BP to Admit Crimes and Pay $4.5 Billion in Gulf Settlement

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Courtesy of The New York Times

BP, the British oilcompany, said Thursday it would pay $4.5 billion in fines and other payments to the United States government and plead guilty to 14 criminal charges in connection with the giant oil spill in the Gulf of Mexico two years ago.

The payments include a $4 billion fine to be paid over five years, with much of it to go to government environmental agencies, BP said in a statement.

As part of the settlement, BP pleaded guilty to 11 felony misconduct or neglect charges related to the deaths of 11 people in the Deepwater Horizon accident in 2010, which unleashed millions of barrels of oil into the gulf.

A law enforcement official familiar with the case also said that two BP employees would be charged with manslaughter in the case. The United States attorney general, Eric H. Holder Jr., was scheduled to hold a news conference in New Orleans later Thursday.

“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 company said in a news release.

The company said earlier Thursday it was in advanced talks with the United States about settling all criminal claims stemming from the spill.

Even with a settlement on the criminal claims, BP would still be subject to other claims, including federal civil claims and claims for damages to natural resources.

In particular, this settlement does not include what is potentially the largest penalty: fines under the Clean Water Act. The potential fine for the spill under the Clean Water Act is $1,100 to $4,300 per barrel spilled. That means the fine could be as much as $21 billion, according to Peter Hutton of RBC Capital Markets in London.

BP repeatedly said it would like to reach a settlement with claimants if the terms were reasonable. The unresolved issue of the claims has been weighing on BP’s share price as the oil company has been under pressure from investors to move on from the disastrous oil spill that had hurt the company’s reputation and finances.

An explosion in 2010 on the Deepwater Horizon drilling rig in the Gulf of Mexico that was connected to a well owned by BP killed 11 oil workers and spilled millions of barrels of oil into the surrounding water.

BP in March agreed with the lawyers for plaintiffs to settle claims on economic loss, including from the local seafood industry, and medical claims stemming from the oil spill. BP said at the time it expected the cost of that settlement to be about $7.8 billion, which it will pay from a trust the company set aside to cover such costs.

The company returned to profitability in the third quarter and increased its dividend, it said in October. It has been shrinking as it sold assets to raise funds to pay for costs related to the oil spill.

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