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BP Hit with the Largest Criminal Penalty in U.S. History Over Gulf Oil Spill

George Washington's picture




 

As we’ve documented for years, BP was criminally negligent in connection with the Gulf oil spill, and has gone to great lengths to cover up the scope of the disaster … including low-balling spill estimates.

Up until today, many said that nothing had changed, and that the missing ingredient is holding BP executives criminally responsible.

AP reports today:

Two men who worked for BP during the 2010 Gulf oil spill disaster have been charged with manslaughter and a third with lying to federal investigators, according to indictments made public Thursday, hours after BP announced it was paying $4.5 billion in a settlement with the U.S. government over the disaster.

 

A federal indictment unsealed in New Orleans claims BP well site leaders Robert Kaluza and Donald Vidrine acted negligently in their supervision of key safety tests performed on the Deepwater Horizon drilling rig before the explosion killed 11 workers in April 2010. The indictment says Kaluza and Vidrine failed to phone engineers onshore to alert them of problems in the drilling operation.

 

Another indictment charges David Rainey, who was BP’s vice president of exploration for the Gulf of Mexico, on charges of obstruction of Congress and false statements. The indictment claims the former executive lied to federal investigators when they asked him how he calculated a flow rate estimate for BP’s blown-out well in the days after the April 2010 disaster.

 

Before Thursday, the only person charged in the disaster was a former BP engineer who was arrested in April on obstruction of justice charges. He was accused of deleting text messages about the company’s response to the spill.

 

Earlier in the day, BP PLC said it would plead guilty to criminal charges related to the deaths of 11 workers and lying to Congress.

 

***

 

BP will plead guilty to 11 felony counts of misconduct or neglect of a ship’s officers, one felony count of obstruction of Congress and one misdemeanor 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.

This all sounds good. And BP is – in fact – being hit with the largest criminal penalty in U.S. history.

But given the decades-long culture of criminal negligence at BP, the indictments against small fish is no more impressive than the Department of Justice’s dog-and-pony show going after low-level bank employees, instead of the big boys.

And given that BP made a profit of $5.5 billion in the most recent quarter - and that the penalty will be paid over five years - this is just the cost of doing business for BP.

Most importantly, nothing has changed in regard to dangerous drilling practices. Indeed, BP is going to drill even deeper … with an even greater potential for disaster.  And see this and this.

Top oil spill expert Dr. Robert Bea – a UC Berkeley professor and government consultant – told us the following after reading this post:

The assigned BP well site leaders, Kaluza and Vidrine, were at the pointed end of this disaster “spear”.  Several news reports have stated they were the two highest ranking BP officials onboard the Deepwater Horizon.

 

This is not accurate.  the two highest ranking BP officials onboard the Deepwater Horizon were Pat O’Brien, VP of Exploratory drilling in the Gulf of Mexico and his subordinate manager David Sims.  O’Brien and Sims were further up the “blunt end” of the disaster spear.

 

The real power that caused this disaster came from higher levels of management (or mis-management) in BP.  Again, we have “blamed the victims” in an attempt to localize the causation.

 

You are right – at this point in the developments, we have reinforced the lesson that this is an “affordable” (to those along the blunt end of the disaster spear) cost of doing business.

 

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Fri, 11/16/2012 - 20:00 | 2989970 Zero Govt
Zero Govt's picture

BP was criminally negligent in connection with the Gulf oil spill, and has gone to great lengths to cover up the scope of the disaster … including low-balling spill estimates.

the US Govt were criminally negligent falsely accusing Iraq of WMD. What happened GW for 300,000 innocent murdered Iraqi civilians?

Do you seriously believe for 1 minute BP wanted an oil spill???

Do you seriously believe for even 5 seconds a BP Exec would not take action if he thought there was a high/fair risk of the well head blowing and oil spilling into the ocean???

It's not in their commercial interest to have their cash flow (oil) pissing out of a well head 1 mile underwater. That's money dissolving away not to mention the expense of repair.

The US Govt is out of its tiny stupid mind accusing BP of negligence or criminal activity (ie. the insanely delusional presumption it was a deliberate act).

 

Two men who worked for BP during the 2010 Gulf oil spill disaster have been charged with manslaughter and a third with lying to federal investigators..

And where's Govt crone investigators on the Iraq WMD scandal or New Yorks negligence with over 70 dead because of a pitiful sea wall???

No BP executive would in his maddest dreams want an oil spill. They want a smooth running business, not a clown show (like Govt). No executive, Rig Manager or worker wants oil spills, industrial accidents or deaths, especially in the litegous US of A

The US Govt is chasing wild fabrications of its own epically stupid mind, prevelent to peanut brained twits behind Govt desks. This is a commercial operation trying to make a profit, not a Govt piss-up job with no commercial discipline that can cover-up its own tragic mistakes (see New Yorks drenching or the Iraq WMD scandal) because it owns the 'justice' system

You've temporarily (i hope!) lost your marbles GW

Fri, 11/16/2012 - 18:57 | 2989940 Zero Govt
Zero Govt's picture

BP Hit with the Largest Criminal Penalty in U.S. History Over Gulf Oil Spill

GW, do you know what the Japanese Govt and Tepco got "hit" with regards fines for Fukinshambles?

Has anyone been interviewed or arrested and charged by either the Japì Nuclear Regulator or Police for sighting the plant in a tsunami alley, a low sea wall and leaving the back-up generators short of fuel???

How about New York State for leaving the door wide open, or sea defence pitifully low, to a storm tide not 50 years after the last drenching?

Love it when Govt gets on its high horse and fines the private sector for what was a mistake (try drilling a mile underwater without one) when Govt's own patently obvious massively expensive errors are swept under the rug (Fannie and Freddie anyone??)

 

Fri, 11/16/2012 - 07:01 | 2987017 leesajhon123
leesajhon123's picture

It is so informative post thanks for sharing.

 

Military Challenge Coins

Fri, 11/16/2012 - 06:46 | 2987005 FunkyOldGeezer
FunkyOldGeezer's picture

Two names spring to mind:

 

Haliburton and Transocean. Are they to walk away scott-free?

 

Fri, 11/16/2012 - 06:32 | 2986996 lakecity55
lakecity55's picture

"...and, as AG, the pResident has directed me to place these funds  in an offshore account only he knows about for safekeeping."

Fri, 11/16/2012 - 04:00 | 2986933 Amagnonx
Amagnonx's picture

Having experience in the mining industry as both an engineer and manager, I can say that this is a useless result. 

 

The only people who could be blamed are the most senior management and the board of directors - it is a strategic decision to either deep sea drill or not.  If the corporation decides it wants to take the well known risks associated with it, then it is the strategic team who should shoulder the resonsibility.

 

Once the decision has been made to go ahead with the operation, no site manager can do anything - you can't say 'hang on, we need to spend x millions on safeguards' - its all too late - you have a budget, and if you won't do it on budget, they will simply replace you.  The rest of the operations team is in the same position, the only thing you could do is walk away from it, but you are constrained by the industry standard - if someone else is running their operation that way, then you either do your job, or walk away from the whole industry.

 

It is difficult to prevent catasrophic technical failures, and the cost of doing so is extremely high.  To eliminate those risks in these kind of operations - would be so expensive they would not be viable at current oil prices - and those responsible for budgeting them have to use current legal frameworks and industry standards - they can't just make up the safety requirements they want to use - they have to follow best practice and the law.

 

Fining the corporation does nothing at all - its shareholders lose a bit of value, and the price of oil goes up a bit to compensate.   Its the strategic decision to be involved with that kind of business that created the problem - thats board and most senior management only.

 

Without a legal prohibition, or legal safety requirements that are prohibitive - this kind of outcome is always a risk - its the way the machine works, everyone is just a cog - and you turn as required, or get replaced.  Unless people are willing to prohibit deep sea drilling, and force it into law - then its not really useful to be sending people to jail over stuff like this - unless its absolutely negligence or incompetence - but usually they will find someone, somewhere that they can blame, though in fact its the strategic decision that was the source.

 

PS:  I should add, I was not in oil and gas - so no, I'm not a BP employee :P

Fri, 11/16/2012 - 09:57 | 2987401 Urban Redneck
Urban Redneck's picture

One of the problems is precisely site managers placing executive management's profit goals and their own career goals above such trivialities as safety or local law.

Fri, 11/16/2012 - 02:55 | 2986894 Joe A
Joe A's picture

Some small fish are thrown to the sharks and the really big fish get away. Same old.

Fri, 11/16/2012 - 01:13 | 2986828 DarthVaderMentor
DarthVaderMentor's picture

Even though it may be a record fine, it's just peanuts. 

 

I guess no one gets punished anymore for death by engineering negligence or fraud by banksters. 

 

So if you own a bank, are a large multinational CEO or are an engineer or vendor to such you are above the law.

Fri, 11/16/2012 - 05:16 | 2986968 zhandax
zhandax's picture

Bingo!

Thu, 11/15/2012 - 22:15 | 2986545 delacroix
delacroix's picture

how long till the funds are disbursed? have the exxon valdez damages been paid yet?

Thu, 11/15/2012 - 22:11 | 2986539 raiha
raiha's picture

If a corporation is a person, why cannot it not go to jail?

Fri, 11/16/2012 - 00:11 | 2986752 DeadFred
DeadFred's picture

How will BP like its new roommate if it does?

Thu, 11/15/2012 - 21:48 | 2986490 notadouche
notadouche's picture

Wouldn't the media and the governement be complicit in the cover up?

Thu, 11/15/2012 - 21:24 | 2986427 Dr. Sandi
Dr. Sandi's picture

In the crystal ball I see....

Hundreds of children of attorneys headed for Harvard instead of dumb old Princeton.

Do I hear a KA-CHING brothers and sisters?

KAAAAA-CHINNNNNG!!!!

Amen!

Thu, 11/15/2012 - 21:30 | 2986440 SILVERGEDDON
SILVERGEDDON's picture

That penalty is a fucking joke. They made ten times that just by jacking up the price of fuel all year long. Use BP executives to plug up the still leaking Horizon well head area - kinda like the way the dentist jams thosee cotton rolls into yer yapper when he'es doing the drill and fill program. That'll solve two problems at once. Fix the leak, and get rid of dumb assed over paid decision makers who play hard and fast with everything in search of another profit dollar.

Thu, 11/15/2012 - 21:21 | 2986417 imbrbing
imbrbing's picture

Chump change, what I want to know is who gets locked up. They even adminitted to manslaughter charges. Still....who gets locked up.

Thu, 11/15/2012 - 21:42 | 2986478 Dr. Sandi
Dr. Sandi's picture

I see more time in the big house for the syncophants who made this all possible. The servant staff at the homes of the BP executive staff.

If butlers and the maids and the cooks and the drivers and the damned nannies hadn't made those mansions so easy to do business from, all of this unpleasantness could have been avoided.

Fri, 11/16/2012 - 05:13 | 2986966 zhandax
zhandax's picture

Hell, the PhD of three card monte just got re-elected in this banana shack.  You actually think someone is going to get locked up?  Read between the smoke and the mirrors.

Thu, 11/15/2012 - 21:18 | 2986406 TradingTroll
TradingTroll's picture

lest we forget, the exxon valdez was carrying bp oil, bp was supposed to have protective booms in sheds on the shoreline, but the sheds were empty

the empty sheds were still certified as containing the booms by bp

anyway, then head of bp lord browne called bush jr for a favor and they got off

 

bp should have been broken up then

Thu, 11/15/2012 - 21:14 | 2986396 booboo
booboo's picture

Hmm, holding those at the "point of the spear" responsible for the deaths. Sounds promising for the families of the dead ambassador and the others right? Maybe the government is turning over a new leaf. haha... bwahaha...BWAHAHAHAHAHAHAHAHAHA

Gotta keep the sheep distracted. Whats next? Bloomturd going after Sandy for the deaths of the 30,000 federally protected New York Nocturnal Effluent Pipe Beaver.

Thu, 11/15/2012 - 21:23 | 2986423 Anomalous Howard
Anomalous Howard's picture

Whaddya mean "next" kemosabe?

The austerity plans about to be imposed on the US by the banks (oops, I mean fiscal cliff avoidance legislation) is being insured right now by a curiously timed flare-up between Israel and Palestine.

If we go over the cliff...military spending takes a big hit.  That spending is the bankers' bread and butter.  Do you think the sheeple of the US would allow those cuts with what's so conveniently happening right now?

It was also curious timing that this all got to where it is now right after tensions were primed by an infantile youtube video insulting Mohammed.

 

Yessiree...what's next indeed.

Thu, 11/15/2012 - 21:14 | 2986394 Anomalous Howard
Anomalous Howard's picture

Imagine how much milder the punishment would have been if all those damn scary sounding conjectural interwebs postings describing total catastrophic failure at the wellhead hadn't gotten all that crazy attention it did...even making Congress sit straight the fuck up in their chairs for once.

Ya gotta love the interwebs.

Thu, 11/15/2012 - 21:11 | 2986390 DaveyJones
DaveyJones's picture

wonder what would happen to a group of middle class teenagers who caused an explosion killing five people, spilling poison for three blocks and killing all the dogs, cats and parakeets in the neighborhood 

Fri, 11/16/2012 - 01:09 | 2986824 sitenine
sitenine's picture

Alternatively, wonder what would happen to a group of psychopathic bankers who caused an explosion killing millions of people, spilling toxic derivatives world wide and killing all the hopes, dreams, and future of the planet...

Fri, 11/16/2012 - 10:55 | 2987630 DaveyJones
DaveyJones's picture

at least your abstraction is in your lap (and your bank account)

Thu, 11/15/2012 - 21:10 | 2986387 mendolover
mendolover's picture

Greg Palast's Vulture's Picnic is the best BP expose I've read.  Funny and sad at the same time.

http://www.gregpalast.com/vulturespicnic/

Thu, 11/15/2012 - 21:37 | 2986462 George Washington
George Washington's picture

Palast = one of the world's top investigative reporters...

Thu, 11/15/2012 - 21:58 | 2986518 DaveyJones
DaveyJones's picture

neat stuff on George and the gang

Thu, 11/15/2012 - 20:58 | 2986357 yabyum
yabyum's picture

And twelve people dead...not enough$$!

Thu, 11/15/2012 - 20:58 | 2986356 disabledvet
disabledvet's picture

they still charged somebody. With MANSLAUGHTER actually. i agree "they're still getting off easy" (though not cheaply by ANY stretch of the imagination) but "they're not walking." and this is indeed news in the USA.

Thu, 11/15/2012 - 20:29 | 2986276 Boxed Merlot
Boxed Merlot's picture

Lets keep things in proportion...

 

What was Exxon's fine for Valdez?  And wasn't that event the birthplace of "share-the-pain let's all make money off this legal decision" financial instruments touted by GS and their whiz bang team of risk takers, I mean peddlers?  What new and improved device will emerge from the black layers lurking below the now pristine looking beaches "cleaned up" by an administration more concerned with appearance than substance?

And of course, it's the "biggest".  Ben's never had so many frns in the float as there are today.  

Thu, 11/15/2012 - 18:25 | 2985924 falak pema
falak pema's picture

its only three months corporate profit for this huge desecration of planet and life. Lets keep things in proportion!

Thu, 11/15/2012 - 18:27 | 2985934 George Washington
George Washington's picture

Exactomundo ...

Thu, 11/15/2012 - 21:03 | 2986365 disabledvet
disabledvet's picture

no...NOT "exactomundo." this is a MASSIVE amount of money for a region that is oil rich to begin with. Trust me...New Jersey if not MANHATTAN will be looking with envy at the amount of "payola" that that region got after Katrina. We'll see just how well this President can deliver on his voting bloc. I guarantee you few if any complain about George Bush down there.

Fri, 11/16/2012 - 01:15 | 2986829 DarthVaderMentor
DarthVaderMentor's picture

Dont worry. Cuomo and his cohorts are already begging....

Thu, 11/15/2012 - 21:53 | 2986499 Zer0head
Zer0head's picture

These BP folks could certainly learn a thing or two from their Wall Street equivalents; criminal charges and paying a fine equiv to the profits generated in a single quarter is definitely a sign of amateur hour, but then again maybe the oil business has a different dynamic than laundering billions for the cartels

Fri, 11/16/2012 - 02:38 | 2986890 calltoaccount
calltoaccount's picture

Sgt_Doom recently opined:

 

 

Who is the majority owner of BP?  According to the European financial database Amadeus, JPMorgan Chase is the No. 1 holder of stock in BP. That distinction also has earned the Wall Street bank the title of “Global Ultimate Owner” of the oil giant, as it owns 28.34% of BP. Next, at 7.99%, is Legal and General Group, a British-based financial services company with assets of more than $350 billion. Another U.S. Investment firm, BlackRock Inc., owns 7.1% of BP. Other owners include the governments of Kuwait, Norway, Singapore and China. (Sorry, missing that link to the above.)

 

 

Fri, 11/16/2012 - 06:59 | 2987013 falak pema
falak pema's picture

the Bilderbergers morphed into Trilaterists who spawned the Davos Group; ultimate expression of true multipolar Oligarchy club of the Reaganista-NWO age. Were the Bushes pleased with their mandate at  doing God's work! 

BP's stock now portrays the corporate prize for this global oligarchy, all hunky-dory in hubristic cosyness; an extractive empire juggernaut.  They should feel proud about its Titanic like voyages into the energy unknown as trail blazer.

"Its ours and its the boat of the future!"

You can bet your bottom dollar on that, all hedged by a mega CDS  placed with its prime owner against the upcoming icebergs.  

Fri, 11/16/2012 - 05:02 | 2986961 zhandax
zhandax's picture

Surprised?  Did you see this linked in another thread tonight?

Thu, 11/15/2012 - 21:56 | 2986512 DaveyJones
DaveyJones's picture

my thoughts as well, the money men are just too damn important for a country in deep debt and fiat trouble

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