For their role in the Deepwater Horizon oil rig explosion and subsequent spill which took 11 lives and ravaged the Gulf Coast ecosystem, BP agreed Nov. 15 to pay fines and penalties totaling $4.5 billion.
The company said it would also plead guilty to 14 criminal charges in the April 2010 disaster.
“The oil spill was catastrophic for the environment, but by hiding its severity BP also harmed another constituency—its own shareholders and the investing public who are entitled to transparency, accuracy, and completeness of company information, particularly in times of crisis,” Robert Khuzami, director of the Division of Enforcement for the Securities and Exchange Commission (SEC) said in a statement.
“Good corporate citizenship and responsible crisis management means that a company can't hide critical information simply because it fears the backlash,” he added.
Both the SEC and the Department of Justice filed charges against the company for the damage caused and the false information it provided about the true amount of oil gushing into the ocean.
A total of $4 billion will be paid to the Justice Department (DOJ), while another $525 million will go to the SEC. Of the money that will be handed over to the DOJ, $1.25 billion will go to criminal fines, $2.394 billion will go to the National Fish & Wildlife Foundation and $350 million will be paid to the National Academy of Sciences.
The $525 million taken by the SEC is a “civic payment” to be made in annual installments for the next three years.
Of the 14 criminal charges, all but one are directly related to the accident that occurred as a result of faulty equipment and overlooked recommendations to upgrade the parts on the Deepwater Horizon oil rig. The company also admitted to misleading Congress on the rate at which toxins were spewed into waters off the coast of Alabama, Louisiana, Florida and Mississippi.
In three separate reports to the SEC during the first two weeks of the spill, the company maintained that only 5,000 barrels of oil were being lost per day.
“Months later, a government task force determined the flow rate estimate was actually more than 10 times higher at 52,700 to 62,200 barrels of oil per day, yet BP never corrected or updated the misrepresentations and omissions it made in SEC filings for investors,” said an SEC press release announcing the judgments.
BP plead guilty to 11 felony counts of misconduct or neglect of ships officers as a result of the human casualties, as well as one misdemeanor count of violating the Clean Water Act.
Under the Clean Water Act, BP could pay anywhere from $1,100 to $4,300 for each barrel of oil spilled between Apr. 20 and Jul. 15, when the leak was finally sealed off.
The Britain-based company also faced one misdemeanor charge for breaching the Migratory Bird Treaty Act, and one felony count of obstruction of Congress.
BP still has to face countless federal civil claims, penalties for destroying natural resources, and cases from companies that lost customers and citizens who experienced health problems as a result of the spill.
“From the outset, we made a commitment to clean up the spill and pay legitimate claims – and we’ve been fulfilling that commitment ever since,” Robert Dudley, BP’s chief executive, said in a statement. “As we move forward, we are preparing to defend ourselves in court on the remaining claims. We are open to settlements, but only on reasonable terms.”