Is a record $4.5 billion fine, guilty pleas to 14 charges and the indictment of three employees enough of a deterrent to stop “serial environmental criminal” BP from placing profits before safety?
If history is any guide, Scott West believes the answer is a resounding, “No.”
West is a former veteran special agent-in-charge at the Environmental Protection Agency’s (EPA) Criminal Investigation Division. In 2006, he led an investigation into BP and the oil behemoth’s senior officials for alleged crimes associated with an oil spill that year at BP’s Prudhoe Bay operations on Alaska’s North Slope, which spilled more than 200,000 gallons of oil across two acres of frozen tundra – the second largest spill in Alaska’s history.
But just as West began collecting evidence against the company’s top executives, his investigation was abruptly shut down. On October 25, 2007, BP and the Department of Justice (DOJ) announced a settlement to resolve all of BP’s pending major criminal cases. The company agreed to pay a $20 million fine and plead guilty to a criminal violation of the Clean Water Act related to the Alaska oil spill. BP also pled guilty to a felony and a paid a $50 million fine over a deadly explosion at the company’s Texas City refinery in 2005, which claimed the lives of 15 employees and injured and maimed 170 others. BP also entered into a deferred prosecution agreement with the DOJ, paid a $373 million fine, and admitted that it had manipulated the propane market in 2004.
West, who was profiled in an investigative report published in Truthout a month after the explosion aboard the Deepwater Horizon in the Gulf that killed 11 rig workers, said he felt if he were allowed to continue his investigation it “would have revealed enough evidence to convict the company and very senior officials on felony charges.”
But, “the Bush DOJ shut it down before it had reached any logical conclusion,” West told Truthout. “My investigation should have lasted another two years or so.”
So when West, who retired in late 2008 and blew the whistle on what took place behind-the-scenes related to his probe of BP, heard that the company had reached its latest settlement with the government in mid-November to resolve all of the federal criminal charges (pending court approval) over its role in the worst man-made environmental disaster in US history, he couldn’t help but feel a sense of déjà vu.
“I’m not convinced the fine, as large as it is, will get BP to change its behavior,” West said in an interview with Truthout. “BP can easily pay it. It may not be enough to get BP to change its corporate culture until senior people are actually held personally accountable for decisions that led to the Texas City refinery explosion, the spills in Alaska and Deepwater Horizon.”
Brent Coon agrees.
Coon is a Beaumont, Texas, attorney who sued BP on behalf of the victims and the families of those killed in the Texas City refinery blast. His law firm’s website boasts that his practice has “built the most comprehensive understanding of BP’s corporate culture of any law firm in the United States.”
“The reality is that BP has a corporate culture that puts profits before safety and that cant and won’t be scrubbed off,” Coon said in an interview with Truthout. “BP is prone to this for a litany of reasons that dates back to their roots. Their employees are groomed under this mentality. I personally know all of the decision making goes all the way to the top of the company. The only way to change the culture is to get rid of everybody at every level of leadership.”
Assistant Attorney General Lanny Breuer acknowledged during a news conference November 15 in New Orleans, where the settlement agreement between the US government and BP were announced, “the explosion of the [Deepwater Horizon] was a disaster that resulted from BP’s culture of privileging profit over prudence.”
BP’s wide-ranging violations, due in part to the type of corporate culture West, Coon and Breuer said exists at the company, have resulted in more than $10 billion in civil and criminal penalties against BP over the past 17 years. Yet, each time the federal government penalizes BP, the company pays its fine and promises to implement new policies to address safety shortcomings. But BP rarely follows through – as evidenced most significantly by more than 700 infractions identified by federal regulators in 2010 at its refineries and alleged neglect at its other drilling rig in the Gulf called Atlantis – and ends up paying more fines and getting another slap on the wrist.
Indeed, in the months following the disaster in the Gulf, BP was found to have violated a federal judge’s March 2009 felony judgment, which required BP to fulfill the terms of a settlement agreement it entered into with government regulators to make certain safety upgrades at its Texas City refinery were made by September 2009.
Instead of revoking the company’s probation and holding senior officials accountable for continuing to flout the law, DOJ authorized BP to spend an additional two years correcting hundreds of safety problems that have plagued the refinery – the third-largest in the country – for a decade andplayed a part in the deaths of 19 people since 2005.
At the same time, thousands of miles away in Alaska, BP was also under scrutiny for a 46,000-gallon oil spill in November 2009, which a whistleblower had claimed was directly the result of the company’s cost-cutting measures that negatively impacted its safety and maintenance programs.
The company’s Alaska arm was on probation when the spill occurred, and, following a lengthy investigation, BP’s probation officer had petitioned the court seeking a revocation of its probation, asserting that the November 2009 spill amounted to “criminal negligence” and violated the terms of BP’s probation agreement of November 2007, signed a year after the massive spill on the North Slope. Again, no senior officials were held accountable, and after a federal court hearing, a judge declined to revoke the company’s probation.
But the nearly two-decade-long run of failing to hold BP officials personally accountable for the company’s crimes appears to have ended with the indictment of three BP employees whose actions allegedly contributed to the disaster in the Gulf.
Robert Kaluza, 63, and Donald Vidrine, 65, whom DOJ said were two of the highest-ranking BP supervisors aboard the Deepwater Horizon when it exploded, were charged with multiple counts of manslaughter for failing “to take appropriate action to prevent the blowout” in the face of “glaring red flags indicating the well was not secure,” according to the government’s 23-count indictment.
Kaluza, who was employed by BP since 1997 and has more than 44 years of oil feld experience, had only been working aboard the Deepwater Horizon for four days before it exploded and sank.
David Rainey, who was BP’s vice president of exploration for the Gulf of Mexico, was indicted on obstruction of Congress and false statements charges. The government alleges Rainey knowingly underestimated the amount of oil hemorrhaging from the Macondo well and based his analysis on an Internet search, specifically a Wikipedia entry. He then lied to Congress and federal investigators when questioned about how he calculated the flow-rate, according to the government’s criminal information, laying out the charges against him.
Attorneys for all three men have vowed their clients will fight the charges.
West said he thinks Rainey, Kaluza and Vidrine are BP’s “designated felons.”
West claimed that, “When a corporation gets into trouble, it’s not uncommon for someone to take the fall. In some cases, the person agrees to do so and is rewarded being the scenes. The ‘designated felon’ tells the governmment that all the folks above him were not involved in the wrongdoing. In exchange, the felon’s family is taken care of by the company, and once the felon is out of jail, the company financially rewards him. In other cases, the ‘designated felon’ does not know he has been tossed under the bus by the company until it’s too late. The company provides information to the government about the ‘felon’ and circles the wagons to ensure that the ‘felon’ cannot incriminate any higher-level folks. This was something I saw or suspected on several occasions.”
West declined to identify any of the companies he alleges undertook such a strategy.
Kaluza’s attorneys said the government is scapegoating their client.
“Bob was not an executive or high-level BP official,” said Shaun Clarke and David Gerger in a statement provided to Truthout. “He was a dedicated rig worker who mourns his fallen coworkers everyday . . . . This is not justice.”
West doesn’t think justice has been served for the victims of the Gulf disaster either.
“What about the corporate executives off the rig?” West asked. “These are the ones who were pressuring the guys on the rig to cut corners. The guys on the rig did not want to burn up and die. It is like blaming a pilot for a plane crash caused by the company cutting back on maintenance costs. That’s insane!”
Coon said the charges against the men are justified, and he’s happy the government has “finally started to indict people.”
“I don’t believe these guys acted on their own,” Coon said. “An independent level of thinking doesn’t exist at BP. But indicting people at a lower level is better than not indicting anyone at all. [Vidrine and Kaluza] made bad, and stupid, and greedy decisions and cut corners, which killed 11 guys, and they should go to jail.”
Still, Coon would like to see the Justice Department indict more senior officials, such as former chief executive Tony Hayward, whose testimony before Congress following the Gulf disaster is most memorable for his insensitive statement, “I want my life back.”
“I would haul his ass in,” Coon said. “And if DOJ is too lazy to prosecute his ass and these other sorry bastards at the top who make these decisions, I will prosecute them free of charge.”
Drawing on his own experience investigating corporate environmental crimes while working at the EPA, West said he thinks the Justice Department may be looking “to fry some bigger fish” and using Kaluza, Vidrine and Rainey to assist in that effort.
He pointed to Attorney General Eric Holder’s prepared statement at the news conference of November 15.
“I want to be absolutely clear that today’s resolution does not mark the end of our efforts,” Holder said. “In fact, our criminal investigation remains ongoing – and we’ll continue to follow all credible leads and pursue any charges that are warranted.”
West said that if Holder had announced that the Task Force set up to investigate alleged crimes related to the Gulf disaster was being shut down, “I’d start screaming.”
“It could be that the ongoing investigation means the Justice Department is hoping these guys come to Jesus,” West said. “The Justice Department didn’t get anywhere by threatening to indict, so had to pull the trigger to get their attention. Thats how it’s done. I don’t know how many times I looked someone in the eye and said, I have enough to take you to jail.’ What do you want to do here? I’d rather take your boss to jail. If these guys start cooperating, it could unravel for BP, and that would be a good criminal case. We may want to wait before we get all pissy with Justice because they may be doing something good here. It remains to be seen. I’m being cautiously optimistic that the right stuff is going on here.”
However, in an internal memo sent to all BP employees by BP chief executive Bob Dudley, immediately after the settlement was announced, he suggested it was unlikely, but possible, there would be further indictments.
“From the outset we have been concerned about the position of individuals,” Dudley said, according to a copy of his memo obtained by Truthout. “We know of a small number of current and former employees, less than half a dozen, whom the DOJ appears to intend to prosecute, or at least potentially prosecute . . . . Consistent with the Company’s policy, we are advancing legal expenses for these employees. Based on everything we know from our involvement in the investigation, we do not currently have reason to believe that, beyond this small number, further individuals from BP will be indicted.”
BP’s Government Contracts
Even while BP is being punished by the government the company is still being rewarded with lucrative government contracts and, sources inside the Pentagon and the EPA, who declined to be named, told Truthout November 16 BP they are unaware of steps the government may be taking to suspend or debar BP as a result of its recent guilty pleas.
In September, while BP was engaged in settlement discussions with the government over its role in the Gulf disaster, the company was awarded hundreds of millions of dollars in new Pentagon fuel contracts.
BP PLC is one of the Pentagon’s main fuel suppliers and one of the government’s top 100 contractors, with $1.47 billion worth in Fiscal Year 2011, which represents 179 government contracts, according to the website USASpending.gov. This year alone, BP has won $1.1 billion in federal contracts. In other words, in just two years, BP has earned from the government more than half the money it is obligated to pay in fines related to the Gulf disaster.
At the same time, according to the watchdog organization Project on Government Oversight POGO, BP has racked up more instances of misconduct – 61 since 1995 – than any of the other top 100 corporations that receive government contracts.
Scott Amey, POGO’s general counsel, told Truthout BP should have faced debarment or suspension immediately after oil started to spew into the Gulf.
“But it appears that the government took a wait-and-see approach to how this case was settled,” Amey said. “At that point, nearly three years have passed. BP fired some executives and hired new engineers and compliance monitors. They aren’t environmentally compliant but they are performing well under their government contracts. So it just makes it impossible to hold the company accountable for something that took place in the past. Theres also the question about whether they may be too big to suspend or debar because the government is so reliant on BP for fuel.”
Jeanne Pascal said it’s likely the latter.
Pascal was the debarment counsel at the EPA’s Seattle office, and she spent more than a decade working on issues related to environmental crime convictions by BP. Before she retired from the agency in 2010, a couple of months before the Gulf disaster, she had prepared a “suspension complaint” against BP, “with about 60 exhibits,” that would have barred the company from receiving government contracts.
Pascal’s complaint was based on BP’s actions in Alaska, Texas City, its admission that it manipulated the Midwest propane market, and record fines imposed on the company by the Occupational Safety and Health Administration (OSHA).
“After I retired from the EPA suspension and debarment division following an injury, the debarment action against BP went nowhere, not even after the well blowout in the Gulf of Mexico,” Pascal told Truthout. “I don’t understand why this company is still receiving federal leases and permits, and why it is still doing business with the federal government.”
“EPA should act regardless of [the Defense Department’s] dependence on BP oil and gas,” Pascal added. “Then [the Defense Department] would be forced to issue an exceptions justification letter explaining why it continues to use BP” which would go to Congress and be made public. “A $4 billion settlement to clean up the estimated $51billion spill costs from a company that made more than $80 billion in net profits over the last five years is, in a word, pathetic. The beleaguered and overburdened US taxpayer will have to pick up the balance. Both parties better hear the message the country sent them in this last election and stop coddling the ultra wealthy at the expense of US taxpayers and voters.”
An EPA spokesperson did not respond to requests for comment.
Despite the most recent guilty pleas and indictments, Pascal will always think of BP as being “Beyond Prosecution” until “their top executives responsible for the decisions underlings make all spend time in jail.”
For it’s part, BP reacted to the settlement by regurgiating old talking points from settlements past. In a statement, the company said that is takes “seriously” its committment to “safety and operational excellence.”
But Coon told Truthout he thinks it’s only a matter of time before BP “kills again.” West and Pascal said they believe that too.
“[BP] said they learned their lesson after Texas City. They didnt and that’s why the Gulf spill happened,” Coon said. “BP will laugh this off and another disaster as bad or worse will happen, and we will be back here again.”