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.

4 words, 2 pictures

Red out, black in:

Every silver lining has a cloud

Obama and Hayward, the 2 CEO's responsible for the Gulf screw-up, are both snakebit. For them every silver lining has a cloud.

A comment in the DT:

As for Hayward’s supposed PR disaster, we need to accept the cultural differences between Britain and the US. We believe you should stay calm and behave as if everything is under control in a crisis. They like to show how committed they are and involved emotionally in the problem.

There's some truth in that. Today Hayward is sailing with his son on his first few hours off since April 20th and the media feign outrage. Hey-ho. Anyway, writing as a punter long BP, it's obvious that Hayward has to go. The guy looks punch-drunk with snake bites - a mixed metaphor to be proud of, I think.

Now, Obama....

Mick intones:

Two nations separated by a common language? I'm sure some of that was in play, but truth be told, calm in the face of the storm is also considered a virtue here in the U.S.

Hayward's demeanor was perfect for BP, because shareholders, employees and executives all know that he shares their fate and concerns. The appearance of sang froid is, in my view, always an asset within this context, but what Hayward did not understand is that Gulf coast residents, and the nation at large, were not at all certain that Hayward and BP shared their specific fate or concerns. The American south has always had a streak of xenophobia running through it, and BP being perceived as a 'foreign' corporation with a 'foreign' chief wasn't helping.

That seemed obvious to me, but apparently escaped Hayward and his team, who would have benefited from hiring some PR consultants as soon as the situated developed. Before he could create a perception of control, he needed to create for the Gulf Coast what he took for granted at BP--a shared fate (BP has long been part of the Gulf coast community...). I would have set up camp and invited the governors of the various gulf states to join him for some helicopter tours and in-depth discussions, setting up some sort of coordinated response between the company and the states.

Hayward made a lot of mistakes, but he has an excuse--ignorance. What's Obama's excuse?

It is literally incomprehensible that Obama didn't jump on this like a hungry owl on a mouse caught out in the open. He had Clinton as an advisor (who handled the Florida hurricanes with aplomb), the negative example of Katrina, and a life-time of political experience to tell him that he needed to get on this thing within hours of it happening.

Obama still has some die-hard supporters in the media who'll keep on making excuses for his profound incompetence, but they are dwindling rapidly.

Mark agrees: I agree.

Actually I don't excuse Hayward. PR in a crisis is an indispensable attribute of his job. The best PR is calm, directed action, frankly explained with no quips. It's not mysterious.

The only xenophobia I've noticed is in Washington. In the UK the contrast with Piper Alpha is widely noted. In 1988 a US operated platform exploded in the North Sea killing 168 men. An enquiry judged the operator, Occidental, to be culpable. There were no boots on throats, yankeephobia or political posturing about this accident, just a determination to fix what was wrong. Margaret Thatcher was Prime Minister.