Ex-BP boss Hayward facing death charges

By This Is Money
Updated: 03:56 EDT, 30 March 2011

Former BP chief executive Tony Hayward could face manslaughter charges in the US over his role in the Gulf oil spill.

Oil crisis: Gulf disaster and failed Rosneft deal pile pressure on BP

BP shares dipped 10.55p to 466.55p on the news that the Briton may be quizzed by investigators on whether decisions he made cut corners on safety and led to the disaster.

The reports added to the recent woes of the oil giant, which has seen its ambitious £10bn share swap with Russia's Rosneft run into difficulty.

Eleven workers were killed in an explosion at the Deepwater Horizon oil rig, in the Gulf of Mexico, which precipitated an environmental disaster.

Possible charges include manslaughter, which carries up to ten years in prison.

Such a move would be unusual, as companies at fault in environmental catastrophes are usually hit with charges, not individuals. It would been seen as further evidence that the Obama administration is still going after BP.

Investigators are said to be looking at Hayward's testimony before Congress, in which he stonewalled dozens of questions, to see if he implicated himself.

The same treatment will be given to a number of other BP executives but Mr Hayward is likely to be considered the prize 'scalp'.

The 53-year-old became a hate figure in the US following a string of gaffes after the spill on April 20 last year which sparked the worst environmental disaster America has seen. He was forced to quit after announcing that he 'wanted his life back'.

Since the spill, BP has vowed to take full responsibility for the clean-up and has set aside £13.5bn for compensation.

Mr Hayward could pocket up to £5m in the next three years thanks to awards of 'performance shares'. The potential payout is likely to infuriate investors in the UK, along with motorists suffering high fuel prices.

In his last year at BP, Mr Hayward earned a basic £1.05m, along with £1.075m to compensate for 'loss of office'.

BP shares were 655.4p immediately before the explosion, and yesterday's closing price of 466.55p represents a decrease in the value of the company of £35bn.

Meanwhile, having tried and failed to tie the knot with Rosneft in an Arctic exploration and share-swap deal, BP is now under mounting pressure to explain the logic of pressing ahead with the share exchange on its own.

A spokesman described its budding relationship with Rosneft as 'hugely valuable', and said it was 'determined to go ahead with the share-swap'.

But the resolve to stagger on with the deal has baffled some investors.

The Association of British Insurers is understood to have concerns that BP's decision to issue £5bn of new shares to Rosneft will dilute the value of existing investors' holdings.

David Cumming, head of UK equities at Standard Life, has also questioned the deal. One analyst noted that without the considerable carrot of the uncharted Arctic blocks, the share swap deal had 'none of the positives and all of the negatives'.

Broker Collins Stewart has downgraded the company to a 'sell' from a 'hold' and lowered its target price to 475p from 500p.

Gordon Gray, oil and gas analyst at the firm, said: 'Uncertainty over the Rosneft deal and consequently over the TNK-BP partnership is likely to overhang investors' views of BP for some time to come.'

The two-pronged plan with Kremlin-controlled Rosneft made good sense when it was signed in January. Claiming to have the backing of the capricious Russian state, BP was set to drill alongside Rosneft in three oil-bearing locations in the Arctic Ocean.

The second part of the plan was equally strategic but less exciting: a share swap that would see Rosneft acquire 5% of BP, with BP taking 9.5% of Rosneft.

That deal was scuppered by BP's other Russian partner, TNK-BP, a troubled and often fractious venture owned equally by the British oil giant and AAR, a consortium comprising several Russian oligarchs.

The consortium, fearing that they were being outflanked by both their partner and a domestic rival, complained that the Rosneft deal breached existing agreements between BP and AAR.

They took their argument to an international tribunal and, on March 24, they won their case.

But BP isn't going to give up yet. Chief executive Bob Dudley is determined to make the deal work.

Next Monday he plans to appeal to the London-based tribunal, seeking to reinstate the second part of the plan - the share-swap - but not the first.