Long-term employees accuse oil giant BP of greed, exploitation and lying about their pensions.
Earlier this month BP’s attempts to curb compensation payouts to those impacted by its 2010 Gulf of Mexico disaster failed after its appeal was rejected by a US court.
Dozens of people and businesses that have claims against the oil giant have told Truthout they are infuriated at the company’s ongoing attempts to avoid payments, and they are not alone.
Several long-term senior BP employees are incensed at what they believe is BP’s attempt to short-change them on their pensions.
Russel Stauffer worked for BP for 32 years, but left in 2012 in “disgust.”
“I quit the company as ‘Head of Finance for the Gulf of Mexico’,” Stauffer told Truthout. “I had a sweet job, but I could no longer stand the injustice and lies at work.”
Stauffer, who worked for BP in Houston, used these strong words to describe what he and at least 450 other BP America employees are outraged over – what they describe as their company reneging on their pension plans by up to 75 percent, lying about it, and actively working against them in order not to pay them retirement benefits that were promised.
According to Stauffer, the issue has grown large enough and been ongoing long enough that BP’s vice president of the Houston region supported him in leading a group to conduct conversations with BP’s Human Resources department to resolve the issue.
“HR instead cooked up prevarications and took them to BP’s CEO Bob Dudley so that he would forever close the book on this issue,” Stauffer said.
Fritz Guenther, a BP employee and United Steelworkers Union member working in Alaska, who has worked for BP for 35 years, said he and his colleagues are “currently fighting to get back the pension plans that BP promised us in writing in 1989.”
“We were openly lied to by BP managers and HR people that when we were converted to the “new” plan that it would be as good or better than the existing and industry competitive plan,” Guenther told Truthout. “Now that many of us are reaching retirement age, we are finding out that we have less than 50 percent of what we would have had if BP’s promise was true or if we had remained in the old plan.”
“Donald Vidrine, the highest ranking BP representative on the Deepwater Horizon, was reportedly in bad health for years leading up to the Macondo disaster,” said a current BP employee. Speaking on condition of anonymity, he asked to be referred to as an ‘engineer’ and told Truthout, “Following the disaster, his testimony is confirmation regarding the condition of his health.”
Working Past Retirement
“BP’s commitment to America does not extend to a small group of its longest-serving, most loyal employees,” Guenther said. “The way we have been treated and repeatedly lied to in no way comes close to following BP’s much touted Code of Conduct and Ethics and could very well have been the root cause of the Macondo incident.”
Guenther, Stauffer, the engineer, and other previous and current BP employees, with whom the news organization Al Jazeera spoke, are frustrated because they all belonged to Standard Oil of Ohio (Sohio), a company BP bought outright in 1987 and made the cornerstone of its new national operation, BP America. At the time, BP promised these new employees in writing that their pension plan would maintain equal value to the old plan, or would even increase in value.
“When BP bought Amoco they brought in thousands of Americans and let them keep those higher value pensions, so at that point, I’m working shoulder to shoulder with people who came from other companies and their pension is worth two to two and a half times as much as mine,” Stauffer said.
In 2011, BP further enhanced the pension plans of employees from other companies it had acquired, but not those from Sohio.
“So this was when all the Sohio people burst a gasket,” Stauffer said. “We asked why the worst off among us weren’t even mentioned when the best off were getting a sweeter deal. I’ve a finance background, I managed economists and accountants and did the numbers and knew the numbers we had were correct . . . but [BP’s] HR played hardball and ignored us and affected the CEO’s thinking on this once and for all so they’d never give in.”
Kirk Wardlaw worked for BP for 31 years before retiring over this issue two years ago.
He’d known of the pension disparity for more than 15 years and knows of more than 50 of his former colleagues who were disgruntled over the issue as well.
Wardlaw told Truthout that BP’s actions over this issue show that BP is “A company that doesn’t keep their word,” in addition to being “unwilling to step up and do what’s right unless required by law or forced to do it.”
BP CEO Bob Dudley wrote, on page nine of the aforementioned company document, “If you are ever concerned that our Code is not being followed, or simply feel unsure about any situation, it is vital that you speak up and ask a question or share your concern straightaway.”
This is exactly what Stauffer and Guenther have done, but to no avail.
“Fritz and I went and met with BP’s Ombudsmen Judge Sporkin in early 2013, with whom we sat for a couple of hours, and he said the difference in pensions was 15 to 20 percent,” Stauffer said. “Billie Garde [BP’s Deputy ombudsman] said she was open to our input on the correct way to value the difference in our actual pension value versus what was promised us. The resulting value difference was large, several times larger than BP claimed, leading both myself and Garde to question whether BP was giving the ombudsman Office cherry-picked information.”
Despite this, according to Stauffer, BP’s Human Resources Department is “giving the ombudsman the runaround.”
“HR are doing the same thing again now, but this time with the ombudsman’s office,” Stauffer said. “Based on recent conversations with the ombudsman office, BP are not owning up to the facts.”
Stauffer said he would still be working for BP had none of this happened, but was so frustrated by it he had no choice but to leave. Today, he said, he is living off a pension that is the equivalent of a beginning schoolteachers’ pension, despite having worked for the company more than 30 years.
“Most of the Sohio folks will work, health permitting, well toward 70,” he said. “I left in my late 50’s due to BPs unconscionable handling of the retirement issue and due to a health issue.”
Stauffer said there is a hidden “meta” impact on BP’s affected employees that takes the form of their children not being able to go to better colleges, and “Indeed, our kids will have less overall and will have a different life now,” he said. “Our parents won’t get as much help in old age. Our retirements will now be somewhere between modest and subsistence living.
“My income leaves me with no choice but to drive the cheapest used car, to defer medical treatment for myself and of course for my pets, and never travel even to see family in Ohio,” he added. “I’d hoped otherwise, but I likely will have to go back to work soon wherever I can, which won’t be easy pushing 60.”
Pension Disparity and Frustration
In 1989, BP replaced the Sohio pension plan with a cash balance retirement plan. This change caused Sohio staff to lose, on average, more than half the value of their retirement.
Thus, for staff hired by BP in the early 1980s, the Sohio pension plan would have been worth on average 2.4 times the cash balance retirement plan that the Sohio employees currently have.
“The root cause of the issue is that BP employees who share a hire date in the early ’80s with similar years of continuous services (28 or more years), work shoulder to shoulder with Amoco/Arco peers, whose pensions and hence total compensation is radically better, all other things being equal,” said Stauffer. “Worse yet, the groups with the highest pension value (Amoco/Arco heritages) obtained yet another three-part pension value uplift in May 2011 for their pension plans, while Sohio folks received nothing.”
The engineer, who has been working for BP more than 25 years, said he only learned of the retirement disparity a few years ago.
“It was pretty obvious when all the Arco and Amoco employees were dancing in the hallways on their last days of work and bragging about the cash value of their retirements,” he said. “That’s when I knew we were getting screwed on our retirements by BP.”
Guenther said that because of this issue, the average Sohio employee is now going to have to work 10 to 12 years longer to receive a retirement pension that is equivalent to BP’s non-Sohio employees.
“While we’re working, we’re seeing guys walking out the door with full retirement when we have to work longer,” Guenther said. “This is causing us to have to make life-changing decisions, like how long am I going to work, and it’s terribly distracting, and when you’re in the oil and gas industry, that’s not a good thing.”
This began to be apparent in the summer of 2011, when Gunther saw several of his colleagues retiring.
A Houston-based engineer currently with BP, who spoke on condition of anonymity, expressed frustration about the matter and told Al Jazeera that the issue has negatively impacted his family, as well as his health.
“I am working beyond the date my doctors have recommended I stop full-time work but I just don’t have the options my Arco and Amoco coworkers of identical age and tenure have,” he said.
Wardlaw told Truthout he has had to continue working due to the pension dispute.
“I intended to retire from BP after 31 years but had to continue working at another oil company to make up for the shortfall in retirement,” he explained. “I will work an additional five years. BP will cost me five years that I could have been volunteering my time to make a difference in my community. My grandson will be starting school when I could have been home playing with him, and I will never get that back no matter how much money I make. Thanks BP.”
Guenther said this issue has impacted both his work safety and personal health.
“The biggest thing this has done is impacted my on-the-job safety; it is hard to focus on what’s important when you see your coworkers of other heritage companies retiring with a smile on their faces and well wishes, in most cases coworkers with less years of service with BP and often even younger.
“Being distracted in the oil business can be devastating,” he continued. “No one knows this better than BP, whether on a corporate or personal level. Anything related to on-the-job safety has an impact on my family and my ability to provide for them.”
Another employee, who has been with BP over 25 years, said that this ongoing issue “impacts me everyday,” and that it is a “terrible distraction, and it becomes much more difficult to focus on your work.”
He added, “My health is deteriorating, and there is a growing chance I’ll have an accident, or cause an accident, I’d like to retire before that occurs, but I honestly don’t know how I’ll make ends meet in retirement with such a paltry pension. BP could easily afford to fix this unethical situation for their rank and file American employees who BP acquired with Sohio, just as they did for the executives of Sohio, but they simply prefer to ignore the problem.”
Guenther said having to work an additional 11 years beyond his coworkers to achieve a similar pension has brought him “Depression, insomnia and anger all wrapped around the fact that a company that wears its code of conduct, ethics and “one team” policy on it’s “corporate sleeve” has just lied, cheated and stole over half of some of its longest serving most loyal employees pensions. This is very, very disturbing and in my opinion speaks to a much larger and chronic problem within BP.”
Allegations of Retaliation
Another BP employee who asked to remain anonymous and to be identified also as a Houston-based engineer who has worked for the company for more than 30 years, told Truthout that when he attempted to get the problem resolved “up through line and HR management at BP,” he was “subject to retaliation from a senior HR manager who was clearly signaling an intent to perform character assassination and reputational damage.”
The engineer, who still works for the company, does not believe BP’s ombudsman will assist in their case because he believes the ombudsman’s ability to be a strong advocate for employees “is limited because they are paid by BP.”
He expressed concerns, like the other employees, that this issue is having negative impacts on workers in the field.
“Some are in critical safety roles,” he explained. “Some are in decision-making roles. Some are hourly operators in oil production facilities, on drilling platforms and so forth.”
According to Guenther, BP has “stalled and road blocked every attempt by it’s Sohio employees and the ombudsman to provide information. BP has even gone so far as to hire two of the ombudsman’s investigators in the middle of the investigation [into the pension matter] in an effort to hamstring the investigation.”
“Staff who challenged BP’s claims on the cash balance plan value were routinely threatened by BP HR with loss of their job,” Stauffer said.
Guenther is unafraid to speak out because of his union membership, but explained that he has several colleagues in management who are in his situation but are too afraid to speak out about it because they fear retaliation from BP.
“I’ve had a manager tell me he is losing sleep over this and it is effecting his job,” Guenther explained. “So there are far more managers out there this effects, some of them pretty high up, who are incensed, but BP is so retaliatory to people who speak out against them, they are afraid. So many of us have kids in college and are afraid to speak out, so this goes a lot deeper than what is on the surface.”
“It’s in BP’s benefit for us to die or retire,” Guenther concluded. “Because we’re the older part of their workforce. They view us as a commodity, and that we’d be better off if we died, retired, and just went away.”
“In Houston, BP elevated HR above the status of a service organization long ago,” the engineer said of how BP is dealing with the situation. “Senior HR executives are allowed to intimidate employees who speak up, and regular employees have lived with this situation so long they accept it as normal. It’s become part of BP’s internal corporate culture.”
He went on to add, “In Houston, senior BP managers do not appear to take BP’s code of conduct seriously. Apparently it’s just a pile of words, some sort of facade for the external world.”
Truthout requested comment on the matter from BP.
A BP spokesman provided this statement:
“BP honors its pension obligations for all US employees regardless of which BP-heritage company they came from. The matter of the former Sohio-heritage employee pension is currently being reviewed BP’s independent ombudsman’s office, led by retired Judge Stanley Sporkin. We look forward to the findings of the ombudsman’s office and hope these findings will help resolve the matter.”
One of the current BP employees Truthout spoke with expected this response from the company.
“If BP Management is challenged regarding their collective lack of action on the Sohio issue I promise you that they will try and make the case that they have not ignored the issue but have to wait for the ombudsman to complete the investigation,” the engineer said of BP’s response. “This is at best disingenuous and at worst dishonest. BP senior management was made aware of this issue and the potential violation of Code of Conduct numerous times prior to employees exhausting internal options for action and engaging the ombudsman.”
He explained that Sohio BP employees were forced to go to the ombudsman as it was their only option left, and accused BP of stalling and obfuscating the ombudsman’s investigation into the matter.
The engineer now feels like how the pension dispute is being handled by BP is another example of other myriad internal problems, adding, “The organization is tripping all over itself with conflicting objectives, onerous internal processe, and horrible contracting.”
Truthout requested comment from deputy ombudsman, Billie Garde, but at the time of publishing had not received a response.
Warnings to Gulf of Mexico Oil Spill Victims
BP’s senior engineer Wardlaw offered a warning to people in the Gulf of Mexico who have filed compensation claims with BP.
“Those depending on BP to “do the right thing” in the Gulf of Mexico should be aware of BP’s unfair and callous treatment of the Sohio heritage employees, failure to adhere to their own Code of Conduct, and the willingness to hide behind a standard of “we did what was technically legal.”
Of the ongoing federal court case against BP, he had this to say:
“Amazing that BP is pleading for reasonableness and fairness relative to the settlement of damages in the Gulf of Mexico, yet they are not interested in nor capable of applying a reasonable level of fairness when addressing an issue impacting their own longest serving employees.”
Wardlaw said BP is “doing better” for the people in the Gulf of Mexico filing compensation claims against BP “than their employees that worked hard and saved their rear ends many times over.”
Contrary to the other employees commenting on the issue, BP’s engineer of 25 years believes that the company has done its best to be accommodating to the oil spill victims, and has done so “more than any other company in history.”
Yet he still believes that the Gulf oil disaster still illustrates part of BP’s problem.
“BP bends over backwards when there is bad external publicity, but inside the corporation the senior executives in BP’s HR organization are pointing their guns inward, squashing dissent and intimidating employees who question BP’s actions or speak up,” he explained. “As long as BP’s unethical senior executives in HR continue to behave this way, BP will have more accidents. And the situation inside BP is getting worse, not better, despite all of BP’s rhetoric.”
Guenther, on the other hand, is not surprised by what he is seeing in the Gulf of Mexico.
“It would not surprise me that BP is not compensating folks in the Gulf,” he said of the matter. “When I saw them backing off of their promises in the Gulf, I said, “Yep, welcome to my world!”
“I’m surprised they’ve ponied up the money they have,” he added. “The only reason they made those promises up front is they don’t want to lose work in the Gulf, because that’s a big carrot for them. And now they have what they want, they are pulling back from their promises to the people in the Gulf.”
BP’s strategy of pushing for multiple reviews by the 5th Circuit Court of Appeals regarding oil spill claims against them may well backfire. Critics of BP’s strategy argue that since US District Judge Carl Barbier is who shall ultimately determine BP’s liability, the oil giant is making a mistake in challenging Barbier’s decision of having approved claim terms.
“They [BP] are alienating in a very profound way the very judge that is going to determine their liability,” Blaine LeCesne, a law professor at Loyola University in New Orleans, told Reuters. “I’m not sure that’s a wise decision.”
Barbier has previously called BP’s efforts to try and contradict many of his rulings with appeals to the 5th Circuit Court “deeply disappointing” and said BP is trying to “rewrite or disregard the unambiguous terms of the Settlement Agreement.”
While BP originally projected its settlement in the case would cost $7.8 billion, as of October 2013, it had boosted its estimate to $9.2 billion, and said this sum could grow “significantly higher.”
BP still faces potential fines totaling in the billions of dollars under the Clean Water Act.
Several current and former BP employees informed Truthout they would be willing to be part of a class action lawsuit to resolve the issue.
“I absolutely would be willing to be part of a class action suit against BP if it came to that,” the senior engineer said. “But think of the added stress and shame of BP forcing it’s Sohio employees into the legal system where they will have to surrender 33 percent of their promised retirement value to a legal firm and the courts in order for BP to be forced to comply with basic human values and their own code of conduct.”
Guenther informed Truthout that he “absolutely” would be willing to sue and that several of his colleagues, including himself, had already spoken with lawyers and agreed to be named plaintiffs.
However, Guenther added, “But I feel suing your employer should always be the last resort.”
BP’s engineer of 25 years who spoke with Truthout said he, too, would be willing to be part of a lawsuit against the oil giant.
“What BP did to their Sohio employees is not only morally and ethically wrong and in violation of BP’s own code of conduct, but with the rare Supreme Court ERISA ruling in 2011, where the court provided for “equitable relief” as a remedy in ERISA cases, once again, BP will most likely find itself on the wrong side of American laws.”
The case he referenced is a 2011 US Supreme Court ruling in a class action that could allow equitable remedies after a lower court asked Cigna Corporation to make changes to its retirement plan in light of the previous Supreme Court ruling.
In that case, the US Department of Labor argued in favor of some 25,000 workers who had accused Cigna of not sufficiently informing them about changes the company had made in their retirement plan that reduced the plaintiff’s pension benefits.