Wednesday, June 02, 2010

BP Independent Director Responsible for Safety & Environmental Assurance May Be Culpable

BP (BP) is now facing a criminal investigation from the Obama administration. The investigation is political posturing. Think through the legal ramifications. To be convicted you need to prove intent.

Never gonna happen.

BP did not intend to spill oil and lose tens of billions of dollars of shareholder wealth.

At the same time the federal government is trying to regulate with one hand. On the other it is pressing a criminal investigation. Any street cop will tell you it’s very hard to get a criminal to cooperate unless you give him/her something. What will Obama give BP to get them to co-operate?

The regulatory infrastructure is rotten. The rot started under the Bush-Cheney administration. Obama is in charge of a very late rescue team. Given his recent approvals of new off-shore drilling he must have spent some time thinking about the regulatory issues.

The thinking does not show.

The investment market place needs to ask itself why it wants to take these risks and what real safe guards are in place. Tony Hayward may be the next sacrificial lamb. But what about the board at BP? What do we know about these guys?

Well look at this

Sir William Castell, LVO is a non executive director and the senior independent director. He is also the Chairman of the safety, ethics and environment assurance committee, as well as a member of the chairman's and nomination committees.

Sir William according to the corporate bio spent his early career with the Wellcome Foundation, holding various positions. In 1989, he joined Amersham plc as chief executive. Following Amersham’s acquisition by General Electric in 2004, Sir William became president and chief executive officer of GE Healthcare, and a vice chairman and a director of the General Electric Company. He retired from GE Healthcare in 2006. Sir William remains a director of the General Electric Company. He was appointed as a member of the board of governors of the Wellcome Trust in 2006, subsequently becoming its chairman.

The senior board member in charge of safety does not have a drilling background much less a petroleum background. He is not suitable to the job.

Disclosure: No position in any stocks mentioned in this post.