BP pays $373m to end investigations in US
Friday 26 October 2007
BP added a $20m (£9.8m) pay-out over an Alaskan oilspill to a wide-ranging settlement of criminal and civil charges that have dogged the company for the past two and a half years.
The settlement on last year's Prudhoe Bay oil leak – the worst onshore spill in Alaskan history – took to $373m the total BP is paying to end federal government investigations into the safety problems and ethical lapses in the US.
Fines of $303m for manipulating the propane market in 2004 and $50m for the environmental fall-out of the fatal refinery blast in Texas City in 2005 were also formally announced by the US Department of Justice yesterday. Four propane traders were indicted on fraud charges.
"The actions we're responding to today reflect there were very serious problems at that company," said acting attorney general Peter Keisler. "These agreements are an admission that, in these instances, our operations failed to meet our own standards and the requirements of the law. For that, we apologise," said the BP America chairman, Bob Malone.
Corroding pipes led to a 200,000-gallon spill that polluted the wildlife-rich Alaskan tundra and a frozen lake, and later forced BP to temporarily shut down its entire Prudhoe Bay oilfield. The $20m includes a criminal fine and compensation to the National Fish and Wildlife Foundation.
The worst blow to BP's reputation in the US came when a refinery explosion killed 15 employees and injured more than 180 others, and a government report said cost cutting and a poor safety culture were at the root cause.
But yesterday's financial penalties were heaviest due to its manipulation of the energy markets, when traders cornered the propane market and drove up prices.
Walt Lukken, acting chairman of the Commodity Futures Trading Commission, said BP's settlement includes $53m in compensation to victims and $25m into a consumer fraud fund. "BP engaged in a massive manipulation," he said.
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