Obama urged to 'punish' BP with $100bn action
Sunday 13 June 2010
Senior US politicians are pushing President Barack Obama to seek $100bn in damages against BP for the Gulf of Mexico oil spill in an attempt to kill the company.
If such an action were to be taken and won, the Ftse 100 flagbearer would almost certainly collapse into bankruptcy. Many prominent US figures would welcome this as suitable punishment for the environmental devastation off the Louisiana coast.
The news will heap further pressure on an embattled board, which meets tomorrow to decide whether to suspend dividend payments, vital to UK pension funds, as up to £1.8bn goes out to investors each quarter.
On Wednesday, BP bosses will meet with Mr Obama, who has called on BP to suspend dividend payments while it struggles to keep the oil spill under control. The clean-up costs are already approaching £1bn, less than two months after the explosion that killed 11 people. Most analysts have forecast that the disaster could cost BP around $20bn as a worst-case scenario, though Credit Suisse has suggested as much as $37bn.
It is understood that a group of senior congressmen from Mr Obama's Democratic Party are pushing the President to sue for up to $100bn. These would include punitive, as well as physical damages, effectively representing a punishment to the company and a broader industry deterrent to breaching safety regulations – even though it is not yet clear that BP failed to meet its responsibilities.
The congressmen are understood to have taken their lead from a 1987 case involving Texaco, which was forced into bankruptcy after a $10.53bn damages claim was awarded against the company, even though that amount was later severely cut. Rival Pennzoil made the claim, believing it had a binding agreement to buy Getty Oil before discovering that Texaco had beaten the company to the prize.
A source close to the politicians said: "There are US congressmen who understand the heartbeat of the Obama administration that are looking at [Texaco]. There is a real chance – 30 per cent, perhaps a bit more – that BP cannot survive."
If the argument sways Mr Obama, it will devastate leading British figures who have tried to defend BP. On Friday, Richard Lambert, the director-general of the CBI, argued that BP "is of great importance to both the US and UK economies" and that the company is committed "to meeting all legitimate claims".
A BP spokesman said: "Damages would be down to US authorities. BP wouldn't want to speculate at this stage."
BP's share price has been battered since the spill started, losing nearly 10 per cent just last week to close at 391.9p.
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