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Title: Halliburton's Flawed Cement May Seal Criminal Fate
Source:
Bloomberg
URL Source: http://noir.bloomberg.com/apps/news?pid=20601039&sid=aJYqJAL8cLC0
Published: Nov 5, 2010
Author: Ann Woolner
Post Date: 2010-11-05 12:32:04 by Brian S
Keywords: None
Views: 3014
Comments: 4
Nov. 5 (Bloomberg) -- Halliburton Co. probably meant no irony when it named its annual report last year, “Pushing Boundaries.” The company may be wishing it had more carefully observed certain boundaries as new evidence emerges of its role in the biggest oil spill in U.S. history. Take, for example, the line between legal conduct and crime. Halliburton may have crossed that border if it negligently sold faulty cement used in the construction of the Macondo well, which spewed 4.9 million barrels of crude into the Gulf of Mexico after an April 20 rig explosion that killed 11 workers. Last week a commission investigating the disaster reported that the Houston-based company had reason to suspect from its own work that the kind of cement similar to that which it used at the well wouldn’t hold. The material had failed three out of four stability tests, and Halliburton didn’t test the final formula used. If it had, it might have found what experts at Chevron discovered when testing that formula at the request of investigators. Nine times they tested the formula used, and nine times the stuff was unstable. “This may have contributed to the blowout,” Fred Bartlit Jr., chief investigator for the National Commission on the BP Deepwater Horizon Oil Spill, said in a letter to the panel. If it did contribute, it would be hard to see how Halliburton, the world’s second-largest oilfield-services provider, could avoid criminal prosecution. And while BP would be the No. 1 defendant, the new finding suggests that Halliburton might well show up on the list of accused, too. Halliburton’s Shield Halliburton disputes Bartlit’s findings. In addition, when asked if there were concerns that the company might face criminal charges, spokeswoman Cathy Mann said by e-mail that Halliburton is protected by an indemnification clause within its contract with BP. But indemnification provisions typically cover civil damages, not criminal fines. “The whole purpose of a criminal prosecution is to punish the wrongdoer,” David Uhlmann, a University of Michigan law professor and, before that, a federal prosecutor of environmental crimes for 17 years, said in an interview. “You can draw a straight line between an improper cement seal and criminal charges,” he said. “It’s not a very difficult conclusion for the government to reach that Halliburton was negligent if Halliburton knew that there might be problems with the cement mixture it was using, and they went ahead and used that cement mixture, anyway.” He figured the company’s potential fine at hundreds of millions of dollars, possibly billions. The Law Simple negligence is sufficient to get convicted of a misdemeanor with that type of penalty under the Clean Water Act. It’s a violation if an employee or company fails to take the reasonable care that an ordinary person would have used under similar circumstances, according to the only two appeals courts that have addressed the matter. That’s easier to prove than gross criminal negligence, which is required in other areas of the law. Surely it would be reasonable to supply only provably stable cement if it’s to be used 2.5 miles beneath the ocean floor. If the government can show that Halliburton knowingly and willfully violated regulations or filed a false report or obstructed justice, then we’re talking about a felony. In either case, the prosecution might try to send those responsible to prison. Bribery Case This wouldn’t be the first time Halliburton has crossed legal boundaries. With global operations and annual revenue exceeding $16 billion, it’s a big deal when it’s caught crossing a line. Take the $579 million fine Halliburton and an arm of its former unit, KBR, agreed in 2009 to pay for charges related to bribing Nigerian officials and to settle a related civil case by the Securities and Exchange Commission. Halliburton didn’t admit wrongdoing in the SEC matter. And then there was that little matter of doing business with Iran, a country that former Vice President Dick Cheneydeclared “the world’s leading exporter of terrorism.” He said that after he left his job as chief executive of Halliburton, and after he stopped talking up the idea of letting U.S. companies do business with state sponsors of terrorism. Business in Iran A Halliburton division was doing millions of dollars of business in Iran, prompting a federal criminal investigation in 2004. The parent company avoided prosecution through a loophole in the law that lets foreign units of U.S. corporations do business with the enemy if they work independently of their parent companies, with no Americans involved. That’s an exception Senate Republicans refused to close in 2004 by a vote of 50 to 49, mostly along party lines. Now the question is whether Halliburton crossed the boundary between legal and illegal conduct this year in the Gulf of Mexico. Bartlit’s letter says Halliburton ran two stability tests in February on cement similar to that which would later be used, and the stuff failed both times. Two more stability tests in April, this time on material more closely matching the substance that would be used, produced mixed results. First a failure, then, finally, a passing grade for stability. Hey, one out of four’s not bad, right? Bartlit said it isn’t clear that Halliburton managers or BP had that last test result before pouring the cement on April 19 and 20, the day the well exploded. If those responsible for supplying the cement didn’t know about that one, it would mean they only knew about the failed tests and supplied the stuff, nonetheless. Change in Formula In any case, Halliburton says it knew of that last test result and informed BP. It also says the earlier tests shouldn’t count because of different formulas for the first two and errors in the third one. Halliburton says even after that last test, BP ordered a change in the formula, anyway. So, Halliburton never ran a stability test on the cement that was eventually used. Halliburton tries to shift its share of the blame to BP in its public response to the Bartlit letter. It was BP that ordered the formula change, failed to do sufficient testing and misread the results of the tests it did run, Halliburton says. All that could sink the hook deeper into BP, but it’s hard to see how it would get Halliburton off. Even if the company played only a contributing role, that would be enough to interest prosecutors, Uhlmann said. Halliburton either did or didn’t perform negligently in supplying the cement, no matter what BP or Transocean Ltd., the rig’s owner, did. The broken cement seal doesn’t have to be the only cause of the explosion for Halliburton to face charges, and surely it isn’t. Investigations point to multiple failures on the Deepwater Horizon rig. Perhaps the disaster could have been prevented if just one of those events had gone right. Say, if the cement seal had worked. When it comes to allocating blame and the fines that will follow, prosecutors will have to say who did what. Look for BP to top any list of criminal defendants, but it may not be alone. (Ann Woolner is a Bloomberg News columnist. The opinions expressed are her own.)
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#1. To: Brian S (#0)
You're shitting me, aren't you!
No, however I have squeezed out a couple of "turds" that resembled you in the past... {{{chuckle}}}
Never swear "allegiance" to anything other than the 'right to change your mind'!
Did you brush your teeth afterwards? Or do you kiss your boyfriend immediately ?
The US is criminally responsible. There is ZERO way that any Mitigation of this Ecocide was possible and everyone knew it. And to this day we drill in the GoM. "down BP's crude fingerprints out in the field all along the coast, in Louisiana, Mississippi, Alabama and Florida's panhandle. "I've found there's still huge amounts of BP crude oil on the sediment soils, in the wetlands, on the vegetation, and in the tissue in the oysters, crabs and mussels." The acute health impacts of these chemicals include severe headaches, nausea, respiratory problems, burning eyes and throat, earache and chest pains."
(Ann Woolner is a Bloomberg News columnist. The opinions expressed are her own.)
#2. To: Ibluafartsky (#1)
You're shitting me, aren't you!
#3. To: Brian S (#2)
I have squeezed out a couple of "turds"
#4. To: Brian S (#0)
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