BP Faces FBI Probe over Oil Spill

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by
TimesOnline/UK

BP Faces FBI Probe over Oil Spill

by
Giles Whittell, Robert Lea, Ian King

Mr Holder announced that he was launching a criminal and a civil investigation into the oil spill. Earlier, he met Louisiana law enforcement officials in New Orleans after ordering BP to preserve records that could shed light on what led to the disaster. He has also instructed US Department of Justice staff to look for evidence of “malfeasance” in the days and hours before the Deepwater Horizon rig blew up. (Jacques Brinon/AP)

BP’s future as a global concern was at stake tonight after the US
Attorney
General, announced that he was launching a criminal and a civil
investigation into the Louisiana oil spill.

As Eric Holder made his announcement, the British company’s chief
executive
fought to halt a headlong slide in its stock price.

After losing a third of its value in just six weeks, BP is expected to
promise
shareholders their full annual dividend in a last-ditch bid to retain
their
loyalty. More than £12 billion was wiped off the company’s value today
alone, as Mr Obama dispatched his top prosecutor to Louisiana and vowed
to
bring to justice those responsible for what he called “the greatest
environmental disaster of its kind in our history”.

Shares in what used to be Britain’s biggest company endured their worst
day’s
trading in more than two decades, dragging down the FTSE 100 index and
with
it the value of dozens of leading pension funds.

In Washington, Mr Obama stepped up his efforts to assert control over
the
disaster response with his second televised address in less than a week.
“If
our laws have been broken leading to this death and destruction, my
solemn
pledge is that we will bring those responsible to justice on behalf of
the
victims of the catastrophe and the people of the Gulf region,” he said.

Mr Holder announced that he was launching a criminal and a civil
investigation
into the oil spill. Earlier, he met Louisiana law enforcement officials
in
New Orleans after ordering BP to preserve records that could shed light
on
what led to the disaster. He has also instructed US Department of
Justice
staff to look for evidence of “malfeasance” in the days and hours before
the
Deepwater Horizon rig blew up.

The first government attack on BP in US courts may come from Louisiana’s

Attorney General, James Caldwell, who has received $5 million from the
state
government and demanded $22 million more to sue the company and its
subcontractors on behalf of the disaster’s victims.

State and federal investigations are likely to focus on BP’s
relationship with
the Minerals Management Service, a government agency condemned in
official
reports for a “culture of corruption”. In an unusual departure from
normal
procedures, the MMS granted BP three changes to its drilling permit for
the
Deepwater Horizon rig in a single day a week before the rig sank, a Wall

Street Journal investigation revealed yesterday.

Separate congressional investigations have focused on two critical
decisions,
both blamed on BP by its main subcontractors, to replace heavy mud with
water in the “riser” pipe leading from the well head to the surface; and
to
use a high-tech but relatively untested type of concrete in the well
casing.

BP said today that its latest effort to cap the well – a hood placed
over the
failed “blowout preventer” at the bottom of the riser – could be in
place as
soon as today. But the failure of every tactic tried so far combined
today
with an increasingly hostile US Administration to produce fears for the
future of the company.

“This situation has now gone far beyond concerns of BP’s chief executive
Tony
Hayward being fired or shareholder dividend payouts being cut,” said
Dougie
Youngson at stockbroker Arbuthnot.

“It’s got the real smell of death. This could break BP. Given the
collapse in
the share price and the potential for it to fall further, we expect that
it
could become a takeover target, particularly if its operating position
in
the US becomes untenable.”

BP is the most important company on the UK stock market by a
considerable
margin. Roughly £1 in every £6 received in dividends by UK pension funds

comes from BP, so a cut would severely impact almost every saver in the
land. Such is the company’s size, the fall in its share price was
yesterday
sufficient to knock 57.5 points from the value of the FTSE-100, although
the
index actually finished 25.13 points lower due to rises among other
blue-chip stocks.

Any cut in BP’s dividend would be a traumatic event for the company. It
last
cut its payout to shareholders in August 1992 after reporting its
first-ever
quarterly loss.

With much of today’s share price fall being attributed to fears that the

company may have to cut its dividend, BP’s chief executive, Tony
Hayward, is
expected later this week to assure investors that the payout will be
maintained.

The company’s share price fell to as low as 412.25p at one stage today
before
a partial rally. That followed an admission from BP that the cost of its

repeated failed bids to stem the flow from the blow out, the clean-up
operation, and early payments of claims by affected American and by
states
around the Gulf has already topped $1 billion. BP is privately putting
the
total cost of the disaster at $4 billion by the end of the year.

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