News Column

BP faces Deepwater Horizon lawsuit by investors including London councils

July 5, 2014

Terry Macalister, theguardian.com



Pension funds from London borough councils and even Shell are among a new group of shareholders suing BP in Texas over the Deepwater Horizon accident.

The lawsuit, which could potentially be extremely costly for the oil group, follows recent US court rulings opening the way to challenges from those who bought financial stakes in BP outside the country.

The US courts are famously generous in their financial awards compared with their British counterparts. In the past only investors who bought their BP stakes on the New York stock exchange or other US markets could file for compensation payments.

A class action specialist, Pomerantz Law, has rounded up 32 major investors seeking financial compensation for the losses they incurred on their shares. The New York-based law firm is taking the case on a no-win, no-fee basis and is hoping that other European investors will join the suit.

The royal borough of Kensington and Chelsea plus City of Westminster council, Cumbria county council and Shell Pension Trust have all put in for claims.

A BP spokesman in London said on Friday night: "All of the plaintiffs' securities claims relating to the Deepwater Horizon accident are meritless and we will continue to vigorously dispute them."

The Deepwater Horizon offshore rig blew up and sank while it was drilling for oil in the Gulf of Mexico in April 2010.

Miles of beaches on the southern coast of the US were coated in oil causing widespread damage to tourism and fisheries. The US government estimated that nearly 5m barrels of oil were spilled in the five months it took to get the well under control.

BP, as operator of the well, was castigated by the US public and politicians.

The group has made payouts of over $30bn (17bn) already.

BP is still waiting to hear a ruling on whether it has been guilty of gross negligence over the well blowout in which 11 oil workers died. The Department of Justice has claimed that the company acted irresponsibly. A gross negligence ruling would open potentially BP up to $20bn worth of new fines under the Clean Water Act.

A Pomerantz lawyer, Jennifer Patiti, told the Evening Standard that the latest court rulings in the US had changed the game for British litigants.

"The fact that UK pension funds who bought stock on the London Stock Exchange can now participate in bringing claims in the US raises the prospect of recoveries where significant losses have been incurred."

The price of BP shares plunged by more than half from over 650p in the immediate aftermath of the disaster. And it has taken a long time to recover to its current level of less than 520p.

In the meantime BP has cast overboard its chief executive, Tony Hayward, who was pilloried by the media for saying in the middle of the tragedy that he wanted his life back.

Hayward has largely been exonerated by his peers and was recently made chairman of the mining conglomerate Glencore Xstrata.

His BP role was taken on by Bob Dudley, a US citizen who has nonetheless struggled to persuade the US court system to treat the oil group more leniently.

BP has recently failed in its bid to stop what it deemed to be unfair compensation payments being handed out by a scheme it set up.

Criminal charges involving BP have already been settled as have a variety of civil claims.

Dudley has also struggled to find a major new strategy for the company beyond slimming down to concentrate on its key strengths.

Some of the asset sales have been forced on it in an attempt to raise funds to pay for prior legal claims against it.

BP has also found itself in a difficult situation over Russia due to the political tension between Moscow and Washington over Ukraine.

BP is a 20% shareholder in Rosneft, which remains largely owned by the Kremlin. The London-based oil company was effectively forced to take the Rosneft holding when the Russian state pushed for the breakup and sale to Rosneft of a previous private-sector joint venture, TNK-BP.

In the US, BP only recently had a ban lifted on applying for new oil licences but still made first-quarter global profits of almost 2bn.


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Source: Guardian Web


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