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Former BP chief speaks on cuts

Houston Chronicle: Former BP chief speaks on cuts

Lawyer quotes Browne as saying budget slashed in years before blast

April 4, 2008, 10:40PM

By KRISTEN HAYS
Copyright 2008 Houston Chronicle

The former chief executive of British oil giant BP acknowledged Friday that he ordered deep budget cuts at the company’s U.S. refineries in the years before a March 2005 explosion killed 15 at its plant in Texas City, a lawyer said.

During an hourlong deposition, John Browne didn’t repeat BP’s oft-stated contention that there was no link between the blast and cutbacks that put off maintenance and upgrades at the aging Texas City refinery, said Brent Coon, the Beaumont lawyer who has spearheaded vast explosion-related litigation.

But Browne did deny “any heightened awareness that there were major problems associated with the cuts,” Coon said. “He denied knowing there were numerous complaints about how cuts affected plants.”

Coon also said Browne testified that he imposed the cuts so BP would be more competitive in the petrochemical industry.

Coon, in Houston, grilled Browne via teleconference. The ex-CEO voluntarily participated from London with in-house and outside BP lawyers at his side. A transcript of the deposition likely will be available next week, Coon said.

He described Browne’s sworn testimony in a news conference Friday after the morning deposition.

Browne testified that “he was aware those cuts generally first affect maintenance,” but didn’t know about specific problems or internal reports that noted deteriorating mechanical integrity at the plant, Coon said.

While Browne heard things anecdotally, Coon said, the ex-CEO recalled that he was more focused on the company’s growth and “was not particularly involved or concerned with the routine operations of a refinery.”

Hard-won opportunity

The opportunity to question Browne marked a hard-won legal victory for Coon, who has tried to gain his sworn testimony for nearly two years. BP fought that effort, and continued to do so after Browne abruptly resigned from BP last May. He quit amid revelations that during a legal battle with a tabloids, he had lied to a British court about how he met a former companion.

The Texas Supreme Court ruled in January that Browne could avoid extensive face-to-face grilling from plaintiffs’ lawyers about the blast but directed a Galveston district judge to enforce a 2006 agreement between Coon and the company that allowed a limited deposition by telephone.

Coon said the deposition revealed no smoking guns, and Browne said nothing that would help or hurt plaintiffs in ongoing blast-related litigation.

More than half of 4,000 blast-related civil claims filed against BP have been settled, including all involving deaths. Hundreds involving injuries or property damage remain pending. The company disclosed last month that it has committed $2.1 billion to settle claims, including $1.6 billion it already has spent.

BP spokesman Neil Chapman declined to comment today other than to confirm that the deposition took place.

Unique knowledge?

BP had long maintained that Browne had no unique knowledge of the blast that plaintiffs’ lawyers couldn’t get from lower-level executives, so he should be spared having to give sworn testimony.

Coon countered that Browne ordered the budget cuts and should have to answer pointed questions about the ramifications of those decisions.

“Regardless of what his lawyers think, or what his friends in the oil industry think, we firmly believe that Lord Browne, like any other party to such a horrific tragedy, should have to answer for his company’s misdeeds,” Coon said.

The U.S. Chemical Safety and Hazard Investigation Board found after a two-year investigation that budget cuts paved the way to the tragedy by deferring maintenance, upgrades and cutting staff and training.

But BP has denied any link between the budget cuts and the disaster. A panel led by former Secretary of State James A. Baker III said that even though BP increased funding for its U.S. refineries from 2002 on, those increases weren’t enough to overcome effects of previous cuts.

Also, the Baker panel found no evidence that BP intentionally underfunded safety improvements, though the company failed to earmark enough money to that area.

BP has embraced the Baker Report and is implementing its recommendations for improvement.

Acquaintances

Coon and other plaintiffs’ lawyers have criticized the Baker report’s findings regarding budget cuts. Coon said that during the deposition, Browne acknowledged that when he chose Baker to head the panel, the two men already were acquainted.

John Williams, a spokesman for Baker, said Friday that Browne and Baker were “very distant” acquaintances before Baker headed the panel.

The blast generated a federal criminal probe as well. Last year BP’s North American products division, which oversees U.S, refineries, agreed to plead guilty to an environmental crime, pay a $50 million fine and serve three years’ probation to resolve that investigation.

The plea deal is in limbo as the 5th U.S. Circuit Court of Appeals considers whether blast victims were consulted properly about the accord. Coon and other plaintiffs’ lawyers have decried the deal as too lenient for a multibillion-dollar company that could pay more.

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http://www.chron.com/disp/story.mpl/headline/biz/5676760.html 

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