The agreement with US government agencies is "subject to court approval, to resolve all federal criminal charges and all claims by the Securities and Exchange Commission (SEC) against the company stemming from the Deepwater Horizon accident, oil spill, and response," a statement released by BP stated.
Eleven workers were killed and millions of barrels of crude oil was released into the Gulf of Mexico in 2010 due to the explosion on board the Deepwater Horizon rig.
BP has been negotiations with the US government and Gulf Coast states for months to settle billions of dollars of civil and criminal liability claims resulting from the April 20, 2010, oil spill due to the explosion.
A federal indictment unsealed in New Orleans Thursday, BP well site leaders Robert Kaluza and Donald Vidrine have been charged with having acted negligently in their supervision of key safety tests performed on the Deepwater Horizon drilling rig before the explosion killed 11 workers in April 2010, reported Tribune wire report.
The indictment says Kaluza and Vidrine failed to phone engineers onshore to alert them of problems in the drilling operation.
Another indictment charges David Rainey, who was BP's vice president of exploration for the Gulf of Mexico, of obstruction of Congress and false statements. The indictment claims the former executive lied to federal investigators when they asked him how he calculated a flow rate estimate for BP's blown-out well in the days after the April 2010 disaster.
Prior to the indictments Thursday, the only person charged in the disaster was a former BP engineer who was arrested in April on charges of obstruction of justice. He was accused of deleting text messages about the company's response to the oil spill.
Earlier in the day, BP in a statement said that in its resolution with the SEC, BP has resolved the Commission's Deepwater Horizon-related claims against the company under Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 and the associated rules.
BP has agreed to a civil penalty of $525 million, payable in three installments over a period of three years, and has consented to the entry of an injunction prohibiting it from violating certain U.S. securities laws and regulations.
The SEC's claims are premised on oil flow rate estimates contained in three reports provided by BP to the SEC during a one-week period (on April 29 and 30 and May 4, 2010), within the first 14 days after the accident. This resolution is subject to U.S. federal court approval.
In addition, as part of the resolution, the company has agreed to plead guilty to 11 felony counts of misconduct or neglect of ships officers relating to the loss of 11 lives; one misdemeanor count under the Clean Water Act; one misdemeanor count under the Migratory Bird Treaty Act; and one felony count of obstruction of Congress. This resolution is subject to U.S. federal court approval.
Thirteen of the 14 criminal charges pertain to the accident itself and are based on the negligent misinterpretation of the negative pressure test conducted on board the Deepwater Horizon.
BP acknowledged this misinterpretation more than two years ago when it released its internal investigation report.
The energy giant maintained the acceptance of the charges is consistent with BP's position in the ongoing civil litigation "that this was an accident resulting from multiple causes, involving multiple parties, as found by other official investigations."
The remaining criminal count pertains to two BP communications made to a member of Congress during the spill response about flow rate estimates.
As part of its resolution of criminal claims with the U.S. government, BP will pay $4 billion, including $1.256 billion in criminal fines, in installments over a period of five years. BP has also agreed to a term of five years' probation.
Under the resolution with the Department of Justice (DOJ), a total of $2.394 billion will be paid to the National Fish Wildlife Foundation (NFWF) over a period of five years. In addition, $350 million will be paid to the National Academy of Sciences (NAS) over a period of five years.
BP has also agreed to take additional actions, enforceable by the court, to further enhance the safety of drilling operations in the Gulf of Mexico. These requirements relate to BP's risk management processes, such as third-party auditing and verification, training, and well control equipment and processes such as blowout preventers and cementing.
In addition, BP has agreed to several initiatives with academia and regulators to develop new technologies related to deepwater drilling safety.
The resolution also provides for the appointment of two monitors for four years each. A process safety monitor will review, evaluate and provide recommendations for the improvement of BP's process safety and risk management procedures concerning deepwater drilling in the Gulf of Mexico. An ethics monitor will review and provide recommendations for the improvement of BP's Code of Conduct and its implementation and enforcement.
"All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region," said Bob Dudley, BP's Group Chief Executive.
"From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf. We apologize for our role in the accident, and as today's resolution with the U.S. government further reflects, we have accepted responsibility for our actions."
Under U.S. law, companies convicted of certain criminal acts can be debarred from contracting with the federal government. BP has not been advised of the intention of any federal agency to suspend or debar the company in connection with this plea agreement.
"We believe this resolution is in the best interest of BP and its shareholders," said Carl-Henric Svanberg, BP's Chairman. "It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims."
The aggregate amount of the resolution is approximately $4.5 billion, with payments scheduled over a period of six years. As of the end of September 2012, BP's financial statements recorded a charge taken against pre-tax income in relation to the accident and oil spill of $38.1 billion.
This charge included $525 million provided for the SEC settlement.
Thursday's resolution is expected to result in an increase of approximately $3.85 billion to the $38.1 billion charge taken against income as of the end of September.
BP's financial statements as of the end of December 2012 will reflect this additional charge, as well as any other adjustments arising during the fourth quarter. It is anticipated that the cash outflows can be met within BP's current financial framework.
Source: http://www.karachinews.net/index.php/sid/210754660/scat/3a8a80d6f705f8cc
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