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Financial Mail on Sunday: Sad fall for Browne at the last fence

Lisa Buckingham,
24 September 2006

Why Lord Browne fought –unsuccessfully – to stay at the helm of BP long after the company’s compulsory retirement date of 60 is anyone’s guess.

It was an ignominious tussle with his chairman, Peter Sutherland, and one that resulted in him getting only a few months extra in the top job.

But even as unseemly briefings by ‘friends’ of both men were given gleeful coverage in the financial Press, BP appeared to be unravelling faster than a ball of wool in the paws of a kitten.

To say that BP, once one of our most admired companies, has had a torrid year or so is an understatement. It suffered the worst refinery fire in the industry’s history last year when 15 people died and hundreds were injured in Texas.

Its giant Thunder Horse platform in the Gulf of Mexico was badly damaged by Hurricane Dennis and production will now come on stream in 2008 – two years late.

Several of its commodity traders in America were accused of trying to manipulate the propane gas market. The US authorities also announced an investigation into its trading in crude oil and gasoline between 2002 and 2004.

And it was forced to shut production at Prudhoe Bay in Alaska after the discovery of severe corrosion in the pipes. It then emerged that senior BP executives had been warned repeatedly by employees that maintenance at Prudhoe Bay was not up to scratch, yet these alarms were, somehow, ignored.

Browne is resisting pressure to put in a personal appearance at hearings in the US into some of the group’s alleged failures. These have incensed politicians on Capitol Hill, where BP’s laudable refusal to make the political contributions routinely expected from oil majors means he has few friends to call on in times of need.

The company is, of course, a gigantic enterprise and wildcat fires can be expected in far-flung reaches of its empire. But the coincidence of bad news suggested something might be rotten at the heart of the edifice that Browne built.

Shareholders, with whom BP has in recent times enjoyed the best of relations, let it be known they were seeking one-to-one meetings with the company’s diminutive boss to satisfy themselves that things were not as bad as they appeared.

There were signs of hope late on Friday when BP said it was about to bring parts of Prudhoe Bay back into operation.

And, though it is arguably a year late in coming, Browne has now ordered a top-to-bottom overhaul of the company’s safety and environmental procedures, similar in scale to the rethink undertaken by Exxon after its tanker, the Valdez, caused one of the worst oil spills.

The operation to clean up the damage in Alaska is likely to take up to a decade. But by that time Browne will be long gone.

What a pity that the man who has year-in, year-out been voted Britain’s most-admired business executive will spend his final days at BP fighting fires. And what a terrible misjudgment to have sought to extend them.

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