A group of investors believe officers and directors of BP PLC, pursuing cost-cutting over safety, ignored “red flags” that could have prevented the explosion of the Deepwater Horizon drilling rig in the Gulf of Mexico. The Louisiana Municipal Police Employees’ Retirement System and other investors claim BP executives and directors breached their fiduciary duties to the company by ignoring safety and maintenance for years before BP’s Macondo well exploded on April 20th. The investors seek reforms in BP management and damages from the executives and board members to be paid to the company. It was alleged in a lawsuit filed last year, and recently amended, by the investors:
Despite repeated guilty pleas, warnings, employee deaths and injuries, and criminal and civil penalties imposed on the company by numerous federal and state regulators, the Defendants continued to systematically cut budgets. The Defendants’ decisions and deliberate inaction caused one of the largest environmental disasters in the history of the U.S.
The investors’ lawsuit is a derivative claim brought on behalf of the company. It has been combined with other shareholder actions pending in federal court in Houston. The Louisiana pension fund initially filed the derivative lawsuit in May and it was joined by similar claims by other investors. The investors now have filed a combined amended Complaint, adding details to their claims.
It was contended that a series of events and regulatory fines since the Texas City explosion should have convinced executives and managers of the need for policy changes. BP’s neglect of company pipelines in Alaska caused a March 2006 rupture that spilled 267,000 gallons of crude oil at Prudhoe Bay and led to $20 million in civil and criminal fines against BP, according to the Complaint. The Plaintiffs alleged that the company’s internal study into problems at the Alaskan pipeline operations, by Booz Allen Hamilton in March 2007, found that “BP’s top-down budget targets provided a ‘budget box’ in which activities, materials and projects had to fit.”
Federal safety regulators fined BP more than $5 million for “willful” safety violations at its Ohio refinery from 2006 to 2010. Federal regulators and prosecutors fined BP more than $150 million in combined civil and criminal penalties for safety and environmental violations at the Texas City plant and the company’s failure to bring the site into compliance after the fatal 2005 blast. The investors are seeking reimbursement of costs for pursuing the lawsuit, including attorneys’ and experts’ fees, along with unspecified damages to be paid to BP by the individual directors and executives for the company’s losses as a result of the alleged breaches of fiduciary duty. The lawsuit also asks that the Defendants account for profits and benefits, including salaries, bonuses and stock options, obtained through their alleged misconduct. Any money recovered would be placed in a trust for the company’s use.
Source: Business Week
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.