October 26, 2020

BP to Admit Crimes and Pay $4.5 Billion in Gulf Settlement

The payments include $4 billion related to the criminal charges and $525 million to securities regulators, the company said in a statement. As part of the settlement, BP agreed to plead guilty to 11 felony counts of misconduct or neglect related to the deaths of 11 people in the Deepwater Horizon accident in April 2010, which released millions of barrels of oil into the gulf over the course of the next few months.

The Justice Department also filed criminal charges against three BP employees on Thursday.

The government charged the top BP officers aboard the drilling rig, Robert Kaluza and Donald Vidrine, with manslaughter in connection with each of the men who died, alleging that they were negligent in supervising tests before the well blowout and explosion that destroyed the rig.

Prosecutors also charged BP’s former vice president for exploration in the Gulf of Mexico, David Rainey, with obstruction of Congress and making false statements about the rate at which oil was spilling from the well.

“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,” Robert Dudley, BP’s chief executive, said in a statement. “From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf. 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.”

While the settlement dispels one dark cloud that has hovered over BP since the spill, others remain. BP is still subject to other claims, including billions of dollars in federal civil claims and claims for damages to natural resources.

In particular, BP noted that the settlement does not resolve what is potentially the largest penalty related to the spill: fines under the Clean Water Act. The potential fine for the spill under the act is $1,100 to $4,300 a barrel spilled. That means the fine could be as much as $21 billion.

In addition to the 11 felonies related to the men killed in the accident, the company agreed to plead guilty to one misdemeanor violation of the Clean Water Act and one misdemeanor violation of the Migratory Bird Treaty Act.

BP also acknowledged that it had provided inaccurate information to the public early on about the rate at which oil was gushing from the well.

The company agreed to plead guilty to one felony count of obstruction of Congress over its statements on that issue. It also agreed to pay a civil penalty of $525 million to the Securities and Exchange Commission, spread over three years, to resolve the agency’s claims that the company made misleading filings to investors about the flow rate.

As part of its resolution of criminal claims with the Department of Justice, BP will pay about $4 billion, spread over five years. That amount includes $1.256 billion in criminal fines, $2.394 billion to the National Fish Wildlife Foundation and $350 million to the National Academy of Sciences.

The criminal fine is one of the largest ever levied by the United States against a corporation, roughly equal to the $1.3 billion fine paid by Pfizer in 2009 for illegally marketing an arthritis drug. BP has repeatedly said it would like to reach a settlement with all claimants if the terms were reasonable. The unresolved issue of the claims has been weighing on BP’s share price.

On Thursday, BP’s American shares were trading at about $40 at midday, roughly unchanged on the day and down about 34 percent since the accident.

“It’s one less thing to be negative on BP about and a minor step in the right direction toward the rehabilitation of BP,” Iain Armstrong, an equity analyst at the investment manager Brewin Dolphin, in London, said. But he added that there were still concerns about remaining claims and that “lawyers might yet have their day at court.”

As part of Thursday’s agreements, BP said it was increasing its reserve for all costs and claims related to the spill to about $42 billion.

Stanley Reed reported from London and Clifford Krauss from Houston. Julia Werdigier contributed reporting from London, John Schwartz from New York and Charlie Savage from Washington.

Article source: http://www.nytimes.com/2012/11/16/business/global/16iht-bp16.html?partner=rss&emc=rss

Consumer Spending Rises, But Inflation Picks Up, too

WASHINGTON (Reuters) — Consumers increased spending for a ninth consecutive month in March as they stretched to cover higher costs for food and gasoline, with inflation posting its biggest year-on-year gain in 10 months.

Despite the rising cost of living, Americans grew a bit more optimistic about the economy this month and even lowered their expectations for inflation over the medium to long term, another report showed Friday.

Consumer spending, which drives 70 percent of the economy, rose 0.6 percent last month after advancing 0.9 percent in February, the Commerce Department said. But prices rose 0.4 percent month on month, leaving spending up just 0.2 percent after adjusting for inflation.

While commodity prices have reduced purchasing power, consumers entered the second quarter with a slightly upbeat outlook.

The Thomson Reuters/University of Michigan’s consumer sentiment index rose to 69.8, from 67.5 in March. The survey’s one-year inflation expectation was unchanged at 4.6 percent, but the five-to-10-year inflation outlook slipped to 2.9 percent, from 3.2 percent in March.

A third report showed factory activity in the Midwest slowed, although it remained at a strong level. The data did little to shake economists’ convictions that growth would pick up in the current quarter.

Economists said tepid demand in the first quarter had left businesses with less of a need to rebuild inventories.

“The need for new orders and production to beef up inventories is greatly reduced and as a consequence, we are seeing the factory sector slow down somewhat,” said Richard DeKaser, an economist at the Parthenon Group.

“Manufacturing is coming off a sprint earlier this year and still moving ahead at a healthy clip.”

The spending report showed consumer prices up 1.8 percent from a year ago — the largest 12-month gain since last May.

An index of core prices, which strips out food and energy costs, rose just 0.1 percent from February, keeping its year-on-year gain at 0.9 percent.

A separate report from the Labor Department showed wages grew at a 0.4 percent rate in the first quarter, and were up only 1.6 percent from a year ago.

Article source: http://feeds.nytimes.com/click.phdo?i=b6676ab3c4ef99e68d3525f8a89e9cc6