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BP sued for breach of duty

Date Class
4th Sep 2006 Questionable Business Practice
 
Details
CHIEF EXECUTIVE Lord Browne and other executives of the oil giant are being sued for allegedly breaching their duty to shareholders following the shutdown of half of the company's Prudhoe Bay field in Alaska.

The company is accused in New York of letting its pipeline in the field deteriorate so badly it caused a disastrous oil leak that led to the shutdown.

'Despite their awareness of the dangerous effect of the corrosion in the pipeline, defendants repeatedly failed to fund the work necessary to correct the problem, opting instead to squeeze every last penny in current profits - $7.3bn (3.9bn) last quarter - at the expense of properlyand safely maintaining the pipeline,' the suit, led by investor Sue Pincus, alleges.

BP had planned to shut the entire field, which provides 8% of US energy needs, but yesterday said it would pump crude from the western half of the field while it replaces corroded pipe on the eastern half. The eastern part could be out of action for up to five months.

BP faces hundreds of millions of dollars in costs to fix the pipeline, plus lost earnings, legal liability, regulatory scrutiny and 'the wrath of customers nationwide who are facing ever-higher gasoline prices at the pump', the suit says.

Pincus seeks undetermined damages from Browne and other executives.

 

 

 


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