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Monday, December 3, 2012

Strategic CSR - BP

I found the recent BP settlement with the U.S. government regarding the 2010 Deepwater Horizon oil spill in the Gulf of Mexico interesting because of the individual indictments they contained:

Donald J. Vidrine and Robert Kaluza were the two BP supervisors on board the Deepwater Horizon rig who made the last critical decisions before it exploded. David Rainey was a celebrated BP deepwater explorer who testified to members of Congress about how many barrels of oil were spewing daily in the offshore disaster. Mr. Vidrine, 65, of Lafayette, La., and Mr. Kaluza, 62, of Henderson, Nev., were indicted on Thursday on manslaughter charges in the deaths of 11 fellow workers; Mr. Rainey, 58, of Houston, was accused of making false estimates and charged with obstruction of Congress.

As the article in the url below indicates, this represents a shift in emphasis. While the prosecution of individuals for wrongdoing in business settings was common up until the 1970s, after Watergate (when companies were found to be using slush funds to bribe foreign government officials, as well as to donate secretly to Nixon’s re-election campaign), Congress began to hold companies responsible for actions committed by individuals on behalf of the organization:

Legal scholars said that by charging individuals, the government was signaling a return to the practice of prosecuting officers and managers, and not just their companies, in industrial accidents, which was more common in the 1980s and 1990s.

This focus on the organization was reflected in legislation, such as the Foreign Corrupt Practices Act (see:, and standardized throughout the judicial system in the U.S. via the 1991 Federal Sentencing Guidelines. This has meant that individual culpability has been de-emphasized for the last few decades in favor of punishing the corporation:

[Jane Barrett, a University of Maryland law professor and former federal prosecutor] noted that it was unusual for the Justice Department to prosecute individual corporate officers in recent years, including in the 2005 BP Texas City refinery explosion that killed 15 workers, where only the company was fined.

This decision by the government to indict two BP Managers for manslaughter and hold another one in contempt of Congress, therefore, suggests a recognition that, since corporations cannot be thrown in jail, focusing on organizational liability and letting individual perpetrators off-the-hook is an insufficient disincentive to commit harm:

They are the faces of a renewed effort by the Justice Department to hold executives accountable for their actions. While their lawyers said the men were scapegoats, Attorney General Eric H. Holder Jr. said at a news conference, “I hope that this sends a clear message to those who would engage in this kind of reckless and wanton conduct.”

Take care

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In BP Indictments, U.S. Shifts to Hold Individuals Accountable
By Clifford Krauss
November 16, 2012
The New York Times
Late Edition – Final