BP Pays record bill

A day of reckoning arrived for BP on Thurs-day as the oil giant agreed to plead guilty to a raft of criminal charges and pay a record $4.5 billion in a settlement with the government over the deadly 2010 disaster in the Gulf of Mexico. Three BP employees were also charged, two of them with manslaughter.

The settlement and the indictments came 2½ years after the drilling-rig explosion that killed 11 workers and set off the biggest offshore oil spill in U.S. history. The settlement includes nearly $1.3 billion in fines - the biggest criminal penalty in U.S. history - along with payments to entities inside and outside government. As part of the deal, BP will plead guilty to charges related to the deaths of the 11 workers and to lying to Congress.

"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." Also, BP rig workers Robert Kaluza and Donald Vid-rine were indicted on federal charges of manslaughter and involuntary manslaughters, accused of repeatedly disregarding abnormal high-pressure readings that should have been glaring indications of trouble just before the blowout.

In addition, David Rainey, BP's vice-president of exploration for the Gulf of Mexico at the time, was indicted on charges of obstruction of Congress and making false statements. Prosecutors said he withheld information from Congress that indicated the amount of oil spewing from the blown-out well was greater than he let on. The settlement, which is subject to approval by a federal judge, includes payments of nearly $2.4 billion to the National Fish and Wildlife Foundation, $350 million to the National Academy of Sciences and about $500 million to the Securities and Exchange Commission.

The SEC accused BP of misleading investors by lowballing the amount of crude spewing from the well. "This marks the largest single criminal fine and the largest total criminal resolution in the history of the United States," Attorney General Eric Holder said at a news conference in New Orleans. He said much of the money will be used to restore the Gulf. Holder said the criminal investigation is still going on.

The settlement appears to be well within BP's means, considering the oil giant made a record $25.8 billion in profits last year. And it will be given five years to pay. But the company still faces huge additional claims. A federal judge in New Orleans is weighing a separate, proposed $7.8-billion settlement between BP and more than 100,000 businesses and individuals who say they were harmed by the spill. Under the settlement with the U.S. government, BP will plead guilty to 11 felony counts of misconduct or neglect of a vessel's officers, one felony count of obstruction of Congress and one misdemeanour count each under the Migratory Bird Treaty Act and the Clean Water Act.

The workers' deaths were prosecuted under a provision of the Seaman's Manslaughter Act. The obstruction charge is for lying to Congress about how much oil was spilling. The largest previous corporate criminal penalty assessed by the U.S. Justice Department was a $1.2-billion fine imposed on drug maker Pfizer in 2009. Greenpeace blasted the settlement as a slap on the wrist.

"This fine amounts to a rounding error for a corporation the size of BP," the environmental group said. Nick McGregor, an oil analyst at Redmayne-Bentley Stockbrokers, said the settlement would be seen as "an expensive positive." "This scale of bill is unpleasant," he said. "But "the worst-case scenario for BP would be an Exxon Valdez-style decade of litigation. I think that is the outcome they are trying to avoid."

The Deepwater Horizon rig, 80 kilometres off the Louisiana coast, sank after an April 20, 2010, explosion that was later blamed by investigators on time-saving, cost-cutting decisions by BP and its drilling partners in cementing the well shaft. The well on the sea floor spewed an estimated 172 million gallons of crude in the Gulf. After several failed attempts that introduced the American public to such industry terms as "top kill" and "junk shot," BP finally capped the well on July 15, 2010 © Copyright (c) The Montreal Gazette