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Wednesday, 11 August 2010 16:41
Public Citizen Says BP, US 20B Oil Spill Collateral Agreement Conflict of Interest
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Public Citizen has gone public about his concerns about the revenue plan that BP and the White House have agreed to use as collageral for the 20B dollars it has agreed to pay the victims of the oil spill of the Gulf of Mexico Macondo well.

 

The Public Citzien organization claimed today the plan is a conflict of interest.


On Monday, BP and the US Department of Justice had announced an agreement to pay the 20 billion dollars and the oil company deposited $3 billion dollars into a trust fund.

Today, the White House released a 40-page document establishing the escrow account to ensure $5 billion dollar payments over 4 years including the full $5 billion to be paid this year.

Common Cause The group sent a letter on Wednesday to President Barack Omaha saying the deal would interfere with the Justice Department's investigation of BP.

"A criminal investigation resulting in sanctions imposed against BP -- including banning the company from federal leases in the Gulf -- will be at odds with the government's agreement to use BP's leases as collateral for the fund," the group wrote.

In particular Common Cause cites two particulars that bolster its conflict of interest claims:

“1) The proposal would inhibit the government’s ongoing criminal probes of the company. The government would be reluctant to mete out harsh sanctions to BP – such as banning the company from federal leases in the Gulf – if the victims’ fund relies on BP revenue from the Gulf.

2) BP’s management problems are well-known and deep. The company has one of the worst environmental and worker safety records in the business. If the escrow fund is conditional on offshore drilling profits, would the administration address BP’s systemic safety problems that the Deepwater Horizon incident has exposed?”

Here is the press release from Public Citizen:

In a press release today, the Public Citizen said, “Public Citizen Sends Letter to Obama Citing Conflicts of Interest and Calling for a Change in the Fund’s Structure

The WASHINGTON, D.C. – A proposal to use revenue from BP’s oil and gas wells in the Gulf of Mexico to ensure the solvency of a $20 billion escrow fund for victims is a bad idea because it will create a conflict of interest for the government and make it a partner in Gulf oil production, Public Citizen told the administration today.

In a letter sent to President Barack Obama, Public Citizen noted that the proposed arrangement creates two main conflicts:

1) The proposal would inhibit the government’s ongoing criminal probes of the company. The government would be reluctant to mete out harsh sanctions to BP – such as banning the company from federal leases in the Gulf – if the victims’ fund relies on BP revenue from the Gulf.

2) BP’s management problems are well-known and deep. The company has one of the worst environmental and worker safety records in the business. If the escrow fund is conditional on offshore drilling profits, would the administration address BP’s systemic safety problems that the Deepwater Horizon incident has exposed?

“The proposed arrangement is wildly inappropriate, as it will make the government and BP virtual partners in Gulf oil production,” said Tyson Slocum, director of Public Citizen’s Energy Program. “It will give the government a financial incentive to become an even bigger booster of offshore oil drilling in the Gulf – which was the fatal flaw of the Minerals Management Service at the time of the BP disaster.”

Public Citizen urges the administration to change the way the fund is structured to ensure the government can remain unbiased and prioritize the public’s interest – not BP’s interests.

The letter is available at http://www.citizen.org/Page.aspx?pid=4060.

Is BP Spill Recovery Fund Secure Despite $3 Billion Deposit?
BP Establishes Trust, Makes 3B Deposit of $20B For Deepwater Horizon Incident

Do you believe there is a conlifct of interest?  Do you have any concerns about the plan, if so, what?

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