$20 Billion Worth of Trouble Resurfaces for BP (BP)
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Shares of BP (NYSE: BP) are trading lower on reports that the US Department of Justice intends to prove gross negligence or willful misconduct in the Deepwater Horizon disaster in 2010. There are also reports out today that beaches and fishing areas in the Gulf were shut after tar and other pollutants were churned up by Hurricane Isaac. The pollutants are currently being tested but the finger-pointing has already begun.
On Friday, the Department of Justice made a clear statement that it will seek the maximum possible penalty in the case. In a strongly worded memo, lawyers ripped into BP, saying the company had a "culture of corporate recklessness".
The comments by DOJ lawyers pave the way for harsh fines or a drawn-out court battle. There had been some expectation that BP would reach an agreement with the US authorities and settle, but those hopes are close to being dashed and a 10-year or longer court battle could be result. It is also worth noting that BP has set aside $3.5 billion for charges related to violations of the Clean Water Act, said an analyst from Deutsche Bank. Under a charge of gross neglect that fine could increase to $20 billion, depending on the amount of oils that was spilled.
BP (NYSE: BP) shares are trading lower by more than 3 percent pre-market in Wednesday.
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On Friday, the Department of Justice made a clear statement that it will seek the maximum possible penalty in the case. In a strongly worded memo, lawyers ripped into BP, saying the company had a "culture of corporate recklessness".
The comments by DOJ lawyers pave the way for harsh fines or a drawn-out court battle. There had been some expectation that BP would reach an agreement with the US authorities and settle, but those hopes are close to being dashed and a 10-year or longer court battle could be result. It is also worth noting that BP has set aside $3.5 billion for charges related to violations of the Clean Water Act, said an analyst from Deutsche Bank. Under a charge of gross neglect that fine could increase to $20 billion, depending on the amount of oils that was spilled.
BP (NYSE: BP) shares are trading lower by more than 3 percent pre-market in Wednesday.
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