In compiling POGO’s Federal Contractor Misconduct Database, it is rare to find a contractor involved in more than one misconduct instance in a single week. Needless to say, we were astounded last week when we found a contractor involved in six instances – all in one day.
October 25, 2007 was just another day for most of us, but to the officers, directors and shareholders of energy giant BP Amoco P.L.C. (now BP P.L.C.), it might earn the nickname “Black Thursday.” On that day, it was announced that various divisions of BP racked up over $380 million in criminal and civil fines and restitution in five separate instances involving federal regulators and prosecutors. In the sixth instance, a federal grand jury indicted four former employees.
Here’s a quick rundown of BP’s very busy day:
* The Federal Energy Regulatory Commission (FERC) assessed a $7 million civil penalty on BP Energy Company for violating FERC’s capacity release policy.
* BP Products North America pleaded guilty to violating the Clean Air Act and agreed to pay a $50 million criminal fine and serve three years of probation.
* British Petroleum Exploration pleaded guilty to violating the Clean Water Act and agreed to pay $20 million in fines and restitution and serve three years of probation.
* A former gasoline trader for BP Products North America paid a $400,000 civil penalty to settle charges of violating the Commodity Exchange Act.
* The Department of Justice agreed to defer prosecution of BP Products North America for violating the Commodity Exchange Act in exchange for $303 million in fines and restitution and cooperating with the government’s ongoing investigation. That day, a federal grand jury in Chicago indicted four former BP America employees in the matter.
It would almost break your heart, were it not for the fact BP boasted $22 billion in profits last year, and oil is currently trading at over $90 a barrel. If paying exorbitant gas prices alone doesn’t elicit your sympathy, consider that BP is one of the federal government’s largest contractors, scooping up over a billion dollars in contracts each year despite regularly committing infractions like the ones described above.
With the addition of these six instances, BP now has the second highest misconduct penalty dollar amount with $1.1 billion. It ranks behind another oil company, Exxon Mobil, with a penalty amount over four times larger. That amount could grow significantly if the Supreme Court, which today agreed to hear a case involving the 1989 Exxon Valdez oil spill, upholds the $2.5 billion punitive damages award.
-- Neil Gordon