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Financial Times: BP freezes payments to Browne

By Sheila McNulty in Houston and Ed Crooks in London
Published: July 8 2007 20:51 | Last updated: July 8 2007 20:51

BP has agreed to withhold millions of dollars in payments to Lord Browne and John Manzoni until the conclusion of a shareholder lawsuit in Alaska that accuses the outgoing executives of mismanagement.

The lawsuit, filed on behalf of BP investors in state court in Alaska, seeks damages from 39 present and past BP managers and directors.

The plaintiffs sought to freeze the funds, fearing they would have no means to attach payments to Lord Browne, BP’s former chief executive, and Mr Manzoni, its departing refining chief, if they were released from liability on leaving the UK oil giant. By agreeing to withhold the payments until the conclusion of the litigation, access to those funds is assured.

BP said among the funds being frozen was Lord Browne’s year’s salary on his departure earlier this year.

Lord Browne brought forward his retirement, after a series of safety lapses in the company’s US operations and disclosures by his former gay lover in UK court. He continues to be embroiled in US court proceedings.

Lord Browne, for example, is in the process of fighting a court order in Texas to provide a deposition, or sworn testimony, to plaintiffs in separate, civil lawsuits in Texas. The decision is being considered by the Texas Supreme Court.

Texas and Alaska have been the key areas for concern about BP’s safety record after a refinery exploded in Texas, killing 15 and injuring 500 in 2005, and BP in Alaska suffered its biggest spill ever amid severe corrosion, forcing it to close half the field last year.

Grand juries in both states are investigating BP for possible criminal charges against the company and/or its executives. And US Congressmen have stepped up their probe into the company’s US operations, with several hearings this year already and more are on the agenda. Alaska, in particular, is coming under their microscope, as new charges emerge about safety lapses at Prudhoe Bay, the biggest oilfield in North America.

A week ago, George Miller, the chairman of the US House of Representatives’ Committee on Education and Labor, wrote to Bob Malone, the president of BP’s North American operations, and state and federal safety regulators, outlining new charges that BP was continuing to put workers at risk in the state of Alaska.

Meanwhile, BP has said that it will look into those charges, relayed to Mr Miller by Chuck Hamel, a long-time advocate for BP workers in Alaska.

Mr Hamel said: “BP must now face the truth in the courts, the Congress, and before the public.’’

Copyright The Financial Times Limited 2007

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