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January 30, 2013

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Court confirms record $4bn fine for BP over Deepwater Horizon

In what is the largest criminal financial resolution in US history, BP Exploration and Production Inc. has been sentenced to pay $4 billion (£2.5bn) in criminal fines relating to its conduct leading up to and after the 2010 Deepwater Horizon oil disaster, in which 11 workers died.

The US District Court for the Eastern District of Louisiana accepted the company’s plea of guilty, in relation to 14 criminal counts – including 11 counts of manslaughter, one count of obstructing Congress, and two breaches of environmental legislation – and was sentenced yesterday (29 January). It follows an agreement BP reached with the Department of Justice (DOJ) in November last year.

That same month, a federal grand jury returned a 23-count indictment charging the two highest-ranking supervisors onboard the Deepwater Horizon with manslaughter and violation of the Clean Water Act. A separate indictment was also laid against former senior BP executive, David Rainey, for obstructing a congressional investigation and making false statements to law-enforcement officials.

The Justice Department stressed that the charges and allegations pending against these individuals are merely accusations at this stage. Nevertheless, in its guilty plea, BP admitted that the supervisors negligently caused the deaths of 11 men and the resulting oil spill. The company accepted that the two supervisors observed clear indications that the Macondo well in the Gulf of Mexico was not secure and that oil and gas were flowing into the well, but chose not to take appropriate steps to prevent a blowout. 

BP also admitted that the company, through a senior executive, misled an inquiry by the US Congress into the amount of oil being discharged into the Gulf while the spill was ongoing.

District judge Sarah Vance noted that the agreement provides just punishment and significant deterrence, requiring detailed drilling safeguards, monitors and other strict conditions of probation. The company is required to retain a process-safety and risk-management monitor and an independent auditor, who will oversee its process safety, risk management and drilling equipment maintenance in relation to deepwater drilling in the Gulf of Mexico.

Commenting on the resolution, Assistant Attorney-General Lanny Breuer said: “Through the tenacious work of the [Deepwater Horizon] Task Force, BP has received just punishment for its crimes leading up to and following the explosion.

“The Justice Department will keep a watchful eye on BP’s compliance with the plea agreement’s terms, including the requirements of full cooperation with the department’s ongoing criminal investigation, implementation of enhanced safety protocols, and adherence to the recommendations of two newly-installed monitors. Should BP fail to comply, we will act swiftly and firmly.”

At the court hearing, Luke Keller, a vice-president of BP America Inc., reiterated the company’s deep regret for its role in the explosion.

He said: “We – and by that, I mean the men and the women of the management of BP, its Board of directors, and its many employees – are deeply sorry for the tragic loss of the 11 men who died and the others who were injured that day.

“Our guilty plea makes clear BP understands and acknowledges its role in that tragedy, and we apologise – BP apologises – to all those injured and especially to the families of the lost loved ones. BP is also sorry for the harm to the environment that resulted from the spill, and we apologise to the individuals and communities who were injured.”

Separate civil action relating to the disaster is scheduled to begin next month.

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