CORPORATE CRIME REPORTER
Spills It on BP, Sporkin, and the Disaster in the Gulf
24 Corporate Crime Reporter 25(10), June 18, 2010
Jeanne Pascal knows BP.
Up until three months ago, when she retired, Jeanne Pascal was an attorney at the Environmental Protection Agency (EPA).
Her beat: debarment of BP.
For years, she worked on the BP case.
After all BP’s rap sheet was long and nasty – three convictions, an $84 million OSHA fine, and a deferred prosecution agreement.
Last year, Pascal was inclined to debar BP – strip it of its government contracts – because of its repeat violations.
But the Pentagon intervened.
“The Defense Energy Support Center told me that BP was supplying 80 percent of the fuel going to the U.S. military in Iraq,” Pascal told Corporate Crime Reporter.
“That’s a very substantial need.”
“We’re talking 2009,” Pascal said. “Had we debarred BP at that time, the Defense Department would have gotten an exception to the debarment and continued to do business with BP. We would have gotten a sister federal agency doing a substantial amount of business with a debarred contractor. And we would have had no oversight or no audit rights over that company.”
So, Pascal shifted to Plan B.
She was willing to enter into a compliance agreement – so that the government could audit BP’s operation to ensure that what happened on the North Slope – spills, slipshod safety – would be corrected.
She had cut a similar five year compliance agreement with BP after it was convicted of polluting on Endicott Island on the North Slope.
But that ended in 2005.
And now BP was in trouble again.
And Pascal offered BP another compliance agreement.
One problem – BP wanted no part of Pascal’s conditions.
First and foremost – that BP’s ombudsman – former federal judge Stanley Sporkin – be kept independent outside of BP.
No, BP said – we need our own ombudsman in house.
“Judge Stanley Sporkin’s office is providing ombudsman services to BP as a result of the House Energy and Commerce oversight hearings in 2007,” Pascal said.
“Then BP president Bob Malone promised that Judge Sporkin would restore the integrity to BP’s operation and restore the confidence of the American people. I wanted Judge Sporkin’s office to continue to do the job that BP promised Congress Judge Sporkin would do.”
“But BP wanted to terminate Judge Sporkin’s office and control that function by appointing a BP person to that position.”
Who did BP want to appoint as its in house ombudsman?
“I think his name was Tom McCormick – but I am not certain,” Pascal says.
Pascal says that the issue of keeping Sporkin as ombudsman for the workers was important to her because she recognized that BP was a “retaliatory company.”
In 2003, BP sought to end the first five year compliance agreement – which Pascal negotiated with BP outside counsel Carol Dinkins, a partner at Vinson & Elkins – end it early – at three to five years instead of five.
When BP workers on the North Slope caught wind that BP was in negotiations to end it early, they complained to Pascal and to BP’s probation officer – Mary Frances Barnes.
who came to me or to Stanley Sporkin with health safety and environmental complaints
found themselves retaliated against,” Pascal said.
As a result, Pascal rejected BP’s plea to end the first five year compliance agreement early.
“If a company employee brings me information and wanted me to look into it, BP would conduct an investigation and try to find out who talked.”
“When they thought they had the answer, they would either demote that person, discipline that person or terminate them.”
you know for a fact that workers who went to you were retaliated against?
“Yes I do,” Pascal says.
“Enough to be of huge concern to me personally. I had about 35 people come to me under the first compliance agreement. And they were terrified that the company would get their names and retaliate against them. “
”People who work for BP are afraid of their employer. BP is a very retaliatory company.”
“BP has the money, talent and resources to correct all of these problems and do all of this right. But they have chosen not to do it.”
“What happened in the Gulf – it looks as if they took shortcuts to save a couple of millions of dollars – that tells me that they have not learned from their four encounters with the law, their millions in fines, the multiple civil lawsuits filed against them – they still have not gotten the message.”
“The amount of the fines and the bad press clearly has not been sufficient to stop their behavior.”
“If I were the debarment official now, I would look at this company and say – this company cannot be rehabilitated. They are not going to do it right. They have actively chosen not to do what they need to do to correct the problem.”
“What stunned me was that BP told us that their lines were in pristine top notch shape. The employees were telling us that the pipes were corroded and in bad shape. In fact, a year after the compliance agreement ended, there was a substantial spill on Prudhoe Bay. That was the 2006 leak. But that was a year after the first compliance agreement ended.”
A second issue was BP’s Health Safety and Environment (HSE) unit.
“BP Exploration Alaska under Doug Suttles had an HSE, which was an independent division with a vice president who reported to the President,” Pascal said.
“Following the 2006 oil spill, Doug Suttles folded HSE under the technical directorate under Tony Brock. So, you have an HSE manager reporting to Tony Brock. Tony Brock reported to the President.”
“I wanted HSE restored to a vice presidential position.”
“BP was saying that HSE didn’t deserve a top billing as a operational concern. So, that was another sticking point.”
Pascal was negotiation the second compliance agreement with BP’s general counsel Jack Lynch.
“He’s a man of great integrity,” Pascal said.
“However, Mr. Lynch is an attorney providing attorney services. And people making decisions on his advice were and are Lamar MacKay, Doug Suttles, Andy Inglis and Tony Hayward.”
“Lamar MacKay is the president of BP America.”
“Doug Suttles was the CEO of BP Exploration Alaska. He’s the guy who devalued HSE. They promoted him and sent him to Houston and gave him control over all exploration worldwide, including exploration in the Gulf.”
“Those four individuals were in control of what was happening and were in control when the Deepwater Horizon sank.”
[For a complete transcript of the Interview with Jeanne Pascal, see 24 Corporate Crime Reporter 25(10), June 21, 2010, print edition only.]
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