Author: Clifford Krauss and John Schwartz
Source: The New York Times
Date: 15 November, 2012
BP, the British oil company, said on Thursday that it had agreed to pay $4.5 billion in fines and other penalties and to plead guilty to 14 criminal charges related to the rig explosion two years ago that killed 11 people and caused a giant oil spill in the Gulf of Mexico.
In a rare instance of seeking to hold individuals accountable for company misdeeds, the Justice Department also filed criminal charges against three BP employees in connection with the accident.
“This is unprecedented, both with regard to the amounts of money, the fact that a company has been criminally charged and that individuals have been charged as well,” Attorney General Eric H. Holder Jr. said at a news conference in New Orleans to announce the settlement.
The government said that BP’s negligence in sealing an exploratory well caused it to explode, sinking the Deepwater Horizon drill rig and unleashing a gusher of oil that lasted for months and coated beaches all along the Gulf Coast. The company initially tried to cover up the severity of the spill, misleading both Congress and investors about how quickly oil was leaking from the runaway well, according to the settlement and related charges.
While the settlement dispels one dark cloud that has hovered over BP since the spill, it does not resolve what is potentially the largest penalty related to the incident: the company could owe as much as $21 billion in pollution fines under the Clean Water Act f it is found to have been grossly negligent. Both the government and BP vowed to vigorously contest that issue at a trial scheduled to begin in February.
Under its deal with the Justice Department, BP will pay about $4 billion in penalties over five years. That amount includes $1.256 billion in criminal fines, $2.394 billion to the National Fish and Wildlife Foundation for remediation efforts and $350 million to the National Academy of Sciences. The criminal fine is one of the largest levied by the United States against a corporation.
BP also agreed to pay $525 million to settle civil charges by the Securities and Exchange Commission that it misled investors about the flow rate of oil from the well.
In addition, the company will submit to four years of government monitoring of its safety practices and ethics.
“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,” Robert W. Dudley, BP’s chief executive, said in a statement. “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.”
A broader settlement that would have resolved the Clean Water Act claims failed to win agreement from some parties, in particular the state of Louisiana. BP and the government now intend to go to trial on those claims in February.
The government charged the top BP officers aboard the drilling rig, Robert Kaluza and Donald Vidrine, with manslaughter in connection with each man who died, contending that the officials were negligent in supervising tests to seal the well.
Prosecutors also charged David Rainey, BP’s former vice president for exploration in the Gulf of Mexico, with obstruction of Congress and making false statements for understating the rate at which oil was spilling from the well.
As part of its plea agreement, BP admitted that, through Mr. Rainey, it withheld documents and provided false and misleading information in response to the House of Representatives’ request for information on how quickly oil was flowing. While Mr. Rainey was publicly repeating BP’s stated estimate of 5,000 barrels of oil a day, the company’s engineering teams were using sophisticated methods that generated significantly higher estimates. The Flow Rate Technical Group, consisting of government and independent scientists, later concluded that more than 60,000 barrels a day were leaking into the gulf during that time.
Lawyers for all three men charged denied that their clients had committed any criminal wrongdoing.
“This is not justice,” Mr. Kaluza’s lawyers, Shaun Clarke and David Gerger, said in a statement. “After nearly three years and tens of millions of dollars in investigation, the government needs a scapegoat.”
Mr. Holder, the attorney general, said that the government’s investigation was continuing and that other criminal charges could be filed.