By Kevin Allison
LONDON, Nov 15 (Reuters Breakingviews) - A sigh of relief is
in order at BP. The embattled UK oil major settled U.S. federal
criminal charges and some civil ones for $4.5 billion - less
than feared. But BP's legal troubles stemming from its 2010 Gulf
of Mexico oil spill will continue. Its admission of criminal
guilt could be used against it in a high-stakes civil trial. No
wonder investors aren't yet cheering.
Still, both sides can take some satisfaction in the deal,
announced on Thursday. The U.S. Justice Department gets to look
tough: BP's $4.5 billion penalty includes a $1.3 billion
criminal fine, the biggest ever levied by Uncle Sam. Meanwhile,
for BP the impact is manageable, at about 10 weeks of last
year's cash flow from operations, to be paid in installments
over six years.
The company will take a $3.85 billion charge against income,
bringing its total provisions for the disaster to $42 billion.
In return, it gets out from under two of the big legal cases
remaining after its pact with private plaintiffs in March - the
other, smaller part of the latest settlement is a deal with the
Securities and Exchange Commission. In January, Morgan Stanley
estimated that the criminal probe alone could cost BP $5 billion
to $15 billion. By that yardstick, the company escaped
One twist, though, is that BP's guilty pleas on 14 counts,
which are part of the settlement, can be introduced in evidence
in a related civil trial beginning in February in New Orleans.
The central issue is whether BP was, in legal terms, grossly
negligent in the disaster. If so, its fines under the U.S. Clean
Water Act could balloon to a maximum $21 billion, versus up to
$5.4 billion if BP's missteps aren't found to have reached that
BP plans a vigorous defense. It says its guilty pleas are
consistent with conduct that was merely negligent, not grossly
so. The feds will no doubt relish BP having to convince a judge
of that, in the light of the criminal admissions. At a minimum,
they surely give the U.S. government leverage in negotiating a
further, civil settlement. That might help explain why BP's New
York-listed ADRs were up just 0.6 percent in 3 p.m. trading,
adding a modest $700 million of market value. The settlement is
a step forward, but the Macondo nightmare isn't over yet.
- BP on Nov. 15 said it had reached agreement with the U.S.
government, subject to court approval, to resolve all federal
criminal charges and all claims by the Securities and Exchange
Commission against the company stemming from the 2010 Deepwater
Horizon accident, oil spill, and response.
- The settlement of criminal charges with the Justice
Department involves a payment of $4 billion, including nearly
$1.3 billion in fines, in installments over five years. BP will
also pay the SEC $525 million.
- The company said it had agreed to plead guilty to 14
criminal charges, 11 relating to the 11 lives lost in the
- A separate civil trial to apportion blame for the disaster
is due to begin in New Orleans in February.
- BP said it would continue to vigorously defend itself
against all remaining civil claims, which include federal civil
claims under the Clean Water Act, federal and state natural
resource damages claims, certain private civil claims and
securities claims, state economic loss claims, and miscellaneous
private civil claims pending in other federal and state courts.
- BP's New York-listed ADRs were up 0.6 percent in 3 p.m.
trading on Nov. 15.
(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
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