Published July 01, 2011
JACKSON, Miss. – Under questioning from the Justice Department and plaintiffs suing the oil giant he once ran, Tony Hayward fought off accusations that he sought to prop up BP's falling share price through his subordinates' daily media briefings on the Gulf oil spill.
Documents obtained by The Associated Press from a deposition last month show that Hayward also sought to stave off claims that the firm failed to keep its promise to share its data on how much crude was spewing into the sea.
During the proceedings, an attorney for the state of Louisiana pointed to an email Hayward sent to an aide asking him to arrange a media briefing to counter information that was hurting BP stock. The share price rose after the briefing.
The deposition was part of ongoing litigation against the British firm and other companies involved in the April 20, 2010, Deepwater Horizon disaster. The government is among the parties suing BP, and is expected to impose fines for Clean Water Act violations potentially totaling billions of dollars. Hayward is considered a critical witness, since he headed BP during and after the disaster until he was ousted in October.
The deposition, which has not been publicly released, was taken over several days in London beginning June 6.
During the deposition, attorneys raised questions about Hayward's sincerity when he said he had the best interest at heart of all those hurt by the Gulf oil spill. Hayward famously infuriated Gulf residents during the height of the spill with his comment, "I'd like my life back."
An attorney for the state of Louisiana, Allan Kanner, asked Hayward about a June 25, 2010, email to BP's former head of exploration and production, Andy Inglis. According to Kanner, it said, "Andy, can you make sure we get the technical briefing on the relief well out today? There are all sorts of ridiculous stories going around. It's the main reason behind the share price weakness."
At the time, the well was still spewing oil into the sea. It wasn't capped until three weeks later. And it wasn't until September that a relief well finally sealed what had become the worst offshore oil spill in U.S. history.
The day of the email, BP's stock price closed at $26.53, a 6 percent drop from the previous day's close. A BP executive, Kent Wells, held a media briefing three days later saying the relief well was only 20 feet away from the blown-out well. He also told reporters that the company had a high degree of confidence in the relief well and a backup one it was drilling.
By June 30, 2010, BP's stock was back up to $28.35 — slightly higher than what it closed at on June 24, the day before the Hayward email.
Kanner asked Hayward if he remembered writing the email. He said he didn't.
"Was one of the goals of the technical briefings and the media blitz, if you will, to keep the share price up?" the attorney asked.
"No," Hayward responded. "The objective of the technical briefing was to provide clear, coherent factual information as to what was and was not going on at any moment in time, and then people could form their own view as to whether that was good or bad for the share price."
"If it was informational, as you said earlier, why were you buying ads in The New York Times, The Wall Street Journal, in California papers, in Connecticut papers, Ohio papers?" the attorney asked.
"So the American people knew what we were doing," Hayward responded.
In a statement Friday, BP downplayed the significance of the line of questioning and Hayward's responses. The company said the court will decide the civil cases based on the evidence presented at trial, "not the questions or cross talk of lawyers or snippets of testimony from any single deposition."
During the deposition, Justice Department lawyer Michael Underhill questioned Hayward about why BP has not turned over key flow rate data to the government even though it promised it would share everything it had.
"As we sit here today, June 6, 2011, are you aware that BP has still not provided that data to the United States government, including but not limited to the flow rate technical group?" Underhill asked.
"Well, I was not aware that that was the case," Hayward responded. "I'll take your word for it, that it is the case. But I wasn't aware of it."
Hayward said he did not give much thought during the crisis to the amount of oil that was flowing, and that the amount would not have changed the way BP responded. Both BP and the government early on gave the public flow estimates, and those estimates turned out to be significantly lower than what was actually flowing. At some point, BP stopped discussing flow numbers, and more than a year later still has not provided its own total for the amount of oil spilled. The government has estimated that some 206 million gallons of oil spewed from the well a mile beneath the sea.
"The bottom line was that I concluded early on that we had very few ways of coming up with any sort of credible flow rate, frankly," Hayward said. "So, it wasn't impacting what I was trying to do day-to-day. I mean, it really wasn't ... I didn't have time to worry about any curiosity of whether it was 5, 10, or 20,000 barrels a day or even more."
Underhill questioned Hayward extensively about the annual report that BP filed with the Securities and Exchange Commission for 2010. In it, BP estimated its total liability for the oil spill at $40.9 billion, and it said it based that figure on cleanup costs, compensation to victims and on potential civil penalties. The report said BP projected the potential fines based partly on its analysis of how much oil was spewing.
The problem, Underhill said, was BP's failure to reveal how much oil was spilled. He also questioned how BP could determine potential fines when the issue of whether BP acted with gross negligence had not been determined. If such a finding were made, fines would be significantly higher.
"Do you understand there are legal consequences if there are material misrepresentations in a document such as this?" Underhill asked Hayward.
"Yes," Hayward responded.
Hayward was no longer CEO when the report was issued, but he was CEO for three-quarters of the year covered by the report.
In another part of his deposition, Hayward was reminded of his testimony before Congress in which he talked about attending a memorial service for the 11 men who died aboard the Deepwater Horizon rig. Asked during the deposition if he could remember the men's names, Hayward misidentified one man and could name only two others.
A plaintiffs attorney, Robert Cunningham, grilled Hayward about whether he told the truth during the Congressional testimony.
"You proceeded to testify falsely under oath on multiple material issues, didn't you, Dr. Hayward?" Cunningham asked.
"I certainly did not," Hayward responded.
"Did your PR people congratulate you on how you did after your testimony was concluded?" Cunningham asked.
"No one congratulated me after that day, thank you very much," said Hayward, who is currently involved with a firm that is going to invest in oil and gas opportunities in Eastern Europe, Asia and elsewhere.
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