Is it time for the business community, and its investors, to sound a note of caution over what is happening to BP?
Yes, the situation in the Gulf of Mexico is horrific: Brutal deaths; hundreds of thousands of livelihoods being destroyed; the scaring of one of our finest coastlines.
Yes, it’s BP’s oil. BP’s leaders seem impotent. BP stands in shame.
Yes, BP’s investors should be handing over a monumental sum: $20 billion, perhaps even the entire value of the business?
But ask yourself two questions:
1) Where is the judicial process in what we are witnessing?
BP could ultimately be made bankrupt by promises that are beginning to be extracted from its punch-drunk directors in closed sessions at the White House. But that is the executive branch of government. And Americans are rightly proud of their separation of powers—the checks and balances that lead to good government. Where are the judges, the jurors?
Don’t BP shareholders also have the right to natural justice—for justice to be seen to be done? I am sure that Kenneth Feinberg is a good man. But is it right that a civil servant will be left to dole out up to $500,000 to each plaintiff without BP having the right of appeal, from a BP escrow that has no ultimate cap.
Clearly, BP made mistakes, monumental mistakes perhaps. But would a court of law find that it was criminally negligent? Or would the government and regulators also share some of the blame. In engineering terms, BP was operating on the cutting edge of where society—and our government—expects oil companies to drill.
Importantly, BP won’t be driven to the edge of bankruptcy because of a leak—but because it failed to stop the leak. And yet this week the CEO of rival ExxonMobil told Congress, "When things happen we are not well-equipped to deal with them." Isn’t Rex Tillerson saying the entire industry is out of its depth when he adds, "When they (disasters) happen, it is a fact that we’re not well equipped to prevent any and all damage."
Surely this is a classic case of the private sector failing, or at least of shared responsibility.
2) Why is there no national mobilization in response to what is a national disaster?
The contrast with the last private sector failure is curious. When the banking industry teetered on the brink of collapse, President's Bush and Obama threw everything the public sector had to prevent economic depression. This time, BP is being squarely blamed, BP is told to sort things out, BP is told to pick up the tab.
Why has the Commander in Chief not ordered tens of thousands of members of the US Army, Navy and Air Force into BP’s crisis; boots on the beaches to help build the barriers that are needed or military helicopters to better spray dispersant?
In fact, no line appears to exist beyond which BP might not be held financially responsible. As a "goodwill gesture," BP’s executives are even promising to pay $100 million to oil industry workers sidelined by the Obama administration’s decision to impose a six-month drilling moratorium, even though they reportedly don’t believe their shareholders are liable.
This time, the White House clearly believes that the politics of leading America through crisis are different. But so too is the rigor in the analysis of what's going on. The ferocity of the media maelstrom feels very similar to that which led up to the start of the Iraq war.
For an alternative point-of-view, watch the video above, in which CNBC's Mark Haines shares a differing opinion with Simon Hobbs.