BP to pay largest criminal penalty in history for Gulf spill
NEW ORLEANS (AP) - Two men who worked for BP during the 2010 Gulf oil spill disaster have been charged with manslaughter and a third with lying to federal investigators, according to indictments made public Thursday, hours after BP announced it was paying $4.5 billion in a settlement with the U.S. government over the disaster.
A federal indictment unsealed in New Orleans claims BP well site leaders Robert Kaluza and Donald Vidrine acted negligently in their supervision of key safety tests performed on the Deepwater Horizon drilling rig before the explosion killed 11 workers in April 2010. The indictment says Kaluza and Vidrine failed to phone engineers onshore to alert them of problems in the drilling operation.
Another indictment charges David Rainey, who was BP's vice president of exploration for the Gulf of Mexico, on counts of obstruction of Congress and false statements. The indictment claims the former executive lied to federal investigators when they asked him how he calculated a flow rate estimate for BP's blown-out well in the days after the disaster.
Earlier in the day, BP PLC said it would plead guilty to criminal charges related to the deaths of 11 workers and lying to Congress.
"This marks the largest single criminal fine and the largest total criminal resolution in the history of the United States," U.S. Attorney General Eric Holder said at a news conference in New Orleans.
Holder said the settlement and indictments aren't the end of federal authorities' efforts and that the criminal investigation is continuing. Holder says much of the money BP has agreed to pay will be used to restore the environment in the Gulf.
The day of reckoning comes more than two years after the nation's worst offshore oil spill. The settlement includes nearly $1.3 billion in criminal fines - the biggest criminal penalty in U.S. history - along with payments to certain government entities.
"We believe this resolution is in the best interest of BP and its shareholders," said Carl-Henric Svanberg, BP chairman. "It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims."
The settlement, which is subject to approval by a federal judge, includes payments of nearly $2.4 billion to the National Fish and Wildlife Foundation, $350 million to the National Academy of Sciences and about $500 million to the Securities and Exchange Commission. The SEC accused BP of misleading investors by lowballing the amount of crude spewing from the ruptured well.
London-based BP said in a statement that the settlement would not cover any civil penalties the U.S. government might seek under the Clean Water Act and other laws. Nor does it cover billions of dollars in claims brought by states, businesses and individuals, including fishermen, restaurants and property owners.
Holder also said a civil lawsuit will go ahead in February seeking billions more in civil penalties.
A federal judge in New Orleans is weighing a separate, proposed $7.8 billion settlement between BP and more than 100,000 businesses and individuals who say they were harmed by the spill.
BP will plead guilty to 11 felony counts of misconduct or neglect of a ship's officers, one felony count of obstruction of Congress and one misdemeanor count each under the Migratory Bird Treaty Act and the Clean Water Act. The workers' deaths were prosecuted under a provision of the Seaman's Manslaughter Act. The obstruction charge is for lying to Congress about how much oil was spilling.
The penalty will be paid over five years. BP made a profit of $5.5 billion in the most recent quarter. The largest previous corporate criminal penalty assessed by the U.S. Justice Department was a $1.2 billion fine imposed on drug maker Pfizer in 2009.
Before Thursday, the only person charged in the disaster was a former BP engineer who was arrested in April on obstruction of justice charges. He was accused of deleting text messages about the company's response to the spill.
A federal indictment unsealed in New Orleans claims BP well site leaders Robert Kaluza and Donald Vidrine acted negligently in their supervision of key safety tests performed on the Deepwater Horizon drilling rig before the explosion killed 11 workers in April 2010. The indictment says Kaluza and Vidrine failed to phone engineers onshore to alert them of problems in the drilling operation.
Another indictment charges David Rainey, who was BP's vice president of exploration for the Gulf of Mexico, on counts of obstruction of Congress and false statements. The indictment claims the former executive lied to federal investigators when they asked him how he calculated a flow rate estimate for BP's blown-out well in the days after the disaster.
Earlier in the day, BP PLC said it would plead guilty to criminal charges related to the deaths of 11 workers and lying to Congress.
"This marks the largest single criminal fine and the largest total criminal resolution in the history of the United States," U.S. Attorney General Eric Holder said at a news conference in New Orleans.
Holder said the settlement and indictments aren't the end of federal authorities' efforts and that the criminal investigation is continuing. Holder says much of the money BP has agreed to pay will be used to restore the environment in the Gulf.
The day of reckoning comes more than two years after the nation's worst offshore oil spill. The settlement includes nearly $1.3 billion in criminal fines - the biggest criminal penalty in U.S. history - along with payments to certain government entities.
"We believe this resolution is in the best interest of BP and its shareholders," said Carl-Henric Svanberg, BP chairman. "It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims."
The settlement, which is subject to approval by a federal judge, includes payments of nearly $2.4 billion to the National Fish and Wildlife Foundation, $350 million to the National Academy of Sciences and about $500 million to the Securities and Exchange Commission. The SEC accused BP of misleading investors by lowballing the amount of crude spewing from the ruptured well.
London-based BP said in a statement that the settlement would not cover any civil penalties the U.S. government might seek under the Clean Water Act and other laws. Nor does it cover billions of dollars in claims brought by states, businesses and individuals, including fishermen, restaurants and property owners.
Holder also said a civil lawsuit will go ahead in February seeking billions more in civil penalties.
A federal judge in New Orleans is weighing a separate, proposed $7.8 billion settlement between BP and more than 100,000 businesses and individuals who say they were harmed by the spill.
BP will plead guilty to 11 felony counts of misconduct or neglect of a ship's officers, one felony count of obstruction of Congress and one misdemeanor count each under the Migratory Bird Treaty Act and the Clean Water Act. The workers' deaths were prosecuted under a provision of the Seaman's Manslaughter Act. The obstruction charge is for lying to Congress about how much oil was spilling.
The penalty will be paid over five years. BP made a profit of $5.5 billion in the most recent quarter. The largest previous corporate criminal penalty assessed by the U.S. Justice Department was a $1.2 billion fine imposed on drug maker Pfizer in 2009.
Before Thursday, the only person charged in the disaster was a former BP engineer who was arrested in April on obstruction of justice charges. He was accused of deleting text messages about the company's response to the spill.
Here's a prediction: A civil suit will be filed against BP by the people in the gulf coast. BP will told by the court to pay. BP will appeal, and appeal, and appeal, and appeal for several decades until it goes to the supreme court. That court will cave and give the descendants of the original filers of the lawsuit peanuts.
 @Black31 No what they'll do it like Chevron did to Ecuador. They'll get a huge judgment against them and then they will get a court in another country void the judgment and get off scott free. Just capitalism at work. Why pay a judgment when you can just pay another judge to void it.
 @Black31 Isn't that what happened with the Exon Valdez? Are you saying history repeats?
It is not enough. The only fair settlement to the American public would a federally mandate price reduction at the pump of 20¢/gallon until 2020.
To all you people out there that are saying " GOOD" they deserve every thing that they get !!!! Â Â Ever think about where the money comes from that they use to pay these huge fines ?? Â May be something to think about.
@lmdk2Â Fines would be paid from BP, who else?
 @grayfox And where does BPs money come from. Check wallet, cause that's where they get the cash. It's called "pain at the pump".
@lmdk2 @grayfox If gas prices had a direct coorelation with oil companies revenues, we would be paying alot less.   Oil companies have seen increases in their yearly revenue but oil prices continue to rise.Â
Now speed up the decline in gas prices to offset the numerous increases that we've all endured to cover that one!
A small cost to BP (if they even end up paying anything close to this) Â for doing business as usual w/ no sincere accountability. Â Â Huge costs to the families of those who lost their lives, Â and to the environment. Â Â The only winners here are the lawyers and BP.
Oh the poor corporation! Why this is just abuse I tell 'ya - abuse!
I'll save time and write the followup article for this, to appear in 2018: "BP has yet to pay any of the massive fine handed down in 2012 as they continue to appeal the amount of the fine in federal court. Legal analysts predict that BP will pay little, if any, of the originally imposed amount. Meanwhile, BP posted another record quarter in profits."
Just like Exxon the little man will get screwed.
 @F4I They already did.
"The settlement includes payments of nearly $2.4 billion to the National Fish and Wildlife Foundation, $350 million to the National Academy of Sciences and about $500 million to the Securities and Exchange Commission."
The money just got pissed away. About 95% of it should go to the people and the states effected. The rest should go to pay for the DOJ work. Its a nice start but there's going to be a lot more. I would suspect by the time this is over in about 15 years BP will have anteed up $20 billion. Probably should be more.
 @Blindman  @F4I This is a criminal case....not civil, so the $$ should go to the things it is going to. The people effected are covered by any civil claim.
 @aintno1special  @Blindman  @F4I The only agency directly effected by this damage is the National Fish and Wildlife Foundation. The others have no reason to involved in the settlement. get tired of the feds scamming all the money and the people directly affected get very little.
More than likely the lawyers on both sides will be making money by the truckload. The average Joe that lost everything to the spill will be lucky to get a dollar. It is all about how much legal BS you can produce reflects on how big your settlement will be.
 @Charl317 In a typical case you'd be correct, but in this case (as I read the story) the US Justice department sued BP...so they have already been paid regardless. BP's attorneys' would be paid by BP and not a percentage of the settlement. Plus this is the criminal side of the suit. This does not have anything to do with the civil cases that have already been settled and are still pending.
The oil spill was bad, but think of the major side-benefit it provided America: electric cars.
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You see, many of the patents that cover current battery and electrical system use that are utilized by current and soon to come EVs (Volt, Leaf, Tesla, etc.) are owned by Chevron, BP, etc. Even the ones that aren't would still normally cause "tactical lawsuits" from the oil giants to suppress them. Don't believe it? Go check out a DVD from the library called "who killed the electric car?" and learn about it.
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But because of the oil spill, Nissan, GM and others were able to go ahead without fear of lawsuit because if the oil companies HAD sued to block the EVs, the public outrage would have been so huge that the next time the oil companies tried to lobby congress to renew their energy patents for the umpteenth time, congress would have refused.Â
I think we have to wait until BP actually PAYS the money to believe these headlines.... like so many previous 'fines', these are often challenged and some judge somewhere in our 'justice' system dismisses them completely as so often happens after the media makes it appear the responsible corporation is actually being penalized for their negligence.... another little deception game that goes on.
Without specific numbers on how big the fine is (the total is not in the article as of 8am this morning...), this article is useless...
 @mhungry $4.5 Billion according to www.money.com
AND, they should! No wonder they have been spending millions of $$$ in advertising in giving themselves accolades for supposedly helping in the recovery of hurricane Katrina. Talk about baffling us with BS, while continuing to rake in billions in corporate profits.