The price of a stain on reputation

Editor's column for The Times

On June 16, BP finally agreed to hand over $20 billion to compensate those whose lives and futures were affected by the oil spill in the Gulf of Mexico. It took several days of public pressure from President Obama and...

On June 16, BP finally agreed to hand over $20 billion to compensate those whose lives and futures were affected by the oil spill in the Gulf of Mexico. It took several days of public pressure from President Obama and countless hours of closed-door negotiations. Given the scale of the disaster in the Gulf, we suspect that this $20 billion may not be enough. But this is a good start.

After meeting with BP top managers at the White House, Obama stressed that this payment does not relieve BP of all financial obligations. According to some estimates, they could exceed $40 billion, including the cost of collecting spilled oil and restoring the damaged ecosystem of the bay.

“I promise the residents of the affected areas that BP will honor its obligations,” the president said. He added that the agreement would not allow the oil company to avoid private lawsuits. BP did not publicly raise the issue of the maximum amount that it is willing to pay, but the chairman of the board of directors of the company, Karl-Henrik Swanberg, nevertheless apologized "to the people of America" ​​and promised to "take care of the affected people" and "repair the damage caused to the region and the economy" .

Of course, there are plenty of reasons not to trust BP.

For many years, the company claimed to be prepared for the likelihood of a spill in the bay, and was completely unprepared. After the Deepwater Horizon explosion, she downplayed the leak, starting with an estimate of 1,000 barrels a day, then 5,000, and then—when her calculations began to look less and less plausible—leaving the job to government scientists. Their current estimate is that the leakage is as high as 60,000 barrels per day.

When President Obama first began talking about creating an escrow fund and suspending dividends to BP shareholders, the company actively resisted, calling on British politicians to help. They argued that the Americans were punishing them unfairly.

It seems that Svanberg decided that the best step now would be to admit guilt and go to the authorities. BP has announced that it will suspend dividend payments for the next three quarters, totaling about $7.5 billion. In essence, the company is putting residents of the affected region ahead of its own shareholders. BP also agreed to provide another $100 million to pay workers who were left jobless after Obama's moratorium on deepwater drilling in the Gulf. This should ease the pressure on the President from those who seek the resumption of oil production.

Having the $20 billion guaranteed should show the victims of the leak and all Americans that BP can't escape responsibility. It is also encouraging that the fund will be managed by Kenneth Feinberg, a seasoned administrator whose oversight of the 9/11 compensation fund was highly praised in its time.

Feinberg's task at that time - estimating the value of life in almost 3,000 cases - was incredibly difficult. This time he will have to evaluate many more claims from many more people. The claims are currently being reviewed by BP, and the company is being criticized for lack of a unified approach and not responding quickly enough to claims from people who could lose their companies within weeks or even days.

The White House must continue to put pressure on BP. Under the terms of the agreement, the company can transfer money to the fund for several years - this was done so as not to harm its liquidity and not to scare off investors. It is necessary to force her not to go beyond the established time frame. The company must also begin to take action to fully pay back the billions of dollars that will be needed to clean up the consequences of the spill and fines under the clean water law.

I would like to think that the issue of payments is now resolved. This is wrong. Claims in the case of the 1989 Exxon Valdez tanker have been pending for two years, and oil is still being found on the rocks of Prince William Bay.