An aerial shot of the BP Gulf oil spill from about 3,000 feet. David Quinn / AP

By Michael Isikoff and Michael Hirsh | NEWSWEEK
Published May 7, 2010
From the magazine issue dated May 17, 2010 Tony Hayward, the CEO of BP, has a couple of major problems on his hands these days. One lies down near the earth’s crust; the other exists deep in the muck of Washington politics. It may take many months to cap the 5,000-foot-deep oil gusher in the Gulf of Mexico. In the meantime, Hayward has to cap the damage to BP’s reputation, and reduce its liability for what could be the costliest cleanup in corporate history. He was already hard at work last week, making the rounds of key senators from coastal states affected by the spill. Described as exhausted but wearing a “wry smile,” Hayward impressed several lawmakers with his earnestness about stopping the leak. He also seemed intent on deflecting questions about responsibility. “He was candid on most of his answers,” says Florida Sen. Bill Nelson. But when Hayward was pressed on how much BP will compensate businesses and fishermen harmed by the spill, Nelson says, “he dodged” and became “very lawyerly.” The Obama administration has promised to “keep the boot on the throat” of the giant British company, as White House Press Secretary Robert Gibbs put it. Others will be trying to do the same. In the coming months there will be lawsuits, hearings, and investigations galore on the spill and who’s responsible for it, as well as heated debates over President Obama’s offshore-drilling plans and new legislation, including a bill raising a $75 million ceiling on BP’s liability for compensation to injured parties. But BP will seek to leverage every penny of the $15.9 million it spent on lobbying last year (its most ever) as it seeks to fend off allegations that the company and its contractors failed to abide by safety provisions for deepwater drilling. Most of all, it will try to contain the penalties it has to pay. If the past is any guide, BP will succeed at that. The story of the company’s handling of other safety problems illustrates how easily high-powered lawyers and sheer corporate muscle can often overwhelm the best efforts of federal regulators. (A BP spokesman said the company “will honor all legitimate claims” stemming from the oil spill. The spokesman declined to comment on all other questions posed by NEWSWEEK.) … In 2006 the EPA and the Justice Department launched a criminal investigation into two massive BP oil leaks in Alaska caused by corroded pipelines. One of the leaks spewed 200,000 gallons onto the tundra. Once again, EPA investigators pushed to charge company officials with a crime. “Everybody was convinced we had a humdinger of a case,” says Scott West, the EPA special agent in charge of the probe, who has since retired. Witnesses—including workers on the pipelines and midlevel managers—had told investigators how BP executives had ignored repeated warnings about corrosion. “There was a corporate philosophy that it was cheaper to operate to failure and then deal with the problem later rather than do preventive maintenance,” West told NEWSWEEK. Later that year, West says, he got authority from the U.S. Attorney’s Office in Alaska for a “surgical” subpoena for internal documents relating to the company’s maintenance of the pipelines. BP complied in early 2007, but in a way that made it virtually impossible for investigators to find the evidence they needed: BP set up a special server with scanned copies of 62 million pages of documents. “If you printed all of them out,” says West, “it would have filled a warehouse … We only had three or four people.” When he began to examine BP’s response, West says, he remembers thinking, “Holy shit, I can’t breathe.” Still, West (who now works for Sea Shepherd, an environmental group) was determined to push a multiyear investigation—not unusual for a complex case that, as he envisioned it, would ultimately reach into corporate headquarters in London. But just a few months later, West says, he was told by federal prosecutors in Alaska to bring the case to a close. “We were told, ‘Main Justice wants this wrapped up,’ and ‘All we can get is a corporate misdemeanor.’?” According to West and Bob Wojnicz, another since-retired EPA agent on the case, BP’s high-powered legal team (headed by Houston lawyer Carol Dinkins, a former deputy attorney general under George H.W. Bush who had previously served as chief of the Justice Department’s environment division) had gone over the agents’ heads. Dinkins negotiated a “global” settlement of all Justice Department inquiries into the company’s conduct—including the Alaska-pipeline case and Texas City—that was to be announced the same day. “There was no reason to shut it down at that point,” says Wojnicz. Nelson Cohen, the U.S. attorney in Alaska at the time, says there was no “realistic chance of generating useful evidence” from continuing the probe and that all investigating agencies and prosecutors concurred in the decision to accept the misdemeanor plea from BP, which included a $20 million fine. Dinkins says, “I don’t comment on my work for my clients.” …

Slick Operator: How British oil giant BP used all the political muscle money can buy to fend off regulators and influence investigations into corporate neglect