Soon after the Mocondo accident, BP took the stance that I thought was remarkable and perhaps wise, but also risky. They decided to publicly declare that they had set aside $20 Billion to pay restitution to those affected by the spill. The rationale was obvious. That last previous major spill was the Exxon Valdez in which Exxon took the opposite approach. Exxon decided to litigate everything, deny, and it cost them dearly in court awards, public opinion and share price. BP hoped to avoid some of that by their stance.
What BP didn’t anticipate was the Obama administration declaring that they were in charge of the clean-up, taking all the public credit for doing so, when the actual work and cost was being done by BP and it’s contractors. BP also underestimated the reaction of the public to a $20 Billion fund that was there for the simple claim of injury, with or without proof.
It didn’t take long for BP to realize they had seriously miscalculated. BP now has the worst of both worlds. A terrible PR hit, a stagnant share price and un-ending payments to people that have no actual claim of damages. If they pay the claims, their share price gets hammered, if the don’t, the press vilifies them and the share price gets hammered. They are in a no win situation and they know it.
It is one thing to pay a shrimper or a restaurant owner $50-100K to make the claim go away, a couple of billion to ATP is a whole different story. BP has nothing to lose at this point but cash. They will fight ATP to the death and BP will win, simply because ATP does not have the resources to take them on. |
