May 24, 2010
Did Wall Street Make BP Spill Oil?
Like what appears to be most of the country, I have been following the on-going Gulf oil spill with great horror. As someone who comes from an energy law background, and who teaches and writes in the area (in addition to business law, of course), I find this whole event remarkable and intriguing, as well as appalling.
For now, I’ll focus on the business perspective: I will be curious to see how the derivative suit filed against BPs executives--Firpo v. Hayward et al., 2:10-cv-01430, U.S. District Court, Eastern District of Louisiana (New Orleans)--will play out. The complaint alleges that the BP directors “elected to cut costs, including safety and maintenance expenditures, in pursuit of profitable results to report to Wall Street.”
Ah, the evil Wall Street made them do it. I am starting to wonder if that may actually be viewed as a legitimate defense for the directors if this goes to trial. Judging from recent political statements and media reports, it seems that Wall Street has some mystical (and mostly evil) powers.
Personally, I don’t need the Wall Street boogeyman to find compelling in a derivative suit context the idea that BP may have cut some major corners. If BP’s directors really did ignore a number of safety concerns and fail to even consider what was needed to protect against/mitigate this kind of catastrophic disaster, then they have shirked their duties to their shareholders by putting hundreds of millions of dollars, if not the entire company, at risk. That’s a big “if,” of course.
Having been around the energy industry, I know that most of the people working on these kinds of deepwater projects are smart. Really, really smart. The fact that they can’t stop the gallons upon gallons of oil flowing into the ocean tells me something, somewhere, went even more wrong than we can appreciate right now. Whether that was a lack of resources or concern at the board level, I don't know. But something sure doesn’t smell right.