The legal situation over the Deepwater Horizon explosion appears to be getting more serious as accounts emerged that there was a serious argument between Transocean and BP officials shortly before the blast — with references to the possible use of the blowout preventer. One BP official, Robert Kaluza, has become the first known person associated with the blast to invoke the Fifth Amendment privilege against self-incrimination to refuse to answer questions.
According to witnesses, there was a fierce disagreement at an 11 a.m. meeting on April 20 — less than 11 hours before the blast. Transocean’s rig operator Jimmy W. Harrell reportedly strongly objected to an order by BP’s top representative over how to start removing heavy drilling fluid and replacing it with lighter seawater from a riser pipe connected to the well head. There are allegations that the crew may have started the process without taking necessary precautionary steps.
Witnesses said that Harrell was so upset that, as he walked away, he complained “I guess that is what we have those pinchers for” — a reference to the now famous blowout preventer that is supposed to sever the main pipe in case of a disaster.
This is the type of meeting that races the heart of any plaintiffs’ lawyer. It is not just likely to be the focus of attorneys representing the families of dead workers but of company lawyers training to shift blame between the three main companies, BP, Transocean, and Halliburton. It may also indicate that likely tort actions will pursue a combination of negligent acts by these companies — through criminal prosecution clearly remains the most prominent concern for officials like Kaluza.
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Greg Palast is one of the best journalists covering corruption in the US. He has a lot to say about BP and about the Exon Valdez spill. Exon managed to delay and stall and ultimately reduce the damages that it paid so that they were less than it had saved by skimping on saftey and less than the value of the damage done to those most affected by the Exon Valdez spill. Even taking punitive damages into account, the damages did not compensate for victims’ losses. This is a recent post about Exon and BP and here is more on the Exon Valdez. I could go further and search Greg’s site for more relevant articles but rather I recommend you search his archives. His books “The Best Democracy Money Can Buy” and “Armed Madhouse” are very gripping reads.
Mike S.
I suggest the terms “kleparchy” and “kleptocracy” instead of “corporatocracy”. We really need some terms of abuse for the rich and powerful carrying as heavy a load of negative connotations as do the terms “liberal”, “progressive”, “pinko” and “bleedinh heart” that no doubt in the minds of decent Americans describe the Professor and most commentors on his site.
i suggest that people interested in th irresponsible behaviour of BP when it comes to preventing oil spills consult the archives at Greg Palast’s web site.
This article is the most recent on a BP spill in Alaska. Incidentally it is BP more than Exon that is responsible for the Exon Valdez catastrophe. Exon just had its name on the ship.
The CEO and President of any Corporation in the US owes the shareholder the following:
Directors, officers, and employees of a corporation owe fiduciary duties to its shareholders.
Those general fiduciary duties owed to shareholders include the duty of care and the duty of loyalty.
This is straight out of the ABA.
AY:
no, I meant to say moral. Company officers, in my opinion, have a moral duty to their employees and shareholders to conduct business in an ethical manner.
It’s that pesky rational self interest philosophy I like to practice.
If you behave unethically it hurts not only share holders and employees but yourself as well. So a rational individual would act morally because it would be in his self interest to do so.
Bryon,
Did you not mean to say amoral?
Question for the lawyers:
why is there even a cap? Who paid what to who to pass that law?
Does that limit private individuals from suing?
Mespo:
“BP’s managers have a duty to their shareholders to abide by the law, act ethically, and to promote the long term best interests of this money making, immortal, and sometimes bumbling giant.”
A big amen to that statement. I would say “moral duty” however.
The ex post facto clause in the Constitution, Article I, sec. 9, cl.3, applies only to penal or criminal laws, not to civil legislation. It bars Congress from making an act criminal after it was committed, or from increasing the penalty for a past act. See the early Supreme Court case Calder v. Bull, 3 U.S. 386 (1798).
For further information, read the Constitution Annotated:
http://www.gpoaccess.gov/constitution/pdf2002/011.pdf
[scroll down to page 369].
There are limits on retroactive civil legislation, but not on the basis of ex post facto. Such legislation must pass muster under, among other things, the due process and just compensation clauses of the Fifth Amendment.
Isabel Darcy:
“BP’s senior management has a duty to its shareholders to use every trick in the book to fight tort claims.”
*****************
I find it odd that we have come to the point where it is seriously argued that corporate managers have a duty to their occasional citizen but mostly institutional shareholders to avoid responsibility by whatever trickery or chicanery is avaialble. Would we make such a determination if the accused was a natural person? Is it in the interests of the shareholders to infuriate the customer base by means of obvious trickery and subterfuge? Were corporate officials in 1982 guilty of malfeasance at Johnson & Johnson when they promptly and publicly acknowledged their responsibility for failure to protect the public from foreseeable tampering with their Tylenol product and expeditiously moved to remedy the packaging issues? Were managers at A.H. Robins furthering the interests of stockholders by sandbagging and obstructing justice in the Dalkon Shield litigation that ultimately led to the bankruptcy of the company, the “fire sale” purchase of its assets, and the displacement of thousands of its workers?
BP’s managers have a duty to their shareholders to abide by the law, act ethically, and to promote the long term best interests of this money making, immortal, and sometimes bumbling giant.
Isabel Darcy,
As I understand it, superfund is a precedent for raising the damage cap retroactively.
BP’s senior management has a duty to its shareholders to use every trick in the book to fight tort claims. They will use the same tactics as Exxon used with the Valdez tragedy. And, unlike the Valdez situation, now there’s the $75M cap on liability over and above actual clean up costs (consequential damages?). I read somewhere that the 1990 law contains a provision allowing the DOI to increase the original $75M cap every three years based on the CPI. Well, it turns out that none of the secretaries of the DOI under Bush, Sr., Clinton, Bush, Jr. or Obama ever bothered to raise the cap. I don’t know if it can be raised retroactively. Notice the silence and coyness of BP on whether they will agree to raise the $75M cap.
There have apparently been lawyers from the DOJ who have recently testified that Congress can unilaterally raise the $75M cap. How can this be? Wouldn’t this be an ex post facto law? I am not a litigator or a constitutional scholar in any way, but this doesn’t sound right to me.
if this keeps up i’d look for BP to do something drastic…like change their name.
In March, I wrote:
Yet this is what the government has done on behalf of the oil industry, setting limits to legitimate damages. Government set up a tax to fund the Oil Spill Liability Trust Fund. In exchange for this small tax ultimately paid by consumers, the industry enjoys a $75M cap on liability. With that artificially lowered liability comes an incentive for increased risk taking. Government policy also drove where these risks will be taken, since exploration is heavily regulated.
Risky deep water drilling in places like the Gulf of Mexico is economically feasible because of government policy, not because of a blind profit motive.
I have to agree that criminal liability is the best way to get the message across to these corporate felons. Of course, having to pay Billions to pay for their mess won’t hurt either. I think we have just begun to see the “taking the Fifth” moments.
Mike A,
I couldn’t agree more – the only way that companies will get the message is through criminal prosecution of executives and loss of shareholder equity – these are the parties that were going to benefit if these unacceptable risks had paid off – they need to be the ones that pay for the mistake.
As mespo notes, this catastrophe virtually begs for awards of punitive damages all around. The corporate decisions that created the risks also exemplify why public policy is ill-served by punitive damages caps. How is the public served by rules precluding a jury from determining that the actions of a corporate defendant are so abhorrent and outrageous that it merits the forfeiture of every last ounce of shareholder equity? The evidence to date certainly suggests that a civil death penalty is warranted in this instance. Only when shareholders begin to look past the dividend checks and understand that they bear ultimate responsibility for the men and women they elect as directors and that everything they have in a company can be put at risk for executive wrongdoing will we see any effort to curtail the profits over safety mentality. As we recently saw in the mining industry, the imposition of paltry fines by compromised agencies, coupled with limitations imposed by workers compensation statutes and sustained union-busting efforts, make irresponsible corporate decision making highly profitable, even in the most dangerous of industries.
In our current Corporatocracy all including criminality is permissible, with little consequence. Anyone reminded of the fact that Nobles in the middle and late middle ages could kill whoever they wanted to (providing it wasn’t another Noble). We are fast heading back to feudalism in this country and that isn’t about economic theory or policy. It’s about the wealthy and executive class egos and their attempt to prove that they have cojones. Remember we elected cowards to lead us in Bush/Cheney and how much each of them attempted to prove they were tough.
frsnkdwag,
You will soon find out that Corp are only people when it comes to Gifts, Grafts and Gratuities… Not when it come to Corporate liability.
Help me out here prof – now that corporations really are people (and all along I thought it was only Solent Green that was people) where are we going to incarcerate these companies?
Will we be locking up just the buildings or all the employees or just the company charter?
What size cuffs will we need to slap on Haliberton world HQ?
“This is Dick Cheney of the FBI. I know I’m in there! If I don’t come out in the next 5 minutes I’m coming in after me!”