What India can learn from BP’s record settlement with US govt

New York: The Indian government which has been a wishy-washy bystander to the Union Carbide toxic gas leak disaster should take a leaf out of America’s playbook. Under intense US pressure, British energy giant BP Plc., agreed on Thursday to accept criminal responsibility for the 2010 Deepwater Horizon oil spill disaster that killed 11 workers.

The company will pay $4.5 billion to settle criminal charges, the largest corporate criminal penalty in US history. Three former BP employees also face separate felony charges related to the spill. This is just the tip of the iceberg for BP: the oil producer still faces an even costlier battle with the US government over civil penalties for the pollution unleashed when its drilling rig exploded in the Gulf of Mexico and caused the worst offshore oil spill in US history.

Representative Ed Markey, a Massachusetts Democrat and the leading Congressional investigator into the BP oil spill which took place on 20 April 2010, described the criminal fines as being appropriate.

"People died, BP lied to Congress, and millions of barrels of oil poured into the Gulf," said Markey.

Fire boat response crews battle the blazing remnants of the offshore oil rig Deepwater Horizon, off Louisiana, in this file photograph. Reuters

"This steep cost to BP will provide the Gulf coast some of the funds needed to restore the region, and will hopefully deliver some comfort and closure to the families and businesses affected by the spill," he said.

BP’s $4.5 billion settlement is composed of $1.256 billion in criminal fines, $2.394 billion to be paid to the National Fish and Wildlife Foundation, and $350 million to be paid to the National Academy of Sciences.

“President Obama seized control of the US response to the worst-ever US environmental disaster from the day it happened,” said a New York activist for the International Campaign for Justice in Bhopal.

“The aggressive American approach towards London’s BP should be a model for fixing corporate responsibility even in the Bhopal case.”

In 2010, after the BP oil-rig accident and spill, the Obama administration hauled BP’s former boss Tony Hayward all the way from London to Washington to appear before the US house energy and commerce subcommittee.

In stark contrast, India has never been able to get former Union Carbide CEO Warren Anderson to face the music before Parliament or in an Indian court. India over the years has called for the extradition of Anderson, 90, to India to stand trial. Predictably, Anderson continues to live a charmed American suburban life in Long Island, symbolizing a travesty of justice.

Coming back to the BP case, note how after throwing Hayward to the wolves, President Obama hammered out a pact in a four-hour White House bargaining session with BP’s top management team. After meeting with Obama, BP agreed to "set aside" $20 billion in US assets as a guarantee that it would make good on the promised $20 billion in cash by 2013.

BP has now sold $35 billion worth of assets, including the recent $2.5 billion sale of its Texas City refinery to fund the costs of the spill.

According to the Wall Street Journal, BP has spent about $14 billion on spill response and cleanup and paid out more than $9 billion in claims to businesses and individuals. It also has entered into a settlement agreement with thousands of other businesses and individuals that will cost BP an estimated $7.8 billion, although that figure could climb.

Five years after the Bhopal gas leak and 20,000 deaths, the Rajiv Gandhi government got Union Carbide to pay $470 million in 1989 to compensate accident victims. The environmental damage caused by the leak in 1984 still hasn't been completely cleaned up.

The government is now stuck with the bill unless it can get something out of Dow Chemical Co. which bought Union Carbide for $7.3 billion in 2001. In recent years, the Indian government has sought more compensation for the victims, but Dow Chemical has denied responsibility for any additional payments, saying the Bhopal accident occurred 17 years before it acquired stock in Union Carbide in 2001.

Predictably, India’s campaign is going nowhere. Contrast this with how America has managed to get BP Oil to own full responsibility for the accident and pay record fines.

“All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region,” Bob Dudley, BP’s chief executive, said in a statement.

“We apologize for our role in the accident, and as today’s resolution with the US government further reflects, we have accepted responsibility for our actions.”

The Obama administration couldn’t help exulting on Thursday that it had BP Oil over a barrel.

“I hope this sends a clear message to those who would engage in this wanton misconduct that there will be a penalty paid,” Attorney General Eric H. Holder Jr. said during a news conference in New Orleans on Thursday.

Updated Date: Nov 16, 2012 10:51 AM

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