An investor lawsuit against BP, claiming the oil giant repeatedly lied about its safety record, will be fronted by two ambitious politicians and range over more than five years of the company's communications with shareholders.
A US court ruling helped to clarify the size and scope of the class-action suit, which is aimed at winning compensation for investors who lost money on BP shares in the wake of the Gulf of Mexico oil spill this year. The judge in Houston, Texas, agreed to roll seven cases into one class-action lawsuit, opening a new front in the British company's legal battle in the US following the worst offshore oil spill in history.
An estimated 5 million barrels of oil spewed from a ruptured well into the ocean for almost three months after a fire sank the Deepwater Horizon rig in April. If successful, investors' complaints could add billions of dollars to the costs of the incident to BP. It must also pay the tab for the clean-up operation, compensate businesses and communities on the Gulf coast, and negotiate a fine with US environmental authorities.
The class-action lawsuit examined in Texas late on Tuesday is expected to be joined by hundreds or thousands of investors who lost money when BP shares plunged in April. Judge Keith Ellison named New York State Comptroller Thomas DiNapoli and Ohio's newly-elected Attorney General Mike DeWine as lead plaintiffs. The two politicians have responsibility for their respective states' public-employee pension funds, which are among the largest holders of BP's US-listed stock.
Of the claims consolidated into the new lawsuit, the Ohio and New York claims are amongst the widest-ranging, alleging that BP was lying to investors as far back as 2005. The suit will therefore examine all of the company's safety-related statements, including its public communication about other accidents that have tarnished its reputation in the US.
BP has for years maintained a corporate culture where adherence to safety protocols and environmental laws were ignored in favour of profits, the suit claims, leading to a fatal explosion at its Texas City oil refinery in 2005 and two oil spills in Alaska in 2006. The company then lied about improvements it had made after those accidents, the suit adds.
Importantly, the claims also extend to the period after the Deepwater Horizon explosion, which killed 11 people. A substantial portion of Ohio's losses derive from purchases of BP stock by one of its funds in May, when it says BP intentionally understated the oil-flow rate in an attempt to diminish the perceived impact of the spill and convince investors it would not significantly impact the company.
The suit was filed earlier this year naming BP, its American subsidiary, and board members and executives, including Tony Hayward, chief executive at the time of the spill, and his predecessor Lord Browne of Madingley. BP partners – including rig owner Transocean and well-cement producer Halliburton – and insurers and banks are also named as defendants.
Source: The Independent (UK)