DAILY NEWS Nov 15, 2012 12:16 PM - 0 comments

BP reaches settlement with U.S. authorities related to Deepwater Horizon

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BP has confirmed it has reached an agreement with the United States government, subject to court approval, to resolve all federal criminal charges and all claims by the Securities and Exchange Commission (SEC) against the company flowing from the Deepwater Horizon accident, oil spill and response.

BP 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.

In April 2010, a rig off the Louisiana coast sank and the well on the sea floor released millions of gallons of crude oil into the Gulf of Mexico. Among other things, the spewing oil, which was not capped until July, temporarily shut down parts of the Gulf to commercial fishing and prompted a temporary ban on deepwater drilling.

As part of its resolution of criminal claims with the U.S. government, the company reports it will pay $4 billion, including $1.256 billion in criminal fines, in installments over a period of five years. As well, $2.394 billion will be paid to the National Fish & Wildlife Foundation and $350 million will be paid to the National Academy of Sciences, both over a period of five years.

With regard to resolution of all SEC claims, this includes $525 million paid in installments over a period of three years.

“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,” Bob Dudley, BP’s group chief executive, notes in the company statement. “From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf,” Dudley adds.

The company, however, reports that it is prepared to vigorously defend itself against remaining civil claims.

Chairman Carl-Henric Svanberg suggests the resolution is in the best interest of BP and its shareholders. “It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims.”

Published media reports on Thursday indicated a settlement in the billions of dollars had been reached. The settlement was said to be the largest criminal penalty in the history of the United States, notes a story published by The Associated Press and carried in the Globe & Mail.

As of the end of September, BP reported on Thursday, the company’s financial statements recorded a $38.1-billion charge taken against pre-tax income related to the accident and oil spill. “Today’s resolution is expected to result in an increase of approximately $3.85 billion to the $38.1 billion charge.”

In March, the company reached a proposed settlement with the plaintiffs’ steering committee (PSC) that was estimated to be worth $7.8 billion. The settlement was to cover medical claims, including payments based on a matrix for certain currently manifested physical conditions, as well as those for economic loss, including an estimated $2.3 billion for the seafood industry and a fund to support continued advertising to promote Gulf Coast tourism.

As part of the terms of the plea agreement announced Thursday, BP has agreed to take additional actions around its risk management processes, enforceable by the court, to further enhance the safety of drilling operations in the Gulf of Mexico. “We take seriously not only our commitment to safety and operational excellence, but also our communications with stakeholders, including the public, the government and our investors,” Dudley adds.

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