BP settles price-fixing, environmental charges

BP’s president apologized for the company’s actions.

WASHINGTON (AP) — Global energy giant BP PLC agreed Thursday to pay $373 million to settle criminal and civil charges that it overcharged U.S. propane consumers by millions of dollars and ignored environmental warnings that resulted in an Alaska oil spill and a deadly explosion in Texas.

Additionally, a federal grand jury in Chicago indicted four former BP traders who were caught on tape discussing an reported scheme to pump up profits by cornering the propane markets.

The federal investigation of Europe’s second-largest energy company, and its executives, will continue during a three-year probation period, Acting Attorney General Peter Keisler said Thursday.

“Obviously, the actions that we’re responding to today reflect that there were some very serious problems within the company,” Keisler said, announcing the cases in Washington.

BP America Chairman and President Bob Malone apologized in a statement.

“These agreements are an admission that, in these instances, our operations failed to meet our own standards and the requirements of the law. For that, we apologize,” Malone said.

The charges against London-based BP and its U.S.-based subsidiaries come in at least three separate cases that federal investigators have been pursuing for several years. They include:

UA February 2004 scheme by BP America Inc. to inflate the price of propane by buying massive quantities of the gas, to be delivered over a Texas pipeline, and then withholding supplies. That forced other buyers in the wholesale market to pay an unnaturally high premium, costing consumers an estimated $53 million and driving spot prices as high as 94 cents a gallon in places like New York, Pennsylvania and Illinois.

Ironically, BP did not profit because the financial benefits of the scheme were outweighed by the unexpectedly huge costs associated with carrying it out. But under an agreement with the Justice Department to avoid criminal prosecution, BP will pay a $100 million penalty on top of fines amounting to $25 million to the U.S. Postal Service; $125 million to the Commodity Futures Trading Commission and $53 million in restitution.

Additionally, the Justice Department charged four former traders accused of carrying out the scheme with 20 counts of mail and wire fraud and commodities violations. At least some of the four traders — Mark David Radley, James Warren Summers, Cody Dean Claborn and Carrie Kienenberger — reportedly were caught on tape gleefully discussing how BP could “control the market at will.”

Describing the tape, Commodity Futures Trading Commission acting chairman Walt Lukken described “outrage that these people were taking advantage of innocent consumers.”

UA March 23, 2005, explosion at a BP refinery in Texas City, Texas, that killed 15 contract employees and injured more than 170. Granta Nakayama, assistant administrator for the Environmental Protection Agency, said BP failed to install environmental and safety standards as required by the Clean Air Act to prevent chemical vapors from being accidentally released.

BP will pay $50 million as part of a felony guilty plea in Texas — what officials called the largest criminal fine ever given in a Clean Air Act case.

UBP’s March 2006 spill of 201,000 gallons of crude oil at Alaska’s Prudhoe Bay, the nation’s largest oil field. BP America will pay $20 million and plead guilty to a misdemeanor violation of the Clean Water Act for the largest crude spill on Alaska’s oil-rich North Slope.

Under the agreement, BP will pay a $12 million fine and $4 million in restitution to the state of Alaska. Another $4 million goes to the National Fish and Wildlife Foundation for Arctic environmental research.