BP fined, charged in oil spill that showed ‘profit over prudence’

Oil giant BP and three of its employees were indicted on criminal charges including manslaughter and obstruction of Congress on top of a record $4-billion fine that the company will pay the government for its role in the oil spill disaster that scarred the Gulf of Mexico, officials announced Thursday.

Led by Atty. Gen. Eric H. Holder Jr., officials announced the indictments in a televised news conference from New Orleans, where the grand jury has been investigating the 2010 explosion of the Deepwater Horizon oil rig off the Louisiana coast. Eleven people died in the explosion.

The announcement of the charges against BP employees came on the same day officials announced that BP had agreed to an unprecedented settlement involving a guilty plea to criminal charges.


“The $4 billion in penalties and fines is the single largest criminal resolution in the history of the United States and constitutes a major achievement toward fulfilling a promise that the Justice Department made nearly two years ago to respond to the consequences of this epic environmental disaster and seek justice on behalf of its victims,” Holder said.

PHOTOS: Deepwater Horizon disaster in hi-res

In addition, BP agreed to pay more than $525 million in civil penalties to satisfy complaints by the Securities and Exchange Commission. That brings the total settlement cost to more than $4.5 billion – not including the billions the company has already paid to settle civil claims from residents, fishermen and businesses harmed by the spill.

The settlement of the criminal charges by the company still leaves BP open to civil cases, officials said. The federal government is also seeking civil penalties in the billions of dollars against the company, arguing that BP was grossly negligent during the oil spill, which poured about 4 million barrels of oil from the underwater Macondo well into the gulf waters. A trial is scheduled in February and BP, in a statement released Thursday, said it will continue to vigorously defend itself from civil actions.

Federal officials blamed BP’s culture of profit for the spill.

“The explosion of the rig was a disaster that resulted from BP’s culture of privileging profit over prudence,” said Assistant Atty. Gen. Lanny A. Breuer at the news conference. “We hope that BP’s acknowledgment of its misconduct – through its agreement to plead guilty to 11 counts of felony manslaughter – brings some measure of justice to the family members of the people who died on board the rig.”

In all, the company said it agreed to enter guilty pleas to 14 charges, including the eleven counts of manslaughter. But the government went further, charging individuals as well.

“Make no mistake,” Breuer said. “While the company is guilty, individuals committed these crimes.”

Two BP employees, Robert Kaluza and Donald Vidrine, who were described by Holder as the two highest-ranking BP supervisors on board the Deepwater Horizon when it exploded, were charged with manslaughter and other counts.

The 23-count indictment “charges these two BP well site leaders with negligence, and gross-negligence, on the evening of April 20, 2010. In the face of glaring red flags indicating that the well was not secure, both men allegedly failed to take appropriate action to prevent the blowout,” Breuer said.

David Rainey, who was BP’s vice president of exploration for the Gulf of Mexico, was indicted on charges of obstruction of Congress and false statements, Holder said. Rainey, a former BP executive, served as a deputy incident commander and BP’s second-highest ranking representative at Unified Command during the spill response, Holder said.

Rainey, Breuer said, is charged with “obstructing a congressional investigation and making false statements to law enforcement officials. The indictment alleges that Rainey, on behalf of BP, intentionally underestimated the amount of oil flowing” from the Macondo well, which was spilling oil into the gulf. “Rainey allegedly cherry-picked pages from documents, withheld other documents altogether and lied to Congress and others in order to make the spill appear less catastrophic than it was,” Breuer said.

Rainey’s lawyer told the Associated Press that his client did “absolutely nothing wrong.” And attorneys for the two rig workers accused the Justice Department of making scapegoats out of them.

“Bob was not an executive or high-level BP official. He was a dedicated rig worker who mourns his fallen co-workers every day,” Kaluza attorneys Shaun Clarke and David Gerger said in a statement. “No one should take any satisfaction in this indictment of an innocent man. This is not justice.”

Chris Jones, the brother of one of the rig workers killed in the disaster, said the settlement renewed his grief and anger over the loss of his younger sibling, Gordon.

“The fact that BP is finally admitting that it is responsible is not shocking; the amount of money it is paying in fines is not shocking,” said Jones, a litigation attorney in Baton Rouge, La. “What is shocking is that it has been ... years since this happened and not once has a representative of BP said to us, ‘I’m sorry for your loss.’ It’s par for the course.”

“BP is simply going to sign a check for billions of dollars, then continue to do business in U.S. waters and make money for its shareholders,” he said. “But Gordon wasn’t able to live a day after April 2010.”

British oil giant BP is more than prepared for the $4.5 billion in settlement charges it agreed to Thursday, analysts said.

In the third quarter alone, BP raked in sales of more than $93 billion and had a net profit of more than $5.2 billion. That result showed that “BP has made the most remarkable comeback from the most costly industrial accident in history,” said Fadel Gheit, senior energy analyst at Oppenheimer and Co., in a note to investors.

In addition, BP has raised more than $30 billion from asset sales, including a $2.5-billion proposal to sell its Carson refinery and other assets.

BP’s recent business performance has been so strong that some critics say the fine isn’t punishment enough.

“This settlement is pathetic,” said Tyson Slocum, director of the energy program at Public Citizen, a consumer advocacy group. “The point of the criminal justice system is twofold: to punish and to deter. This does neither. It is a weak-tea punishment that provides zero deterrence to BP or other companies.”

What remains unclear is how the settlement will affect BP’s business in the U.S., particularly in the Gulf of Mexico, where BP remains active. The company has seven rigs drilling in the gulf and has plans to add an eighth and possibly a ninth next year.

BP faces five years of probation and will undergo scrutiny by two appointed monitors.


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Times Staff writer Louis Sahagun contributed to this report.