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London | Friday 21 September
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BP to pay $4.5 billion for Deep Water Horizon disaster


22/11/2012

 

BP announced that it would pay $4.5 billion in fines and other payments to the government and plead guilty to 14 criminal charges connected to the 2010 Deepwater horizon accident which resulted nearly 5 million barrels of crude being spilled into the Gulf—as well as the deaths of 11 crewmen aboard the doomed Deepwater Horizon rig. The total amounts to the largest single criminal fine in corporate history.

Included in the settlement will be $4 billion related to those criminal charges—which include lying to the public about the size of the spill—and $525 million to security regulators. BP will also plead guilty to 11 felony counts of misconduct or neglect related to the deaths of those 11 crewmen. And there will be real criminal charges against real individuals. The Justice Department also announced that it will file manslaughter charges against the two top BP company men aboard the Deepwater Horizon, as well as charges of obstruction of Congress against David Rainey, BP’s former VP of exploration, for making false statements about the rate that oil was leaking out of the blown well.

Robert Dudley, BP’s chief executive—who took over for the much-maligned Tony Heyward—tried to spin the settlement as a step forward for the company, which has seen its share price dragged down by legal uncertainty over the spill.

There are also potential fines from BP’s violation of the Clean Water Act, which charges oil companies for every barrel of crude spilled. How much BP could end up paying will depend on how negligent the company is found to have been during the spill. If BP is found to be simply negligent, the company would be charged $1,100 for every barrel spilled. If it is found grossly negligent, however, those fines rise to $4,300 per spilled barrel.

BP could also face a massive, multi-billion dollar penalty over a provision of the Oil Pollution Act, which would allow the Justice Department to charge the company ore than $30 billion to fix damages from the spill. A settlement of some sort seems more likely, but the Gulf Coast insists that BP should pay the full fine, and that the bulk of those funds should go to the Gulf states. (Legislation already exists that would send 80% of the fines implemented under the Clean Water Act to the Gulf states.) A settlement, however, might allow the federal government to control where that money ends up.

Edited extract from TIME

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