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Gulf oil spill: a BP shareholder revolt?

May 10, 2010 |  1:22 pm

Spill
Oil company BP is under siege from lawsuits by family members of rig workers killed in the explosion of the Deepwater Horizon rig, and by fishermen, property owners and small businesses alleging damages from the resulting huge gush of oil that has begun to foul the Gulf of Mexico coastline.

Now comes a new threat to the oil giant: a likely wave of legal challenges from its own shareholders.

A lawsuit filed in federal court in New Orleans on Friday accuses Anthony B. Hayward, chief executive of BP, and other officials of the London-based company of cutting costs at the expense of safety and lobbying government officials to slash safety regulations. BP acknowledged Monday that it has already spent $350 million on spill response and payouts, and the new lawsuit charges that the accident will ultimately cost the company and its shareholders billions of dollars.

The suit, by Pennsylvania resident Katherine Firpo, is a "shareholder derivative" suit, meaning that it was filed by a shareholder on behalf of the company. In addition to seeking monetary damages from BP executives, it asks the court to order changes in the company's corporate governance. After a similar 2006 lawsuit, settled out of court, the company made "purely cosmetic changes at the corporate level," Firpo's complaint charges.

The Oil Price Information Service, an energy news agency, predicted Monday that BP may face a growing number of class-action suits from shareholders, as well as lawsuits by small businesses and fines imposed by the Environmental Protection Agency. A Los Angeles Times investigation, published Sunday, found that as oil companies have pushed into ever deeper waters in the last decade, government watchdogs have failed to plan for new hazards.

"The BP defendants have a long history of ignoring crucial safety issues related to the operation of offshore submersible rigs such as the Deepwater Horizon rig, including problems with the crucial blowout preventer devices that so spectacularly failed during this disaster," the lawsuit alleged. It also named the rig's owner-operator, Transocean Ltd; Cameron International Corp., which manufactured the blowout preventer; and Halliburton Energy Services Inc., which was responsible for cementing the well to prevent leaks.

Spokespeople for BP, Transocean and Cameron declined comment Monday, while Halliburton spokeswoman Teresa Wong told the Associated Press that "it is premature and irresponsible to speculate on any specific causal issues" and declined further comment.

An estimated 3.5 million gallons of oil has spewed into the Gulf since the April 20 explosion. At that pace, the spill would surpass the 11 million gallons that escaped from the Exxon Valdez tanker by Father's Day.

-- Margot Roosevelt

The Associated Press contributed to this report.

Photo: Members of the Louisiana National Guard position sandbags to prevent oil from entering the wetlands of Grand Isle and Port Fourchon. Credit: Carolyn Cole / Los Angeles Times

Photos: Oil spill spreads in the Gulf of Mexico

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