In another example of BP’s insatiable greed, BP has now been accused of overcharging the State of California by as much as $300 million by selling natural gas to the state at an inflated price. According to the state, BP routinely manipulated and overcharged California agencies by as much as 10 times what it billed other bulk-purchase customers between 2004 and 2012. It’s alleged in the complaint:
BP’s management manipulated its profit margin to exceed any reasonable amount of profit and greatly exceeded these contractual caps. The amount of overcharging to plaintiffs on special purchases was rarely less than three times greater than allowed under the contract and was often five to six times the cap.
For the past decade, California’s Department of General Services entered into exclusive contracts with BP to provide natural gas for state entities in hopes of locking in a reasonable and constant price. Instead, the state alleges, BP sellers routinely sold natural gas to the state at a price well above market price, and BP reaped a profit margin that typically was at least three times what was set in the contract.
The State of California alleges it was overcharged between $150 million and $300 million on total gas sales of $2 billion. The state also contends that BP padded its billing by exceeding an agreed-upon maximum profit margin of 15 percent. Then, it hid the excess charges “in an intentionally convoluted fashion so the state could not unwind the transactions.”
Additionally, it is alleged that BP’s traders only sold gas at inflated prices to California and “did not obtain natural gas at competitive market prices.” Moreover, according to the state, BP had been billing California more than it charged similar bulk clients and the company’s management also “had actual knowledge on a daily basis of the fact of overcharging and the significant amounts that were involved.”
The California attorney general’s office has joined the lawsuit that alleges a violation of the California False Claims Act. The complaint was unsealed last month in San Francisco Superior Court. According to the state, BP, the exclusive gas supplier to California government agencies, overcharged agencies by as much as 10 times what it billed other bulk-purchase customers between 2004 and 2012.
The suit was originally filed by a former employee of a BP subsidiary company based in Houston. The whistle-blower, Christopher A. Schroen, was a member of a BP team that worked on the company’s natural gas supply account with the California Department of General Services during the eight-year period.
Sources: www.abcnews.go.com and www.latimes.com
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