David Prosser: Dudley prepares for stage two of thegreat BP clean-up
Thursday 30 September 2010
Outlook It is known in business as the "kitchen sink" strategy and for the new boss of a company with problems, it is an attractive proposition. On day one in the job, you dramatically announce you're chucking out everything that went before (including the kitchen sink) under the discredited management, in favour of new arrangements you will supervise personally. Goodbye tarnished brand, hello shiny new image.
If only it were that simple for BP. Robert Dudley is clearly desperate to make an early splash as he replaces Tony Hayward in the chief executive's office. His announcement of a management shake-up yesterday – two days before he even takes over – is the beginning of a campaign to put the Gulf of Mexico catastrophe behind BP. Out goes the head of the exploration unit – another symbolic ousting of someone in the chain of command above Macondo – and in comes an all-powerful safety unit.
The new chief executive has two goals in mind. No doubt, he is utterly sincere in his promise to improve BP's safety record, but we won't be in a position to judge him on that pledge for years to come. The more pressing objective in the short term is to placate BP's critics in the US, many of whom are still pressing for potentially ruinous action against the company.
There may not be a great deal BP can do now to influence the various official inquiries that, were they to find it guilty of gross negligence, threaten potentially huge fines – it has already made its own submissions to such probes. But Mr Dudley will hope to see some moderation in the tone of USlegislators. The House of Representatives has already cleared new health and safety laws that would effectively bar BP from any further offshore drilling in American waters. If the legislation were to make it onto the statute book – and those politicians standing forre-election in November's mid-terms will be aware of the public anger against BP – the new chief executive's task in restoring the company's fortunes suddenly looks much larger.
Since BP finally cappedMacondo earlier this month,sentiment around the company has improved. The share price has bounced and it managed to get a large bond issue away this week with no great difficulty. However, assuming that the company is now in the clear would be a great mistake. Mr Dudley's pre-emptive strike yesterday is an indicator of how much work he thinks BP has to do to get itself out of this mess. He is not complacent and nor should shareholders be.
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