were indicted on manslaughter and involuntary manslaughter charges, accused of disregarding abnormal high-pressure readings that should have glaring indications of trouble just before the deadly blowout.

In addition, Holder announced an indictment against David Rainey, a BP vice president, for hiding information from Congress and lying to law-enforcement officials about the rate at which oil was gushing into the Gulf of Mexico.

Air Force C-130 Drops Chemical Dispersant
U.S. Air Force

An Air Force C-130 Hercules drops an oil-dispersing chemical into the gulf as part of the response effort.

“Make no mistake: While the company is guilty, individuals committed these crimes,” said Assistant Attorney General Lanny A. Breuer, head of the criminal division.

Of the two rig supervisors, Breuer said: “In the face of glaring red flags indicating that the well was not secure, both men allegedly failed to take appropriate action to prevent the blowout.”

In April, a former BP engineer was arrested on obstruction-of-justice charges. He was accused of deleting text messages about the company’s response to the spill.

‘People Died, BP Lied’

In September 2011, the U.S. government published its final investigative report on the accident, which ultimately dumped more than five million barrels of oil into the Gulf of Mexico. The report blamed cement failure, insufficient training, plan changes, inappropriate responses, and other factors for the disaster.

The blame extended to Deepwater Horizon operator Transocean and contractor Halliburton, the government said. Full documentation on the various government investigations is available here.

Rep. Edward J. Markey, the senior Democrat on the Natural Resources Committee, called Thursday's disposition of the case “appropriate for such a massive disaster.”

“People died, BP lied to Congress, and millions of barrels of oil poured into the Gulf," he said. "This steep cost to BP will provide the Gulf coast some of the funds needed to restore the region, and will hopefully deliver some comfort and closure to the families and businesses affected by the spill.”

   

Tagged categories: Accidents; BP; Cement; Failure analysis; Fatalities; Government contracts; Health and safety; Laws and litigation; Lawsuits; Offshore; Oil and Gas; Regulations

Comment from John Bennett, (11/16/2012, 11:23 AM)

The last hyperlink 'Full documentation on the various government investigations is available here.' is broken - it is missing a colon.


Comment from Mary Chollet, (11/16/2012, 11:37 AM)

Thank you! It has been fixed.


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