Winnipeg Free Press - PRINT EDITION

BP to pay $4.5B for deadly Gulf of Mexico explosion

Three employees face charges

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NEW ORLEANS -- A day of reckoning arrived for BP on Thursday as the oil giant agreed to plead guilty to a raft of criminal charges and pay a record $4.5 billion in a settlement with the U.S. government over the deadly 2010 disaster in the Gulf of Mexico. Three BP employees were also charged, two of them with manslaughter.

The settlement and the indictments came 21/2 years after the drilling-rig explosion that killed 11 workers and set off the biggest offshore oil spill in U.S. history.

The settlement includes nearly $1.3 billion in fines -- the biggest criminal penalty in U.S. history -- along with payments to entities inside and outside government. As part of the deal, the BP will plead guilty to charges related to the deaths of the 11 workers and to lying to Congress.

"We believe this resolution is in the best interest of BP and its shareholders," said Carl-Henric Svanberg, BP chairman. "It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims."

Also, BP rig workers Robert Kaluza and Donald Vidrine were indicted on federal charges of manslaughter and involuntary manslaughters, accused of repeatedly disregarding abnormal high-pressure readings that should have been glaring indications of trouble just before the blowout.

In addition, David Rainey, BP's vice-president of exploration for the Gulf of Mexico at the time, was indicted on charges of obstruction of Congress and making false statements. Prosecutors said he withheld information from Congress that indicated the amount of oil spewing from the blown-out well was greater than he let on.

Rainey's lawyers said the former executive did "absolutely nothing wrong." Attorneys for the two rig workers accused the Justice Department of making scapegoats out of them.

"Bob was not an executive or high-level BP official. He was a dedicated rig worker who mourns his fallen co-workers every day," Kaluza attorneys Shaun Clarke and David Gerger said in a statement. "No one should take any satisfaction in this indictment of an innocent man. This is not justice."

The settlement, which is subject to approval by a federal judge, includes payments of nearly $2.4 billion to the National Fish and Wildlife Foundation, $350 million to the National Academy of Sciences and about $500 million to the Securities and Exchange Commission. The SEC accused BP of misleading investors by lowballing the amount of crude spewing from the well.

"This marks the largest single criminal fine and the largest total criminal resolution in the history of the United States," Attorney General Eric Holder said at a news conference in New Orleans. He said much of the money will be used to restore the Gulf.

Holder said the criminal investigation is ongoing. Before Thursday, the only person charged in the disaster was a former BP engineer who was arrested in April on obstruction of justice charges, accused of deleting text messages about the BP's response to the spill.

The settlement appears to be well within BP's means, considering the oil giant made a record $25.8 billion in profits last year. And it will be given five years to pay. But the company still faces huge additional claims.

The settlement does not cover the billions in civil penalties the U.S. government is seeking from BP under the Clean Water Act and other environmental laws. Nor does it cover billions in claims brought by states, businesses and individuals, including fishermen, restaurants and property owners.

A federal judge is weighing a separate, proposed $7.8-billion settlement between BP and more than 100,000 businesses and individuals.

BP will plead guilty to 11 felony counts of misconduct or neglect of a vessel's officers, one felony count of obstruction of Congress and one misdemeanour count each under the Migratory Bird Treaty Act and the Clean Water Act.

-- The Associated Press

Republished from the Winnipeg Free Press print edition November 16, 2012 A24

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