BP, Feinberg and $4 Billion Dollars
As a result of the Federal lawsuit against British Petroleum for violations of the Clean Water Act and Oil Pollution Act, estimates are the resulting fine for British Petroleum could be between $5 and $20 billion dollars, depending primarily upon whether BP is found grossly negligent in the explosion of the Deepwater Horizon. Though these numbers have been written about for months, according to an article by Rowena Mason in the Telegraph, by analysis of BP’s own accounts British Petroleum has budgeted only $4 billion dollars towards this settlement.
This could be perceived as quite a gamble, so what happens if they’re wrong?
Writes Mason: I pressed Bob Dudley repeatedly at BP’s annual results on whether the company had a “plan B” for raising more money, if it is found guilty of gross negligence or it has underplayed liabilities. However, he was absolutely adamant that it will not come to that.
British Petroleum has been reassuring its stockholders by saying they have already paid $10 billion in cleanup costs, that the $20 billion dollar escrow account should be more than enough (and expecting a large portion back) to pay Gulf Coast claims and companies like Anadarko and Mitsui will have to fork over a percentage of the damages upon completion of lawsuits.
That might be all well and good, but what British Petroleum appears to have failed to take into account are punitive damages the Feds could go after, other civil and criminal fines that various government agencies could hold BP liable for and last, but not least…Gulf Coast residents who opt to tell Feinberg what he can do with his no-sue clause and go after BP personally, including the families of the eleven people who died on the Deepwater Horizon.
This makes that $4 billion dollar estimation by BP’s own accounts look a little less safe.
It also puts the spotlight on Feinberg and the no-sue clause.
Ken Feinberg has repeatedly asserted that his payouts will be more generous than any court and he has used this claim in the furtherance of one of his stated main goals, to keep people out of court, to get them to accept final payments and keep them from filing lawsuits. By his own estimate, he feels he will be able to give BP back $14 billion dollars of the escrow money.
And this could be money BP sorely needs, and would seem by their own accounts, money they might even be depending on, which again raises the question, who is Feinberg in the Gulf to serve? From the account of many frustrated Gulf Coast residents it certainly isn’t them.
The final payment, Feinberg’s new quick payments, all come with the no-sue clause which would certainly appear to be designed to limit liability not only for British Petroleum, but 120 other companies, including Halliburton, Transocean and the makers of Corexit, Nalco.
This, while long-term health effects are unknown, while future damage to the seafood industry are unknown, while the long terms effects of the millions of gallons of Corexit dumped into the Gulf of Mexico remain unknown. Signing the no-sue clause leaves Gulf Coast residents on the hook for any problems that should come as a result.
And Feinberg also denied 220,000 claims, almost half, limiting BP’s liability even further. In doing so, Ken often blamed poor documentation for the denials, but to me, it would appear more of the blame should be associated with British Petroleum’s $4 billion dollars, any potential findings of “gross negligence,” and BP’s ace in the hole, Ken Feinberg.
Have a nice day.