Manslaughter charges for BP

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UYGUR: Justice Department investigators are considering whether to pursue manslaughter and forgery charges for the explosion aboard deepwater horizon ring which killed 11 workers. If pursued, the measures would finally hold the company with the history of problems responsible for its deadly negligence. Even before the BP spill, this was a company with many, many problems. It had been cited for 760 egregious willful safety violations between June of ‘07 and February of 2010.

By way of comparison, Exxon only had one over that same period. It beat Exxon 760 to one in safety violations, that is not a good record. But the company reached new levels of inept attitude and the days and months leading up to the explosion. BP was repeatedly warned by Halliburton, the company that it hired to seal the well with cement, that it should use 21 devices called centralizers to make sure the well was properly sealed. They opted and said to use just six. Can you imagine? They were more irresponsible than Halliburton. Now, on top of that they ignored clear warning signs in the hours leading up to the explosion.

Investigators learn that there was quote, “a very large abnormality in a negative pressure test,” which expert leaks in the well. But workers later decided that the test was successful after all. Gee, I wonder what kind of pressure was put on to get to that result. During the testimony months later, BP called that the fundamental mistake, although there were many mistakes, of course. Now, why the rush to get that work done? And to avoid dealing with promise that would lead approves to be deadly? Money, of course, BP leaks the Deepwater Horizon oil rig from Transocean. It was hoping to use that rig to drill another well in the gulf.

Now, BP had hoped to start a new well by March 8. The delays had put the company behind schedule. Based on an estimate of $500,000 per day to drill on the site, the delay of forty three days had cost BP more than $21 million by the day of the explosion on April 20. So, they risked the operation and people‘s lives because they wanted to hurry up and make more money. And there‘s no clearer example of their cost-cutting than the infamous blow-out preventer. The one thing that was supposed to be the fail state in cutting the flow of oil. This last line of defense didn‘t work for numerous reasons. Among the promise cited, a dead battery in its control pad, a useless version of a key component and last but not the least, the failure to install a 500,000 switch in case blow-out preventer failed.

Well, that extra $500,000 wound up costing them $20 billion in damages, and much more importantly, 11 lives were lost because of the explosion on that Deepwater Horizon oil rig. That‘s really—see those folks? I mean, I hate to tell you this, but they died. You know that, and they had families, and now they‘re not with us anymore, because somebody didn‘t want to spend a little extra money. And of course, an estimated 172 million gallons also spilled into the gulf affecting all of us. Look, corporations demand special rights in court, and they usually get them. Cases like Citizens United give them human rights like freedom of speech. But when it comes to responsibility, then all of a sudden they don‘t want treated like human beings, they don‘t want to be held criminally responsible for their actions.

Well, you can‘t have it both ways, you can‘t say you want all the constitutional rights of real human beings and none of the responsibilities. And who should shoulder that blame? How about the guys at the top who are making all of the money. They get all the up side, so shouldn‘t they be held responsible for the down side? My guess is that if we did that, and they were on the line, all of a sudden, we would have a lot more safety precautions, because those guys don‘t want to go to jail.

Joining me now is University of Maryland Law School Professor Jane Barrett to talk about this more. Professor Barrett, what would happen if we said, hey, you know, the CEO of the company is going to go to jail if people die on this job because of criminal negligence, do you think that that would help make the jobs a lot safer?

PROF. JANE BARRETT, UNIVERSITY OF MARYLAND LAW SCHOOL: Well, I think if there were personal accountability of corporate management for these types of accidents, that‘s clearly would make people pay more attention to the laws, and I agree with you, it would stop some of the workplace disasters we see.

UYGUR: And how about the specific case of BP? Do you think there is some chances that some people are going to go to jail, and if they do, who would that be?

BARRETT: I think that there is a possibility, based on the reports, the government is looking at a wide range of potential actions, ranging from false statements to Congress, false statements perhaps to investors, as well as what actually happened on the rig. The seaman‘s manslaughter statute has provisions to hold both of people who are on the rig responsible for negligence, as well as people who are onshore or up the corporate chain. The government can always use an aiding and abetting to kind of loop in the senior executives. I will tell you, this is a long process, this are not easy cases to bring, in my view one of the worst things could happen is if the government just simply settles for a large corporate fine and doesn‘t try to at least hold some individuals accountable.

UYGUR: You see, here‘s my problem with middle management, right? Or, set the guys on a ring, they have a ton of pressure on them, to make money, make money, we‘ve got to go, we‘ve got to open up that second rig, it‘s costing us a lot of money, and then if something goes wrong, then you blame them. And if they don‘t do it, and they don‘t succumb to that pressure, they get fired sometimes. So, it doesn‘t make more sense to move it up the chain, so that there‘s a culture at the company, oh my God, don‘t play with people‘s lives, because ass is.

BARRETT: Well, absolutely. The problem is under our system of laws, you‘ve got to have the evidence. And sometimes, the only way to get the evidence is by working your way up the chain just like you do in any other criminal case. If you‘re investigating a company for falsifications in terms of government contract, you start with the lower-level employees and you work your way up. That‘s not to say that all of those lower-level employees would get charged, but they‘re clearly going to be part of the investigation. And in my view, you need to get this investigation up to management that are off the rig who are making some of the decisions, if it‘s going to have a deterrent effect.

UYGUR: All right. Professor Jane Barrett, thank you so much for joining us tonight.

BARRETT: My pleasure.

UYGUR: We really appreciate it.

BARRETT: And look, I want to tell the audience one more thing here, look, again, I can‘t emphasize enough, those 11 guys died. It wasn‘t a simple mistake. It wasn‘t an act of God. It was people saying I want to save a nickel and a dime, and if people wind up dying, OK, so be it. There‘s something wrong with that, and I think the government should take criminal action on that.

About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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