BP loses 15 percent of market value as U.S. launches criminal probe of spill
Wednesday, June 2, 2010
As BP hacked away at a pipe gushing oil at the bottom of the Gulf of Mexico, investors sawed off 15 percent, or $21.1 billion, of the company's market value Tuesday.
Attorney General Eric H. Holder Jr., during a trip to the Gulf Coast, announced that the Justice Department had launched criminal and civil investigations, adding to pessimism among BP investors reeling from the failed attempt to plug the leaking well over the weekend.
BP, the world's fourth-largest company before the April 20 blowout on the Deepwater Horizon drilling rig, has lost a staggering $74.4 billion, or 40 percent, of its market value in six weeks.
Although investment analysts say the company has pockets deep enough to pay for mounting claims and cleanup costs, the political outcry for making BP pay has added to the uncertainty surrounding its future, especially while oil is still leaking into the Gulf of Mexico.
President Obama vowed a "full and vigorous accounting" of the causes of the oil spill disaster in the gulf, telling the leaders of a new commission that they should pursue the trail of blame without limits. Separately, the Justice Department told a federal judge in Houston it opposed the request by Transocean, owner of the Deepwater rig, to limit its liability to $27 million under a 1851 maritime law. "This is cannot do," the department said in its filing.
Calls for punishing BP intensified. Sierra Club Executive Director Michael Brune said: "BP should pay. Not just for the cleanup, but for the lives lost and the natural treasures destroyed." And on the Web site Talking Points Memo, former labor secretary Robert Reich urged Obama to put BP's American operations into temporary receivership.
Meanwhile, BP had begun yet another effort to deal with the spill, using a giant lobster-claw-like slicer to cut off the old damaged pipe that has been twisted on the seafloor. A saw then worked on the remaining section of the blowout preventer to make it easier to get a tight fit later this week if BP can successfully lower a new apparatus on top to funnel oil and gas to the surface.
But the national incident commander, Coast Guard Adm. Thad Allen, did little to raise hopes of a quick end to the crisis, saying "We've got to keep our heads in the game; we've got to keep our shoulders to the wheel."
The tense relationship between the Obama administration and BP took a more adversarial turn with Holder's trip. He said that Justice was reviewing statutes such as the Clean Water Act and Oil Pollution Act of 1990, which could carry penalties of $1,100 for every barrel of crude spilled into the gulf, or more if negligence is proved. Legal experts said it is likely that BP will face at least a civil federal lawsuit and is already in violation of environmental laws.
In addition, criminal prosecutors are examining the possibility of false statements, obstruction of justice and conspiracy, federal law enforcement sources said, though they would not say whether evidence of such crimes has emerged. Legal experts said this means that investigators are exploring whether BP ignored warning signs before the explosion, falsified records or statements to regulators, or tampered with testing equipment.
Holder did not specify BP as the target of investigation. Numerous contractors are involved with the Deepwater rig.
The prospect of criminal charges, especially if filed against the corporation as well as individuals, could threaten BP's leases with the Interior Department and weaken its position in claims negotiations. Criminal charges put the accounting firm Arthur Andersen out of business, but other companies that have been the subject of criminal probes have settled and paid fines.