Feds question former BP chief Hayward about financial records, Gulf oil flow
The Associated Press acquired documents from a deposition held last month in England, in which Federal and state attorneys were able to question Hayward. Details of the deposition have not yet been officially released.
During the proceedings, an attorney for the state of Louisiana pointed to an email Hayward sent to an aide asking him to arrange a media briefing to counter information that was hurting BP stock. The share price rose after the briefing.
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An attorney for the state of Louisiana, Allan Kanner, asked Hayward about a June 25, 2010, email to BP's former head of exploration and production, Andy Inglis. According to Kanner, it said, "Andy, can you make sure we get the technical briefing on the relief well out today? There are all sorts of ridiculous stories going around. It's the main reason behind the share price weakness."
At the time, the well was still spewing oil into the sea. It wasn't capped until three weeks later. And it wasn't until September that a relief well finally sealed what had become the worst offshore oil spill in U.S. history.
The day of the email, BP's stock price closed at $26.53, a 6 per cent drop from the previous day's close. A BP executive, Kent Wells, held a media briefing three days later saying the relief well was only 20 feet away from the blown-out well. He also told reporters that the company had a high degree of confidence in the relief well and a backup one it was drilling.
Kanner: Was one of the goals of the technical briefings and the media blitz, if you will, to keep the share price up?
Hayward: No. The objective of the technical briefing was to provide clear, coherent factual information as to what was and was not going on at any moment in time, and then people could form their own view as to whether that was good or bad for the share price.
Kanner: If it was informational, as you said earlier, why were you buying ads in The New York Times, The Wall Street Journal, in California papers, in Connecticut papers, Ohio papers?
Hayward: So the American people knew what we were doing.
During the deposition, Justice Department lawyer Michael Underhill questioned Hayward about why BP has not turned over key flow rate data to the government even though it promised it would share everything it had.
Underhill: As we sit here today, June 6, 2011, are you aware that BP has still not provided that data to the United States government, including but not limited to the flow rate technical group?
Hayward: Well, I was not aware that that was the case. I'll take your word for it, that it is the case. But I wasn't aware of it. [...] The bottom line was that I concluded early on that we had very few ways of coming up with any sort of credible flow rate, frankly. So, it wasn't impacting what I was trying to do day-to-day. I mean, it really wasn't ... I didn't have time to worry about any curiosity of whether it was 5, 10, or 20,000 barrels a day or even more.
Underhill questioned Hayward extensively about the annual report that BP filed with the Securities and Exchange Commission for 2010. In it, BP estimated its total liability for the oil spill at $40.9 billion, and it said it based that figure on cleanup costs, compensation to victims and on potential civil penalties. The report said BP projected the potential fines based partly on its analysis of how much oil was spewing.
The problem, Underhill said, was BP's failure to reveal how much oil was spilled. He also questioned how BP could determine potential fines when the issue of whether BP acted with gross negligence had not been determined. If such a finding were made, fines would be significantly higher.
Underhill: Do you understand there are legal consequences if there are material misrepresentations in a document such as this?
Hayward: Yes.
In another part of his deposition, Hayward was reminded of his testimony before Congress in which he talked about attending a memorial service for the 11 men who died aboard the Deepwater Horizon rig. Asked during the deposition if he could remember the men's names, Hayward misidentified one man and could name only two others.
A plaintiffs attorney, Robert Cunningham, grilled Hayward about whether he told the truth during the Congressional testimony.
Cunningham: You proceeded to testify falsely under oath on multiple material issues, didn't you, Dr. Hayward?
Hayward: I certainly did not.
Cunningham: Did your PR people congratulate you on how you did after your testimony was concluded?
Hayward: No one congratulated me after that day, thank you very much.
Poor, poor Tony.
BP’s Ex-Chief and Plaintiffs’ Lawyers Spar Over Safety
Remember last summer, when Hayward testified before the House? He swore up and down that BP, by god, had instituted new and comprehensive safety protocols in the past three years, and that they, by god, would get to the bottom of the Deepwater Horizon disaster and find out who, by god, was responsible!? Yeah, well... not so much.
Last month[...] in grueling depositions in London with lawyers suing BP, Mr. Hayward was challenged on his assertions that the company’s safety overhaul was comprehensive and fully carried out. The plaintiffs’ lawyers argued that the company’s investigation did not examine the role of BP’s top officials in setting the tone for a safety-oriented culture, nor had the safety program been fully under way for drilling rigs in the gulf.
In hundreds of pages of Mr. Hayward’s depositions, Mr. Hayward, whose public handling of the April 2010 spill was roundly criticized as clumsy, rejected every contention. But the questions suggest lines of attack that could eventually be used in the many lawsuits consolidated in a federal courtroom in New Orleans, including accusations that the company’s former chief executive lied to Congress.
The afore-mentioned Mr. Cunningham started the questioning by challenging whether BP had done a proper inquiry into their own culpability.
While BP’s team examined immediate causes and events leading up to the blast on the rig itself, it did not include what Mr. Cunningham referred to as “root causes,” those involving management and corporate culture, and which the company’s own policies call for after major accidents.
Mr. Cunningham insisted that the BP inquiry constituted only “two-thirds of [your] standard investigation.”
Mr. Hayward acknowledged that the initial investigation “did not look at the overarching management process at that time,” but he bristled at the suggestion that the investigation was incomplete.
“This was an investigation that was open, transparent, it was communicated as soon as we had the results,” he said, adding with a touch of acid, “in stark contrast to anyone else involved in this accident.”
Lawyers for BP and Mr. Hayward raised objections to the tone of nearly every question — more than 400 objections in the first day of depositions alone. In many of Mr. Hayward’s responses, he said he did not remember certain incidents, argued that he had not been involved in an issue at the level of decision making, or that incidents had occurred after his departure from the company. And many times, he declined to answer questions that he said would call on him to speculate.
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Scott Dean, a spokesman for BP, said that the deposition was “just one of the hundreds of scheduled depositions to be taken as part of discovery in this case.” As for the acrimonious tone, Mr. Dean said: “The back and forth among the lawyers is typical of civil depositions where the lawyers know that their questions could be excluded from trial by the court because they are entirely improper, wholly irrelevant, or have no basis in fact. In the end, the court will decide the case based on the evidence presented at trial, not the questions or cross talk of lawyers or snippets of testimony from any single deposition.”
Another contentious line of questioning involved BP’s expenditures on safety; Mr. Cunningham argued that cost cuts at BP had raised risk, but Mr. Hayward countered that whenever he spoke, he would emphasize that “reliable operations come first, whatever the cost” — and insisted that the corporate budget-cutting affected operations, not safety.
But Mr. Cunningham scoffed, “If the first words out of your mouth every time you open it were ‘I am Superman,’ that wouldn’t make you Superman, would it?”
To which a lawyer for BP responded, “Objection to form.”
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