BP is hit with a record $4.5bn penalty over Gulf spill damage

Oil giant pleads guilty on 14 counts Managers face manslaughter charges

BP will pay the biggest criminal penalty in US legal history by some distance after reaching a $4.53bn (£2.9bn) settlement with American authorities over the Gulf of Mexico spill.

Two men who worked for the oil giant at the time of the disaster are, meanwhile, facing involuntary manslaughter charges, while a third was yesterday charged with lying to federal investigators and obstructing an enquiry into the spill by the US Congress.

In its settlement, which remains subject to court approval, the FTSE 100 oil giant agreed to plead guilty to 14 counts of criminal misconduct to resolve all federal criminal charges and claims by the Securities and Exchange Commission (SEC) relating to the Deepwater Horizon spill in 2010, which killed 11 workers and spilled nearly 5 million barrels of crude oil into the Gulf of Mexico.

Penalties agreed as part of the deal will see BP paying $4bn to the Department of Justice and $525m to the SEC and will increase the charge it is taking to cover the costs of the spill to $41.95bn. The fine dwarfs the previous record US criminal penalty when Pfizer, the pharmaceutical company, paid $1.3bn in 2009 for marketing fraud relating to pain medicine.

Bob Dudley, BP's chief executive, said: "We apologise for our role in the accident, and as today's resolution with the US government further reflects, we have accepted responsibility for our actions."

The deal does not cover federal civil claims, including damages from the Clean Water Act, federal and state natural resources damages claims or outstanding private civil claims.

Separately, a federal inducement unsealed in New Orleans charged the two highest ranking BP supervisors who were on board the ill-fated rig on the day of explosion with 23 criminal counts, according to US Attorney General Eric Holder.

Speaking in New Orleans, he said: "I want to be absolutely clear that today's resolution [with BP] does not mark the end of our efforts. In fact, our criminal investigation remains ongoing – and we'll continue to follow all credible leads and pursue any charges that are warranted."

The Department of Justice named the two supervisors as BP well site leaders Robert Kaluza and Donald Vidrine. They are alleged to "engaged in negligent and grossly negligent conduct", violating, according to the Department, statues related to involuntary manslaughter and seaman's manslaughter, and the Clean Water Act.

David Rainey, a former BP executive who was vice president of exploration for the Gulf of Mexico, was also charged yesterday in a separate indictment. He allegedly lied to investigators and obstructed a Congressional inquiry. In its settlement, BP admitted that the 58 year old "manipulated internal estimates to understate the amount of oil flowing from the well," according to the Department. The company further admitted that, while Mr Rainey was preparing manipulated estimates, its internal teams were reporting what were said to be "significant higher estimates"

As part its agreement, BP is pleading guilty to 11 felony counts of "misconduct or neglect of ships officers" relating to the lives lost. It is also pleading guilty to one misdemeanour count under the Clean Water Act, one misdemeanour count under the Migratory Bird Treaty and one felony count of obstruction of Congress.

BP has also agreed to take actions to improve the safety of its drilling operation in the Gulf of Mexico, which is enforceable by court. These include third-party auditing and verification of its risk management process, extra staff training and measures to improve the functioning of blowout preventers and cementing.

The deal is a relief to BP, removing a key uncertainty over how much the spill will cost the company. However, it falls short of BP's hopes that it could resolve all of its outstanding civil and criminal actions, including damages claims or outstanding private civil claims. BP could be liable for a maximum penalty of $5.4bn under the Clean Water Act alone, a figure which could rise to $21bn if the company is found to be grossly negligent, a claim it has denied. If that happened, the total cost of the spill to BP could soar way beyond $41 bn since the group has only set aside $3.5bn to cover penalties relating to the Clean Water Act.

The fines announced yesterday far outstrips outstrip BP's last major settlement with the Department of Justice in 2007 when it paid out about $373m to resolve three separate inquiries into a 2005 Texas refinery explosion, an Alaska oil pipeline leak and fraud for conspiring to corner the US propane market.

BP's shares fell by 0.35p to end the day at 425.4p.

Corporate payouts

BP $4.53bn (Gulf oil spill, 2012)

GSK $3bn (various drugs, 2012)

Pfizer $2.3bn (Bextra, 2009)

Enron $1.5bn (improper trading, 2005)

Johnson & Johnson $1.1bn (Risperdal, 2012 )

US indictments: The BP managers facing charges

David Rainey

Mr Rainey was the former BP Vice President in charge exploration in the Gulf of Mexico. The 58 year old, who was part of the unified command handling the spill, is charged with false statements to law enforcement officials and of obstructing a Congressional probe into the spill. The allegation is that he was manipulating estimates that played down the size of the leak. If convicted, he faces a maximum penalty of five years behind bars on each count.

Robert Kaluza and Donald Vidrine

Mr Klaus and Mr Vidrine were Well Site Leaders – or the highest ranking BP supervisors on the Deepwater Rig when the explosion occurred in April 2010. They are alleged to have ignored what the Department of Justice called "clear indications" that oil and gas were flowing into the rig well. In doing so they failed to take steps to head-off the blowout. This is alleged to have resulted in the loss of control of the well, "resulting," prosecutors allege, "in catastrophe".

A conviction would see the two men each face up to 10 years in prison on each of the of 11 seaman's manslaughter counts, up to 8 years on each of the 11 involuntary manslaughter counts and up a year behind bards on count of violating the Clean Water Act.

Arts and Entertainment
Sheeran arrives at the 56th annual Grammy Awards earlier this year
musicYes, that would be Ed Sheeran, according to the BBC
Sport
Rio Ferdinand, Alan Shearer, Alan Hansen and Gary Lineker during Hansen's final broadcast
Sport
News
newsBear sweltering in zoo that reaches temperatures of 40 degrees
Arts and Entertainment
Brendan O'Carroll has brought out his female alter-ego Agnes Brown for Mrs Brown's Boys D'Movie
filmComedy holds its place at top of the UK box office
PROMOTED VIDEO
News
Ian Thorpe has thanked his supporters after the athlete said in an interview that he is gay
people
Arts and Entertainment
Professor Kathy Willis will showcase plants from the Royal Botanic Gardens at Kew
radioPlants: From Roots to Riches has been two years in the making
Arts and Entertainment
TV The follow-up documentary that has got locals worried
Arts and Entertainment
Eminem's daughter Hailie has graduated from high school
music
Arts and Entertainment
Original Netflix series such as Orange Is The New Black are to benefit from a 'substantial' increase in investment
TVHoax announcement had caused outrage
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

News
One Direction star Harry Styles who says he has no plans to follow his pal Cara Delevingne down the catwalk.
peopleManagement confirms rumours singer is going it alone are false
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Curtain calls: Madani Younis
theatreMadani Younis wants the neighbourhood to follow his work as closely as his audiences do
Arts and Entertainment
'Deep Breath' is Peter Capaldi's first full-length adventure as the twelfth Doctor
TVFirst episode of new series has ended up on the internet
Life and Style
Douglas McMaster says the food industry is ‘traumatised’
food + drinkSilo in Brighton will have just six staple dishes on the menu every day, including one meat option, one fish, one vegan, and one 'wild card'
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Life and Style
Once a month, waistline watcher Suran steps into a 3D body scanner that maps his body shape and records measurements with pinpoint accuracy
techFrom heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

Otter man Gavin Maxwell's bitter legacy

The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

Joanna Rowsell: 'I wear my wig to look normal'

The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

Bill Granger's quick and delicious marinades

Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

Anyone but Argentina – why Brazilians don’t love their neighbours any more

The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

The Open 2014

Time again to ask that major question - can Lee Westwood win at last?