BP sued by 'hoodwinked' funds over Gulf of Mexico spill
By Rebecca Burn-Callander Tuesday, 04 September 2012
Six investors are suing the oil giant for tens of millions, claiming that BP misled them over the Gulf of Mexico disaster.
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A consortium of funds, which includes the South Yorkshire Pensions Authority, Skandia Global Funds and GAM Fund Management have filed common fraud, statutory fraud and negligent misrepresentation law suits in the state of Texas. The investors claim that they would never have paid top dollar for the firm’s shares had they ‘known the truth’.
The investors believe that BP and its then CEO Tony Hayward were involved in a cover-up, both in the years prior to the spill and following the disaster itself. They allege that BP’s ‘safety first’ policy was never as robust as the oil giant claimed, and that efforts were made to conceal the size of the oil spill, and downplay ‘the degree of BP’s likely responsibility for the catastrophe’.
This is a further blow for BP, which has already set aside $38bn to cover the cost of various law suits with US authorities over civil (and possibly even criminal claims) related to the Gulf of Mexico spill. The disaster wiped billions from BP’s market cap back in 2010, and the energy firm is yet to recover: its share price reached a pre-spill high of 655.4p in April that year, and now hovers at the 441.3p mark (down 2.43p) this morning.
In its last quarterly statement, BP revealed that profits had taken a significant dive, both as a result of the Gulf of Mexico divestments, and because of newly introduced – and expensive – safety reforms across the firm’s oil refineries. A not-so-slick Q2 ended with just $238m in BP's profit reservoirs.
The second half of the year won’t look much better for BP if these lawsuits are successful. Analysts reckon that the investors could claim tens of millions in compensation – and more claimants are pipped to join the consortium over the following days. Cash pay-outs aside, this ongoing reputational damage is going to be a real headache for CEO Bob Dudley. It’s a case of out of the oil spill and into the fire for BP…