Economic Outlook: How big is big?

By ANTHONY HALL, United Press International  |  Nov. 16, 2012 at 9:53 AM
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Reports say the chain of command broke down, there was a rookie in charge of testing, some tests were overlooked and warnings went unheeded.

As a massive fire and a plume of black, oily smoke forced workers to jump into the Gulf of Mexico after the deadly explosion on the Deepwater Horizon oil platform run by British behemoth BP, one worker reportedly radioed for assistance while those in charge were in an emergency huddle, figuring out what to do.

After calling for help -- "Mayday, Mayday" -- one of the supervisors chastised the worker, telling her she didn't have the authority to call for help. The worker's response to the supervisor was to apologize.

It is not incomprehensible that a worker's at BP should have to apologize for putting out a distress call while the fire raged out of control on the isolated, deepwater oil rig. After all, six weeks after the explosion and fire that killed 11 workers, Tony Hayward, BP's chief executive officer at the time, explained to the news media that he was "sorry for the massive disruption" that the oil spill caused for fishermen in the area.

But then he added, "There's no one who wants this over more than I do. I'd like my life back."

That poor Hayward routine didn't go over so well. The executive is known for a quote in which it appears he was more concerned with the disruption to his yachting schedule than he was to anyone affected by the disaster.

The company is also famous for spending millions on advertising while the deepwater well was still gushing out of control -- funds that critics said should have gone to cleanup efforts.

On Thursday, the U.S. Department of Justice caught up with that detached attitude and hit BP with a record of $4.5 billion in fines and restitution and the company agreed to plead guilty to "seaman manslaughter," due to a failure to correctly respond to an important safety test.

Moreover, three former company employees were each charged with crimes -- two with 11 counts of seaman manslaughter, 11 counts of involuntary manslaughter and one count of violation of the Clean Water Act.

The prison time involved could be extreme -- for all 11 counts, potentially 110 years for the seaman manslaughter charges and an additional 88 years for the involuntary manslaughter convictions for each of the defendants.

A third man was charged with obstruction of justice.

The legal ordeal is far from over for BP. If "gross negligence" is proved, the company could be ordered to pay $20 billion for violations of the Clean Water Act.

This comes on top of $14 billion already spent on cleanup efforts and $9 billion spent compensating various victims for loss of business. In a separate suit, BP is expected to pay at least $7.8 billion in damages, although a final figure has yet to be decided.

Nothing brings into focus quite so clearly the size of the parallel universe inhabited by corporations than the enormous settlements that get rid of company malfeasance. Barclays, for example, agreed to pay $450 million to settle charges of manipulating the Libor and it's just a cost of doing business.

BP was hit harder by this one. It has sold about $35 billion in assets to make sure it had enough funds to cover cleanup costs, restitution and fines.

But with a major case behind it and enough funding tucked away to cover the $4.5 billion settlement, investors were encouraged. Shares of BP went up Thursday, not down, as the company put some of this mess behind it. And reports say it is still the largest oil producer in the Gulf of Mexico.

In international markets Friday, the Nikkei 225 index in Japan added 2.2 percent and the Shanghai composite index in China shed 0.77 percent. The Hang Seng index in Hong Kong gained 0.24 percent and the Sensex in India lost 0.79 percent.

The S&P/ASX 200 in Australia fell 0.29 percent.

In midday trading in Europe, the FTSE 100 index in Britain gave up 0.39 percent while the DAX 30 in Germany lost 0.25 percent. The CAC 40 in France was flat, rising less than 0.01 percent and the Stoxx Europe 600 fell 0.09 percent.

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