The financial penalties levied against BP began as a landmark $4.5 billion settlement, topping the previous largest U.S. criminal penalty issued against Pfizer for marketing fraud.
BP will pay $2.3 billion to commercial fishermen, seafood boat captains and crew, seafood vessel owners and oyster leaseholders.
The money represents ‘approximately five times the annual average industry gross revenue for 2007 to 2009 of the seafood industry in the region covered by the settlement agreement.’ It also ‘represents 19.2 times lost industry revenue in 2010,’ the ruling said.
The ruling notes that ‘the settlement program is processing claims in an “impressive fashion.”‘ By last month, 4,500 claims were processed per work. (Source)
However, not everyone is happy about this settlement.
While these settlements are at least a record of BP’s guilt, families who have lost loved ones, such as Arleen Weise whose son, Adam, was one of the 11 workers directly killed in the initial explosion had this to say about her bittersweet feelings over BP’s financial penalties:
‘I knew all along that BP was the devil in that accident,’ Weise said. ‘Now they’re getting their due . . .
It doesn’t matter how much money anyone pays. It doesn’t nearly amount to what we’ve lost,’ said Weise. (Source)
Others who opted out of the settlement like shrimp processor, Dean Blanchard, are planning their own lawsuits.
‘BP is trying to make a one size fits all,’ he said, saying some people and businesses were hit worse than others and deserve more money. ‘It’s not right.’ (Source)
Sales And Profits: BP in 2011 recorded revenue of $234.25 billion, with net income of $16 billion, according to data tracker FactSet. In other words, BP could pay even a $10 billion penalty with just nine months’ worth of profits. A $4.5 billion penalty would wipe out a little more than a single quarter’s profits. In this case, it will be paid out over five years — beginning in 2013 — meaning the hit to quarterly profits will be much gentler. BP has more than enough cash to cover this, meaning it won’t have to borrow money to pay the costs, saving on interest payments.
This latest Friday night ruling awaits its Wall Street reception in a short session on Monday before closing for Christmas. You can follow the stock price HERE. Every indication is that there will be little to no effect.
There is, however, the remaining question of how the health impacts will be handled by courts, since this latest ruling only covers financial losses. For an up close and personal perspective at what the economic and health impacts of the Gulf Oil Disaster really looked on the ground in the aftermath of one area most affected, please view the documentary Kindra’s Window featuring Gulf Activist Kindra Arnesen.
Read other articles by Joe Wright Here