FORMER BP EXECUTIVE TONY HAYWARD WAS GRILLED ON PAST SAFETY RECORD, OIL SPILL DEPOSITION SHOWS

Published: Sunday, March 04, 2012, 6:45 AM
By Mark Schleifstein, The Times-Picayune
http://www.nola.com/news/gulf-oil-spill/index.ssf/2012/03/former_bp_executive_tony_haywa.html

BP has taken the unusual step of releasing portions of potentially embarrassing pretrial deposition testimony by former CEO Tony Hayward to back up its complaint that attorneys representing those filing suit against the company over the Gulf oil spill are intent on violating an order by U.S. District Judge Carl Barbier prohibiting use of testimony about past BP accidents in the delayed first phase of the trial.

In May, 2010, BP Chief Executive Tony Hayward walks along Fourchon Beach during cleanup of oil from the Deepwater Horizon oil spill.

The embattled Hayward, who stepped down in October 2010, was questioned repeatedly by Robert Cunningham, an attorney for the Plaintiffs' Steering Committee, about a series of accidents at BP facilities around the world that preceded the Deepwater Horizon explosion and oil spill in 2010, according to portions of Hayward's June 6, 2011, deposition attached to the motion filed Thursday.

Those incidents included major accidents at BP's Grangemouth refinery in Scotland in 2000; an explosion and fire that killed 15 workers at BP's Texas City, Texas, refinery in 2005; a series of oil leaks from a BP pipeline in Prudhoe Bay, Alaska in 2006; and a federal price fixing investigation of BP involving propane gas trading in 2007.

BP pleaded guilty to felony violations of the Clean Air Act and a $50 million fine after the Texas City incident. The company pleaded guilty to criminal Clean Water Act violations and was fined $20 million after 200,000 gallons of oil were spilled during the Prudhoe Bay incident.

On Feb. 9, U.S. District Judge Carl Barbier ruled that both BP's past safety record and a number of investigative reports involving past accidents and the Gulf oil spill could not be used in the first chapter of the three-part court battle, called the "incident" phase, which deals with events leading up to the explosion of the Deepwater Horizon rig.

He based his rulings largely on the length of time that would be added to the trial by either assuring information on which the reports were based followed federal evidence rules, or allowing BP and other defendants to contest the materials.

Plaintiff attorneys had hoped to show that the oil giant had failed to adopt adequate "process safety" rules in the aftermath of earlier accidents. According to Barbier's ruling, BP implemented a new operating management system in response to the Texas City incident, but it was not in place at the Macondo operation.

Barbier ruled that the plaintiffs "have failed to demonstrate any substantial similarity between the prior incidents and the Macondo casualty." BP had argued that the real reason for including the evidence was to show the company guilty of "bad character," a tactic not allowed under federal evidence rules.

Barbier said allowing use of the evidence also would require allowing BP and other defendants the right to present competing evidence, resulting in "a real danger of creating a 'trial within a trial,'" and delaying its conclusion.

BP attorneys also had complained before Barbier's ruling that plaintiff attorneys had been too aggressive in their interrogation of Hayward during his deposition.

Cunningham's questions in the segment of the deposition transcript released this week pointed out that after each accident, BP issued statements promising "to take action to ensure that it is never repeated." And that Hayward and other BP executives used similar wording in repeated public statements in the aftermath of the Deepwater Horizon disaster.

The questions also emphasized that at the time of the Deepwater Horizon disaster, subsidiaries of the company were on probation concerning felony criminal convictions involving two of the earlier incidents, and subject to a three-year deferred prosecution agreement involving mail and wire fraud charges stemming from the price fixing incident.

Cunningham also grilled Hayward about the conclusions reached by several investigative bodies following the earlier incidents that BP cost-cutting initiatives may have played a part in their cause.

"When all of those events and guilty pleas occurred, you were in the top leadership at BP, weren't you?," Cunningham asked at one point during the deposition.

"I was in the leadership of BP, yes, correct," Hayward responded.

"And despite everything that had occurred before 2007, during which you were part of the top leadership at BP, the board of directors promoted you to CEO in 2007, didn't they?" Cunningham asked.

"They did," Hayward said.

"In fact, the entire time that you were the CEO of BP, BP was on probation for criminal conduct, true?" Cunningham asked.

"For incidents that had occurred prior to my becoming the CEO, that is true," Hayward said.

"Is it true that the entire time you were CEO of BP, BP was on probation for criminal conduct?" Cunningham asked, prompting an objection by BP's attorney.

"As I said, BP was on probation for criminal conduct during my time as CEO for incidents that had occurred prior to me becoming the CEO," Hayward said.

"They occurred while you were in the top leadership of BP, though, didn't they?" Cunningham said.

"I was -- I was in the senior leadership," Hayward said.

"You were in the senior leadership, weren't you?" Cunningham repeated.

"I was," Hayward said.

"And it's true, isn't it, that the culture of an organization is shaped by the leaders in it?" Cunningham asked, again drawing an objection from BP's lawyer.

"That people do what leaders do?" Cunningham asked.

The transcript then skips three pages, picking up with Cunningham reading Hayward the same line from one of his statements.

"...do...that's been proven time and time again? Did you or did you not say that?" Cunningham said.

"I did say that. I did say that," Hayward said.

At another point in the deposition, Cunningham read from a federal Chemical Safety Board report on the Texas City disaster that concluded cost-cutting was involved. Health, safety and environment "was unofficially sacrificed to cost reductions, and cost pressures inhibited staff from asking the right questions; eventually staff stopped asking," the report said.

Using that document and a book written about the Texas City explosion, Cunningham pressed Hayward on whether cost-cutting measures he implemented after becoming CEO helped cause that accident and the oil spill.

But Hayward insisted the budget cuts he made were aimed at higher-level administrators, and not the day-to-day operations involving refineries or exploration operations like the Deepwater Horizon's drilling of the Macondo well in the Gulf.

"We had a very significant cost base, sitting above the operation, had no impacts on the operation, added nothing to the operation other than burden and complexity," Hayward said. "That is what we removed in the course of 2008 through 2010, and we supplemented the operations by investing into them."