BP Budget Cuts May Have Contributed to Texas City Blast: Safety Board [MarketWatch.com]
Summary: CBS reports that John Manzoni, BP's chief executive of refining and a company director, was aware of potential danger in BP's Texas plant before a fatal explosion killed 15 workers and injured hundreds in March 2005. CSB Chairman Carolyn Meritt, appearing on the CBS news magazine "60 Minutes," blamed deep budget cuts, including a 25% reduction in fixed costs: "Our investigation has shown that this was a drastic mistake," she said. While Manzoni denied that cuts were made at the expense of safety and that he had any knowledge of potential problems, internal memos prove he was warned of the possibility of a "major site incident" at the refinery, and in an e-mail, he complained about missing a day of vacation to inspect the site following the disaster. The U.S. Occupational Safety and Health Administration fined BP $21.4 million for safety violations, and the company is putting aside $400 million to $1.2 billion to settle lawsuits. The U.S. Justice Department is currently investigating the disaster for criminal violations.
Potentially impacted stocks and ETFs: BP plc ADR (BP) • Competitors: Chevron (CVX), Exxon (XOM), Royal Dutch Shell (RDS.A)
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