BP Settlement Doesn't End Brand's Woes
BP pled guilty yesterday to 14 criminal charges related to the oil rig explosion in the Gulf of Mexico in April 2010 that killed 11 workers and created the biggest environmental disaster in U.S. history. It will pay a record $4.5 billion in fines and penalties. Three of its workers also face criminal charges.
“This is unprecedented, both with regard to the amounts of money, the fact that a company has been criminally charged and that individuals have been charged as well,” according to U.S. Atty. Gen. Eric H. Holder Jr., who announced the settlement at a news conference in New Orleans. That’s not the end of the company’s legal woes, however, and the damage to it brand name is ongoing.
"The real fallout is not financial; the real fallout is trust," James S. O'Rourke, a professor at the University of Notre Dame tells the Los Angeles Times’ Ronald D. White in a story carrying the hed, “For BP, Restoring Its Image Is A Bigger Task Than Paying Billions.”
The expert in business communications and reputation management continues: "It will take some time for investors, employees, communities, business partners, regulators and others to answer a fairly direct question for themselves: Do we trust this management team to deliver on the promises they have made?"
Writing in the Houston Chronicle’s“Fuel Fix” blog, Loren Steffy points out “the disaster was first and foremost a human tragedy, and it’s important that the government didn’t let BP off the hook on this point.” Beyond the fines and penalties to be paid to various governmental entities, “what matters far more is that the company will now be branded as a felon,” Steffy writes. “The point of the case, though, can’t merely be to punish BP. BP has to fundamentally change its culture, beginning at the top of the organization.”
Another Houston Chronicle blog post, carrying the hed “Oil Spill Settlement Deal Rapped As Chump Change For BP,” rounds up reactions to the settle from across the spectrum, and they range from “slap on the wrist” to “brought down the hammer.”
John Young, president of Jefferson Parish, La., emphasized that the deal was “just the first major step” in a tragedy that took 11 lives during an interview with Jeffrey Brown on “PBS Newshour” last night. “I have been very -- we have been very dissatisfied with the company's behavior,” he went on to say. “BP runs commercials saying they're going to make it right or they have made it right, but they have not done that. We continue to fight with BP.”
“Thirteen of the 14 criminal charges relate to the accident itself and are based on the negligent misinterpretation of the negative pressure test conducted on board the Deepwater Horizon,” according to Harry R. Weber’s lede story in the Houston Chronicle. They include 11 felony counts of “Misconduct or Neglect of Ships Officers,” according to the Wall Street Journal’s Joe Palazzolo, who has put together a “quick guide” to the rap sheet explaining such details as why BP also is charged with a misdemeanor violation of the Migratory Bird Treaty Act.
Two of the individuals charged were “well-site leaders” aboard the rig. The indictment claims their “negligent conduct … proximately caused the death of these 11 men.” The third is a former BP vp in charge of exploration in the Gulf of Mexico who was charged with obstruction of Congress and making false statements to law enforcement officials.
Observers point to the indictment of the three BP employees as a positive sign that the government is serving notice that it will hold individuals accountable for corporate criminal conduct -- something that has been notably lacking in, for example, settlements with pharmaceutical companies over marketing misdeeds.
John Levy, a lawyer with experience in catastrophic accident cases, tells the New York Times’ Clifford Krauss that the Justice Department is “clearly sending a message to all corporate executives that they have to be super-diligent, and I think it’s a growing trend.” He adds, “You can’t put a corporation in jail.”
Krauss points out that “prosecuting officers and managers, and not just their companies, in industrial accidents … was more common in the 1980s and 1990s.”
The attorney for one of the well-site leaders tells the Chronicle’s Weber, however, that “the government is trying to sell the fiction that the deaths of 11 men and the worst environmental disaster in our nation’s history was caused because two guys working on a rig misinterpreted a test. It is beyond ludicrous.”
In addition to the criminal trials of the three men, BP still faces actions for civil penalties and damages from federal, state and local authorities in a case scheduled to go to trial next February, the Financial Times reports. One thing that the forthcoming proceedings guarantee, certainly to BP’s chagrin, is that narratives on all sides of the issue have yet to run their course.