Published on November 15th, 2012 | by Chris Milton1
Why it pays BP to be criminal
Earlier today I was scribbling away furiously trying to keep up with the news that BP admits criminal liability for the Deepwater Horizon disaster. Then an astounding thought struck me: it’s actually paying BP to be a criminal.
My thinking goes something like this.
Reuters’ initial wire on the subject said:
(the record for the largest US criminal fine) is now held by Pfizer Inc, which paid a $1.3 billion fine in 2009 for a marketing fraud.
It also reported that the DoJ has instituted civil proceedings in New Orleans, which…
… could nearly quadruple the civil damages owed by BP under the Clean Water Act to $21 billion in a straight-line calculation
What do you think … be a criminal and accept a fine of over $1.3 billion, or not be a criminal and get walloped for $21 billion. Not much of a choice really is it?
Over in a different universe, I was also scribbling away about resilient economics. The article’s main thrust was how basing commerce on the long term exchange of good and services can create a more flexible and entrepreneurial market, instead of the suffocating deadness and inflexibility of basing an economy on financial activity.
And I can’t I can’t help remembering the neverending saga of Chevron in Ecuador, where Chevron (or Texaco as was) thought it had struck a similar bargain with the Ecuadorian government only to find the people affected coming after it for more money. And winning, it seems.
So. You put all these thoughts into a blender and give them a quick whizz. What do you end up with?
A business and regulatory system which is so hopeless inflexible it believes money will make everything right. I did wrong? Here have some cash. You want justice? Here have some cash. The definition of progress? Rising prices.
It’s utter madness. BP should be made to hang tough and remain engaged with the environment and communities its “stunningly, blindingly botched” (DoJ) activities have ruined for years, probably decades, to come.
As I’ve been scribbling away at this article, news has come out that BP has admitted liability and will pay $4.5 billion in penalties. It’s share price closed down by a whopping 0.08% (sarcasm) and is expected to rise over the next few days. So much for responsible investment and well as responsible business, then.
In the meantime, that mainstay of all that’s good in the business world Forbes published a piece a few weeks ago pondering whether CSR as we know it has now run its course. Run it’s course?? Boy, we’ve not even started to get started with what needs to be done!
Thankfully I’ve already written my response to that, and you can read it in Unstalling CSR with the Value Creation Framework. For now, though, I’ll end this rant here. Thank you for listening.