BP a Felon, to Pay $4 Billion

BP Exploration and Production will plead guilty to fourteen felony manslaughter, environmental crimes and obstruction of Congress charges and pay a record $4 billion in criminal fines and penalties for its conduct leading to the 2010 Deepwater Horizon disaster that killed 11 people and caused the largest environmental disaster in U.S. history.

The 14-count information charges BP with 11 counts of felony manslaughter, one count of felony obstruction of Congress, and violations of the Clean Water and Migratory Bird Treaty Acts.

BP was represented by Mark Filip of Kirkland & Ellis and Joseph Warin of Gibson Dunn & Crutcher.

BP has signed a guilty plea agreement with the government, also filed today, admitting to its criminal conduct.

As part of its guilty plea, BP will pay $4 billion in criminal fines and penalties – the largest criminal resolution in United States history.

David Uhlmann, the former head of the Environmental Crimes Section at the Justice Department, is currently a professor at the University of Michigan Law School.

“The plea agreement announced today is a fair resolution of the Justice Department’s criminal investigation,” said David Uhlmann, a professor at the University of Michigan Law School and the former chief of the Environmental Crimes Section at the Justice Department. “The Justice Department chose to emphasize worker deaths, which is appropriate, although it could and should have placed greater weight on the environmental crimes that occurred, since this was the worst oil spill in U.S. history.”

“The Justice Department has obtained the largest criminal fines in U.S. history, although it could be argued that the amounts are modest when you consider that BP faced up to $30 billion to 40 billion for the Clean Water Act violations,” Uhlmann said. “It also is curious that the Justice Department agreed that BP could have five years to pay the penalties, since criminal fines are supposed to be paid immediately unless there are ability to pay issues.”

Attorney General Eric Holder said civil claims have not been resolved because “we have not reached a number that I consider satisfactory.”

The civil case is scheduled for trial in February 2013.

Holder said that the $4 billion in penalties and fines is the single largest criminal resolution in the history of the United States and constitutes “a major achievement toward fulfilling a promise that the Justice Department made nearly two years ago to respond to the consequences of this epic environmental disaster and seek justice on behalf of its victims.”

“The explosion of the rig was a disaster that resulted from BP’s culture of privileging profit over prudence,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “We hope that BP’s acknowledgment of its misconduct – through its agreement to plead guilty to 11 counts of felony manslaughter – brings some measure of justice to the family members of the people who died onboard the rig.”

In addition to the resolution of charges against BP, Robert M. Kaluza, 62, of Henderson, Nevada and Donald J. Vidrine, 65, of Lafayette, Louisiana – the highest-ranking BP supervisors onboard the Deepwater Horizon on April 20, 2010 – are alleged to have engaged in negligent and grossly negligent conduct.

They were charged in a 23-count indictment charging violations of the federal involuntary manslaughter and seaman’s manslaughter statutes and the Clean Water Act.

David I. Rainey, 58, of Houston – a former BP executive who served as a Deputy Incident Commander and BP’s second-highest ranking representative at Unified Command during the spill response – is charged with obstruction of Congress and making false statements to law enforcement officials.

Federal officials alleged that, on April 20, 2010, while stationed at the Macondo well site in the Gulf of Mexico, the Deepwater Horizon rig experienced an uncontrolled blowout and related explosions.

BP admitted that the two highest-ranking BP supervisors onboard the Deepwater Horizon, known as BP’s “Well Site Leaders” or “company men,” negligently caused the deaths of 11 men and the resulting oil spill.

The information details that, on the evening of April 20, the two supervisors, Kaluza and Vidrine, observed clear indications that the Macondo well was not secure and that oil and gas were flowing into the well.

Despite this, BP’s well site leaders chose not to take obvious and appropriate steps to prevent the blowout. As a result of their conduct, control of the Macondo well was lost, resulting in catastrophe.

Kaluza and Vidrine each are charged with 11 felony counts of seaman’s manslaughter, 11 felony counts of involuntary manslaughter and one violation of the Clean Water Act.

If convicted, Kaluza and Vidrine each face a maximum potential penalty of 10 years in prison on each seaman’s manslaughter count, up to eight years in prison on each involuntary manslaughter count, and up to a year in prison on the Clean Water Act count.

The information charging BP further details that the company, through senior executive Rainey, obstructed an inquiry by the U.S. Congress into the amount of oil being discharged into the Gulf while the spill was ongoing.

As part of its plea agreement, BP has admitted that, through Rainey, it withheld documents and provided false and misleading information in response to the U.S. House of Representatives’ request for flow-rate information.

BP admitted that Rainey manipulated internal estimates to understate the amount of oil flowing from the well and withheld data that contradicted BP’s public estimate of 5,000 barrels of oil per day.

BP has also admitted that, at the same time Rainey was preparing his manipulated estimates, BP’s internal engineering response 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 per day were leaking into the Gulf during the relevant time, contrary to BP’s representations to Congress.

Rainey is charged with one count of obstruction of Congress, and one count of making false statements to law enforcement officials. If convicted, Rainey faces a maximum potential penalty of five years in prison on each count.

The criminal resolution is structured such that more than half of the proceeds will directly benefit the Gulf region.

Pursuant to an order presented to the Court, approximately $2.4 billion of the $4.0 billion criminal recovery is dedicated to acquiring, restoring, preserving and conserving – in consultation with appropriate state and other resource managers – the marine and coastal environments, ecosystems and bird and wildlife habitat in the Gulf of Mexico and bordering states harmed by the Deepwater Horizon oil spill.

This portion of the criminal recovery will also be directed to significant barrier island restoration and/or river diversion off the coast of Louisiana to further benefit and improve coastal wetlands affected by the oil spill.

An additional $350 million will be used to fund improved oil spill prevention and response efforts in the Gulf through research, development, education and training.

BP will retain a process safety and risk management monitor and an independent auditor, who will oversee BP’s process safety, risk management and drilling equipment maintenance with respect to deepwater drilling in the Gulf of Mexico.

BP is also required to retain an ethics monitor to improve BP’s code of conduct for the purpose of seeking to ensure BP’s future candor with the United States government.

Copyright © Corporate Crime Reporter
In Print 48 Weeks A Year

Built on Notes Blog Core
Powered by WordPress