BP sued in US over cut payout

AMERICAN shareholders are taking legal action against British Petroleum for halving its dividend, following the oil company's announcement of 11,500 job losses and pounds 717m interim losses on Thursday.

The shareholders are within the Max Fecht, Bruce Doniger and John Steer profit-sharing plan, according to Bloomberg news agency. BP had not received the papers yesterday.

The investors allege that BP put out false and misleading documents leading them to believe the dividend would not change. They cite an announcement of 25 June which said there would be no change of strategy following the departure of Bob Horton as chairman.

The statement was designed to reassure employees and investors in the wake of the boardroom bust-up, which reflected unhappiness over Mr Horton's style.

The US suit, filed in Manhattan Central Court, names Lord Ashburton and David Simon, who took over as chairman and chief executive on Mr Horton's departure.

It alleges that BP either knew or should have known on 25 June that it was going to cut the dividend.

Mr Horton was felt in the City to have been attached to maintaining the dividend, so when he left British investors mostly resigned themselves to a reduced payout. But American investors were said to be more confident that it would be maintained.

The action is a class action by a group of shareholders. Litigation of this type is rare in Britain but common in the US.

BP's shares fell 11p to 185.5p yesterday, making for a two-day fall of 21p. They were 304p earlier in the year.

The company's loss was stated after a pounds 1bn exceptional charge, including pounds 472m for redundancy payments and pounds 544m for a fall in the value of some of BP's plants.