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November 15, 2012

Is the BP federal plea deal concerning 2010 Deepwater Horizon disaster worthy of celebratation (or criticism)?

The question in the title of this post is prompted by this press release from the Justice Department, which carries this heading: "BP Exploration and Production Inc. Agrees to Plead Guilty to Felony Manslaughter, Environmental Crimes and Obstruction of Congress Surrounding Deepwater Horizon Incident."  Here are excerpts from the press release:

BP Exploration and Production Inc. (BP) has agreed to plead guilty to felony manslaughter, environmental crimes and obstruction of Congress 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, Attorney General Eric Holder announced today.  The 14-count information, filed today in U.S. District Court in the Eastern District of Louisiana, 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 has signed a guilty plea agreement with the government, also filed today, admitting to its criminal conduct.  As part of its guilty plea, BP has agreed, subject to the Court’s approval, to pay $4 billion in criminal fines and penalties -- the largest criminal resolution in United States history.

“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,” said Attorney General Holder.  “We specifically structured this resolution to ensure that more than half of the proceeds directly benefit the Gulf Coast region so that residents can continue to recover and rebuild.”

“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, Nev., and Donald J. Vidrine, 65, of Lafayette, La. -- the highest-ranking BP supervisors onboard the Deepwater Horizon on April 20, 2010 -- are alleged to have engaged in negligent and grossly negligent conduct 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.  A grand jury in the Eastern District of Louisiana returned the indictments against Kaluza, Vidrine and Rainey, which were unsealed today....

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....

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.

In addition to the historic $4 billion in criminal fines and penalties, BP has agreed as part of its guilty plea to 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....

Today, the SEC simultaneously resolved civil securities fraud charges with BP in a $525 million settlement.  The Justice Department also acknowledges and expresses its appreciation for the significant assistance provided by the SEC’s Division of Enforcement.

November 15, 2012 at 06:35 PM | Permalink


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The Mafia could learn a thing or two about corporate shakedowns by government. I have personal knowledge of a 400 Million + shakedown in a previous case which was nothing but fabrications and innuendo. There were even no claims of personal, material or financial harm. The company was innocent of the claims but even two pieces of unrelated E-mail could be put together to imply anything the government's imagination would want to imply. The proof of innocence (or rather, lack of guilt) is in reality, much more difficult to achieve than removing the innuendo of guilt. The gubermints unlimited time and ability to seek limitless information and charge multiple crimes for the same related but innocuous actions was too much even for an innocent multi-billion dollar company to fight and it was easier for the company to just stop the blackmail.

If I was BP, I would do one thing: follow every dollar of the payments to see where they finally end up, even if you needed a staff of 25 people to monitor and audit this function.

Posted by: albeed | Nov 16, 2012 10:09:47 AM

I should have also added that I believe that BP and their partners are responsible for paying for the clean-up and any damages that occurred as a result of the spill. Real and not-imaginary damages as the government so many times claims.

If one were really serious about determining who does the most damage to the environment and the general welfare of the people, I think it would be the government, hands down.

Posted by: albeed | Nov 16, 2012 5:10:12 PM

It would be nice if a portion of the money collected went towards maintaining the federal criminal justice system such as hiring additional clerks, judges, case mangers, CJA attorneys and paying them better, since it is chronically underfunded by Congress. Just saying.

Posted by: Alan Winograd | Nov 16, 2012 6:40:43 PM

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