UPDATE: BP to Pay $4.5 Billion Over Gulf Oil Spill

Holder: "Single largest criminal resolution in the history of the United States"

Published in CSP Daily News

UPDATE: In what U.S. Attorney General Eric Holder called "the single largest criminal resolution in the history of the United States," BP has agreed, subject to the Court's approval, to pay $4 billion in criminal fines and penalties for its conduct leading to the 2010 Deepwater Horizon disaster that killed 11 people and caused the largest environmental disaster in U.S. history.

The agreement charges BP with 11 counts of felony manslaughter, one count of felony obstruction of Congress and violations of the Clean Water and Migratory Bird Treaty Acts.

BP also resolved civil securities fraud charges with the U.S. Securities & Exchange Commission (SEC) in a $525 million settlement.

"The $4 billion in penalties and fines is the single largest criminal resolution in the history of the United States and constitutes a major achievement toward fulfilling a promise that the Justice Department made nearly two years ago to respond to the consequences of this epic environmental disaster and seek justice on behalf of its victims," Holder said in a press conference Thursday afternoon. "We specifically structured this resolution to ensure that more than half of the proceeds directly benefit the Gulf Coast region so that residents can continue to recover and rebuild."

He added, "I want to be absolutely clear that today's resolution does not mark the end of our efforts. In fact, our criminal investigation remains ongoing--and we'll continue to follow all credible leads and pursue any charges that are warranted."

Click here to view Holder's full statement.

Assistant Attorney General Lanny Breuer of the U.S. Department of Justice's Criminal Division, also said at the press conference that "the explosion of the rig was a disaster that resulted from BP's culture of privileging profit over prudence. We hope that BP's acknowledgment of its misconduct--through its agreement to plead guilty to 11 counts of felony manslaughter--brings some measure of justice to the family members of the people who died onboard the rig."

Click here to view Breuer's full statement.

"The oil spill was catastrophic for the environment, but by hiding its severity BP also harmed another constituency--its own shareholders and the investing public who are entitled to transparency, accuracy and completeness of company information, particularly in times of crisis. Good corporate citizenship and responsible crisis management means that a company can't hide critical information simply because it fears the backlash," said Robert Khuzami, director of the SEC's Division of Enforcement.

Click here to view additional information, details of the criminal charges and court documents.

WASHINGTON -- BP has reached agreement with the U.S. government, subject to court approval, to resolve all federal criminal charges and all claims by the Securities & Exchange Commission (SEC) against the company stemming from the Deepwater Horizon accident, oil spill and response. As part of its resolution of criminal claims with the U.S. government, BP will pay $4 billion, including $1.256 billion in criminal fines, in installments over five years.

BP has resolved the SEC's Deepwater Horizon-related claims against the company. BP has agreed to a civil penalty of $525 million, payable in three installments over three years, and has consented to the entry of an injunction prohibiting it from violating certain U.S. securities laws and regulations.

BP has also agreed to a term of five years' probation. This resolution is subject to U.S. federal court approval.

"All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region," said Bob Dudley, BP's group CEO. "From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf. We apologize for our role in the accident, and as today's resolution with the U.S. government further reflects, we have accepted responsibility for our actions."

In eliminating the possibility of any further federal criminal charges against the company based on the accident, BP has taken another significant step forward in removing legal uncertainty and can now focus more fully on defending itself against all remaining civil claims. The company said that it "is prepared to vigorously defend itself against remaining civil claims."

"We believe this resolution is in the best interest of BP and its shareholders," said Carl-Henric Svanberg, BP's chairman. "It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims."

As reported in a Raymond James/CSP Daily News Flash, as part of the resolution, BP has agreed to plead guilty to 11 felony counts of Misconduct or Neglect of Ships Officers relating to the loss of 11 lives; one misdemeanor count under the Clean Water Act; one misdemeanor count under the Migratory Bird Treaty Act; and one felony count of obstruction of Congress.

Thirteen of the 14 criminal charges pertain to the accident itself and are based on the negligent misinterpretation of the negative pressure test conducted on board the Deepwater Horizon. BP acknowledged this misinterpretation more than two years ago when it released its internal investigation report. Today's agreement is consistent with BP's position in the ongoing civil litigation that this was an accident resulting from multiple causes, involving multiple parties, as found by other official investigations. The remaining criminal count pertains to two BP communications made to a member of Congress during the spill response about flow rate estimates.

Under the resolution with the Department of Justice (DOJ), a total of $2.394 billion will be paid to the National Fish & Wildlife Foundation (NFWF) over a period of five years. In addition, $350 million will be paid to the National Academy of Sciences (NAS) over a period of five years.

Pursuant to the terms of the plea agreement, BP has also agreed to take additional actions, enforceable by the court, to further enhance the safety of drilling operations in the Gulf of Mexico. These requirements relate to BP's risk management processes, such as third-party auditing and verification, training and well control equipment and processes such as blowout preventers and cementing. In addition, BP has agreed to several initiatives with academia and regulators to develop new technologies related to deepwater drilling safety.

Click here to view the full BP statement.

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