x Abu Dhabi, UAEFriday 19 January 2018

US Congress poised to pillory BP chief Hayward over oil spill

In a possible attempt to soften the coming blows, BP has agreed to set up a US$20bn fund to pay claims to victims and a $100m fund for unemployed oil workers.

Workers try to catch a brown pelican covered in oil from the Deepwater Horizon spill near Venice, Louisiana.
Workers try to catch a brown pelican covered in oil from the Deepwater Horizon spill near Venice, Louisiana.

WASHINGTON // BP's chief executive, Tony Hayward, is due on Capitol Hill today to face the fury of legislators who have accused his company of recklessness and mismanagement that caused the worst oil spill in US history. Members of the House of Representative's energy and commerce subcommittee on oversight and investigations are expected to lace into Mr Hayward with tough questions and sharp exchanges, making for what observers say will be hours of gripping and tense political theatre.

Yesterday, in a possible attempt to soften the coming blows, BP agreed to set up a US$20 billion (Dh73.4bn) fund to pay claims to victims as well as a $100 million fund for unemployed oil workers. The anger directed at Mr Hayward reflects the broader frustration in this country over BP's failure to stop the flow of oil into the Gulf of Mexico. In a new USA Today/Gallup poll, 71 per cent of those surveyed said they wanted the Obama administration to get tougher with BP. Eight in 10 respondents said they expect the spill to hurt the US economy and drive up petrol and food prices.

Legislators, who face mid-term elections in the autumn, will seek to channel the public's outrage into the hearing room, according to Norman Ornstein, a scholar at the Washington think tank, the American Enterprise Institute. "This is going to be an experience for him like being a piñata," he said of Mr Hayward. William Galston, a former White House adviser to Bill Clinton and senior fellow at the Brookings Institution, said the hearing could be even tougher than the hours of blunt questioning endured by Goldman Sachs executives in April. In that hearing, seething legislators sought to convey the public's anger over accusations that the investment banking firm misled investors and profited from the financial crisis.

"Goldman Sachs was sort of the complicated causal relationship with outcomes that people didn't like, but this is really simple and easy for people to understand," Mr Galston said, adding that Mr Hayward will find few allies on the panel, if he finds any. "I don't think there are a lot people who are neutral on BP. It's going to be a very tough day for him". In hearings earlier this week, executives from the world's largest oil companies - Exxon Mobil, Chevron, ConocoPhillips, Shell and BP - were reprimanded by politicians for lacking serious plans to deal with large oil spills. Lamar McKay, the president of BP America, took the brunt of the criticism. Edward Markey, a Massachusetts Democrat, demanded that Mr McKay apologise; Cliff Stearns, a Florida Republican, called on Mr McKay to resign.

Mr Hayward is expected to receive similar treatment during his appearance on the Hill. Henry Waxman, who chairs the energy and commerce committee, has a reputation for being a tough questioner. In the 1990s, he famously forced the executives of major tobacco companies to say that smoking is not addictive. Many observers have compared those hearings to the current clash between Congress and the oil industry. In a preview of what awaits the BP executive, Mr Waxman and Bart Stupak, a Michigan Democrat who chairs the oversight and investigations subcommittee, sent a letter to Mr Hayward on Sunday outlining their "serious concerns" about BP's conduct, including its apparent violation of industry guidelines and its failure to heed the warnings of contractors and personnel who said the ill-fated well in the Gulf of Mexico was not safe.

"BP appears to have made multiple decisions for economic reasons that increased the danger of a catastrophic well failure," the two legislators wrote. Mr Hayward, who has shown himself to be gaffe-prone since the crisis began in April - he was widely criticised for telling a reporter "I'd like my life back" - has enlisted the help of the Brunswick Group, an international public relations firm that specialises in crisis management, several media outlets reported.

Steven Smith, a political science professor at Washington University in St Louis, said it is common for executives in Mr Hayward's position to seek such coaching. He said that Mr Hayward is also probably studying the recent testimony of Wall Street executives for lessons on how to conduct himself. A fundamental decision awaiting Mr Hayward, according to Mr Galston, is whether to go on the defensive, and risk seeming combative, or take a stance of "abject apology". "That is a very high-level executive decision that someone is going to have to make," he said. "It is more important than any of the talking points."

BP recently launched a US$50 million ad campaign n newspapers, on radio, television, and the internet featuring an apologetic Mr Hayward vowing to "make this right". The media buy-in was criticised by President Barack Obama, who urged the company to focus on compensating victims rather than its public image. Yesterday Mr Obama secured the company's US$20.1 billion commitment on compensation in a meeting yesterday with top BP executives, including Mr Hayward. In brief remarks after the meeting, Mr Obama called the fund a "good start", but said that he would continue to "fight each and every day until the oil is contained, until businesses recover, and until the Gulf Coast bounces back from this tragedy".

The US president has kept up the pressure on BP, saying during a prime-time address on Tuesday that he would ensure the company pays for those who have been "harmed as a result of the company's recklessness". The speech was the president's first from the Oval Office, a venue usually reserved for major announcements, and was meant to show that he is in control of the disaster response, after weeks of criticism that he has been too slow to react.

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