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Updated Friday, November 16, 2012 at 09:43 AM

BP agrees to pay $4.5B; three employees charged

By Bettina Boxall and Ronald D. White
Los Angeles Times

LOS ANGELES — Laying the blame for the deaths of 11 rig workers in the Deepwater Horizon explosion and Gulf of Mexico oil spill on BP, federal prosecutors announced Thursday that two BP supervisors have been charged with manslaughter and the company will pay a $4 billion criminal fine, the largest in U.S. history.

"Those deaths were in fact unnecessary," U.S. Attorney General Eric Holder said in New Orleans, adding that the federal investigation continued into the 2010 Deepwater disaster and the nation's biggest offshore oil spill. "Our work is far from over."

The charges, contained in a criminal settlement with BP and an indictment handed down by a federal grand jury, paint a picture of a corporation that placed "profit over prudence," said Assistant Attorney General Lanny Breuer.

Not only did the BP supervisors on board the rig the night of the explosion fail to take steps necessary to prevent the blowout when they realized they were losing control of the deep-sea well, company executive David Rainey later lied to Congress about the size and severity of the spill, prosecutors said.

"As part of its plea agreement, BP has admitted that, through Rainey, it withheld documents and provided false and misleading information in response to the U.S. House of Representatives' request for flow-rate information," the Department of Justice said in a news release.

The explosion on the night April 20, 2010, unleashed a gush of oil from broken equipment on the seabed that continued for 87 days off the Louisiana coast. More than 200 million gallons of oil were spilled, shutting down commercial fisheries, destroying the summer beach season along part of the coast and fouling coastal wetlands.

Still to be settled are federal civil claims for the spill's environmental damage that could cost BP billions of dollars more.

Also, a federal judge in New Orleans has not yet approved an estimated $7.8 billion settlement with more than 120,000 plaintiffs in a civil suit by fishermen, beachside property owners and business owners, among others.

As part of BP's settlement of criminal charges, prosecutors said BP had agreed to plead guilty to felony manslaughter, environmental crimes and obstruction of Congress, and would pay the record $4 billion in criminal fines and penalties.

About $2.4 billion of that will go to environmental restoration in the Gulf. The company will pay an additional $525 million civil penalty to the Securities and Exchange Commission (SEC) for misrepresenting the size of the spill in SEC filings.

Robert Kaluza, 62, of Henderson, Nev., and Donald J. Vidrine, 65, of Lafayette, La. — the highest-ranking BP supervisors onboard that night — were charged with 11 felony counts of seaman's manslaughter, 11 felony counts of involuntary manslaughter and one violation of the Clean Water Act in a federal indictment unsealed Thursday.

Rainey, 58, of Houston, a former BP executive who helped oversee the spill response, was charged with obstruction of Congress and making false statements to law-enforcement officials.

At the height of the spill, then-BP President Tony Hayward was forced to step down, in part for commenting that "I'd like my life back" during the frenetic cleanup period when oil was washing ashore in Louisiana and many livelihoods were in ruins.

In a statement, Bob Dudley, BP's group chief executive, said the company deeply regretted the loss of life.

"From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf," he said in a statement. "We apologize for our role in the accident, and as today's resolution with the U.S. government further reflects, we have accepted responsibility for our actions."

Chris Jones, older brother of Gordon Jones, who died in the fiery explosion, was not satisfied with BP's mea culpa.

"The fact that BP is finally admitting that it is responsible is not shocking; the amount of money it is paying in fines is not shocking," said Jones, a litigation attorney in Baton Rouge, La. "What is shocking is that it has been three years since this happened and not once has a representative of BP said to us: 'I'm sorry for your loss.' It's par for the course."

"BP is simply going to sign a check for billions of dollars, then continue to do business in U.S. waters and make money for its shareholders," he said. "But Gordon wasn't able to live a day after April 2010."

British BP can easily absorb the $4.5 billion settlement, analysts said.

In the third quarter alone, BP raked in sales of more than $93 billion and had a net profit of more than $5.2 billion. That shows that "BP has made the most remarkable comeback from the most costly industrial accident in history," Fadel Gheit, senior energy analyst at Oppenheimer & Co., said in a note to investors.

In addition, BP has raised $35 billion from asset sales, including a $2.5 billion proposal to sell its Carson, Calif., refinery and other assets.

BP's recent business performance has been so strong that some critics said the fine isn't punishment enough.

"This settlement is pathetic," said Tyson Slocum, director of the energy program at Public Citizen, a consumer advocacy group.

"The point of the criminal-justice system is twofold: to punish and to deter. This does neither. It is a weak-tea punishment that provides zero deterrence to BP or other companies."

What remains unclear is how the settlement will affect BP's business in the U.S., particularly in the Gulf of Mexico, where BP remains active. The company has seven rigs drilling in the Gulf and has plans to add an eighth and possibly a ninth next year.

BP appeared to acknowledge the uncertainty in a statement: "Under U.S. law, companies convicted of certain criminal acts can be debarred from contracting with the federal government. BP has not been advised of the intention of any federal agency to suspend or debar the company in connection with this plea agreement. BP will continue to work cooperatively with the debarment authority."


GERALD HERBERT / AP
This Wednesday, April 21, 2010 photo shows oil in the Gulf of Mexico, more than 50 miles southeast of Venice on Louisiana's tip, as a large plume of smoke rises from fires on BP's Deepwater Horizon offshore oil rig.





David Rainey charged with obstruction of Congress.




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