I should declare two connections before I start offering opinions about the latest US judgment against BP relating to the ‘Macondo’ disaster — the explosion on the Deepwater Horizon oil rig and subsequent spillage in the Gulf of Mexico in 2010. The first is that I’m occasionally invited to interview BP executives for its in-house magazine. That doesn’t mean I’m in their camp, but it does mean I have had the opportunity to discuss Macondo with, among others, chairman Carl-Henrik Svanberg, and I did not think he was merely parroting the corporate line when he told me, ‘We’re not going to let people take advantage of us, but we’re going to do what’s right and be a showcase of responsibility.’
In that spirit, BP has so far paid out $43 billion in clean-up costs and fines (including $4 billion in relation to its guilty plea for manslaughter of the 11 men who died in the explosion) as well as compensation claims — having unsuccessfully challenged a claims administrator who made awards to many inland businesses that did not appear to have been affected at all. Now Louisiana district judge Carl Barbier has found BP liable for ‘gross negligence’ under the Clean Water Act, which imposes penalties of $4,300 per barrel of oil spilled; simple ‘negligence’, which BP expected, would have cost $1,100 per barrel. Judge Barbier allocated two thirds of the blame to BP, and one third to the other companies cited, the Swiss-domiciled rig owner Transocean and the US contractor Halliburton. He will now determine how many barrels were spilled — and if he takes the US government’s estimate of 4.2 million (BP says 2.45 million) the total penalty will be $18 billion.
Barbier’s lengthy judgement focuses on dangerous decisions that were taken on Deepwater Horizon just before the explosion: no one is still arguing that this was what insurers call ‘an act of God’. Likewise, I have never heard it argued that BP tried to duck its responsibilities in the aftermath; it just tried to set legitimate limits on them. But many observers feel the company has been subjected to an extreme assault by the US judicial system and political establishment — and, as one report put it, treated ‘like a cash machine’ by claimants — with an undertone that was sparked by President Obama’s use of BP’s former name ‘British Petroleum’; the same undertone has been sensed, by some, in the extraditions of British businessmen such as the ‘Natwest Three’.
Now the UK government has weighed into the argument, with a deposition to the US Supreme Court asserting that the decision to uphold the controversial BP compensation claims by a lower appeal court, the Fifth Circuit in New Orleans, goes ‘far beyond anything that would seem to be appropriate under our shared common-law traditions or that anyone would reasonably expect’ and undermines the ‘trust necessary for international commerce’.
Most British readers (whether or not they have any connection to BP) will, I suspect, find that argument persuasive and feel that retribution has gone far enough. For a balancing American voice, however, I consulted a wise Louisiana law professor of my acquaintance. The response was trenchant: ‘The only evidence that BP was targeted seems to be that the company has been made to pay a massive amount of money for causing a massive amount of damage… The issue of anti-British bias is entirely invented. I can’t say this strongly enough: you have been misled. I have never read or heard a single word of anti-British sentiment in the US surrounding the oil spill. Whatever Obama’s intent in spelling out the BP acronym, it had no impact. Americans understand BP to be a multinational oil company, as powerful and stateless as any other. It is only the British press that seems to conflate an attack on BP as an attack on Britain. Quite a PR accomplishment on BP’s part!’
One thing’s for sure, British public opinion is not going to influence how much more BP has to pay out when its Macondo legal battles are finally settled at the highest level. We accuse US justice of being more money-driven than ours (read Natwest Three member David Bermingham’s book A Price to Pay for confirmation) but its Supreme Court is surely beyond that reproach. My second connection to this story, by the way, is that I once chaired a debate in the Fifth Circuit courthouse, to which the Barbier judgement will also now be referred. I sat on the bench occupied between 1957 and 1977 by Judge John Minor Wisdom, celebrated for his advancement of civil rights against the political tide of the time. The marbled dignity of the place certainly instilled a sense of the need to do what’s right; let’s hope BP finds judgely wisdom in the end.
The death at 96 of Sir Jasper Hollom, former deputy governor of the Bank of England, severs a last link with the era of Montagu Norman, who was the Bank’s strangely charismatic governor from 1920 to 1944. Joining as a teenage clerk in 1936, Hollom attended a talk by Norman on the financial affairs of the Huntley & Palmer biscuit company, and was ‘absolutely captivated’. Hollom himself was uncharismatic in the best sense: a self-effacing public servant whose guarded manner was attributed by colleagues to the strains he had suffered as a prisoner of war in Italy. He was described by his governor, Gordon Richardson, as ‘a rock’ long before that epithet was devalued by the Princess of Wales applying it to her butler, and by another Bank alumnus, Sir Jeremy Morse, as ‘decisive, firm and clear in a very mild-mannered way’.
On the 40th anniversary of the crash of December 1973, I wrote here of the quiet command with which Hollom steered the Bank’s subsequent ‘Lifeboat’ rescue of stricken banks, and I’m glad to add a vignette from Forrest Capie’s modern history of the Bank: ‘Hollom was always unruffled: losing his composure amounted to peering over his dark-rimmed glasses.’