June 20, 2010

Barack Petroleum - banana republic edition

The $20 billion dollar shakedown of BP has set an unholy precedent which will reverberate thru US business interests overseas. Next time Exxon has a Russian style environmental audit at Sakhalin, what's to stop a Gazprom-friendly politician ordering up a few bill. in escrow money by citing the Obama example ?

BP screwed up unforgivably by the looks of it, albeit with the full, explicit knowledge of the relevant federal agencies, but it was meeting all its financial duties and has resources and cash flow to meet future liabilities. That refers to legal and moral liabilities, not economic losses from the imbecilic, US mandated 6 month drilling shutdown based on an expert report falsified by the Dept of Energy and disowned by the experts who wrote it.

This FT article asks a good question - how is the BP's escrow commitment to Obama legal without shareholder approval?
“I don’t get how [legally] BP can cancel an already declared dividend, and offer up $20 billion, without a shareholder vote. Nor why they’d do either of those things. If Obama insisted on a political headline, I’d have much rather it’d been Hayward’s scalp,” one trader said.

The article makes a nice point about one of Tony Hayward's possible successors, Robert Dudley:
Mr Dudley, an affable Mississippian, meanwhile, has been in the fray in Houston, managing the clean-up and is seen as having handled the public scrutiny better than his chief executive.

He was also at Mr Hayward and Mr Svanberg’s side during Wednesday’s meeting with Mr Obama.

Mr Dudley’s recent post as chief executive of TNK-BP, BP’s Russian partnership, gives him experience running a company in a host country with an unpredictably hostile government.

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