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As criticism of Tony Hayward grows and with President Obama throwing his toys out of the pram with increasing regularity, many people are wondering what this shows us about the leadership qualities – or lack thereof – of both men. But who is to blame for this disaster?

This post has grown from several comments I made to an Institute of Directors (IoD) LinkedIn discussion. One of the key skills that a director has to have is leadership, and the IoD promotes and teaches leadership skills amongst its members. Leadership is important at all times but in times of crisis it is vital hence the LinkedIn discussion on the performance of Tony Hayward is of interest to professional directors. As the crisis has continued the leadership of President Obama is also coming under scrutiny, particularly as he continues, incorrectly, to refer to BP as British Petroleum. This is being seen as a way to deflect criticism from his government onto Britain.

(By the way, for those who don’t know, LinkedIn is a business related social networking site. It has been called “Face Book for Adults”. Do have a look at LinkedIn via the link in our Blogroll – to the right of this page. You can also have a look at the IoD website from there.)

So is Tony Hayward displaying good leadership skills? Well he is certainly doing what one would normally expect. He has visited the site of the disaster and has shown himself to be taking charge and taking responsibility for sorting the problem out. However, whilst this accepted disaster management strategy has always worked in the past – Sir Richard Branson turning up at the site of a Virgin Train crash for example – but in this case the disaster has been so massive and has dragged on for so long that it is difficult to see what good Hayward is doing. Indeed it seems he is now doing more harm than good.

Where Are the Missing Men?

Hayward may not be doing a great job, but rather than criticise him I have to ask why it is that he is the only board member on site and taking any part in the corporate damage limitation exercise (as opposed to the ecological damage limitation exercise).

Where on earth has the BP Chairman been hiding? For the record his name is Carl-Henric Svanberg. He is a Swedish businessman with degrees in Applied Physics and Business Administration. Formerly the CEO of communications giant Ericsson. Not much more is known about him.

Where is Andy Ingliss? Who, you ask. Well although Tony Hayward is CEO of BP he isn’t the only BP CEO on the board. Hayward is described as CEO/MD of BP Worldwide but there is also Andy Ingliss who is described as CEO Exploration & Production. Shouldn’t he be taking part in this crisis? It is his area of responsibility after all.

What’s Obama’s Beef About?

President Obama’s critics (of whom there are many) have long described him as a “control freak”. He is clearly out of his depth, unhappy about not being in control, and seems to be operating on the premise that “the best method of defence is attack”. However is he attacking the right target?

Obama keeps on talking about “British Petroleum” – a company which does not exist. This has been pointed out to Obama but still he refers to British Petroleum rather than BP Plc or even BP America (who hold the drilling license). Obama is demonising “British Petroleum” and trying – with no legal basis – to stop BP plc paying dividends. This has resulted in a fall in BP shares with a knock-on effect for British pension funds who are big shareholders in BP. Not only that, by whipping up anti-British feelings Obama is causing problems for the whole British economy, as Americans boycott British goods and companies not to mention the damage to Britain’s tourist industry. Mind you British Airway’s and Icelandic volcanoe’s are doing a fairly good job on that front already

BP – As Much an American Company as a British One

The roots of BP go back to 1909 with the foundation of the Anglo Persian Oil Company. Shortly before the First World War, in order to safeguard oil supplies, the British government took a controlling stake in the company. Between the wars Anglo-Persian expanded into Canada, South America, Africa, New Guinea, and Europe. In 1935 the company was renamed the Anglo-Iranian Oil Company.

In 1951 Iran nationalised all the company’s assets in the country, at that time the UK’s largest overseas investment. The company then began exploration in other Middle Eastern countries, such as Kuwait, Libya and Iraq and in 1954 was renamed British Petroleum Company. The UK government remained the major shareholder.

Over the next 50 years the company expanded its operations worldwide and now has operations in more than 70 countries. A major emphasis was to enter the American market, which it did by purchasing several American companies including Standard Oil of Ohio, Gulf Oil, and others. BP also developed major oilfields such as those at Prudhoe Bay, Alaska and, latterly, at various offshore Gulf of Mexico locations.

Between 1979 and 1987, as part of Mrs Thatcher’s policy of privatisation, the UK government sold all its shares in British Petroleum. Thus it was that in December 1998 when British Petroleum merged with Amoco (formerly Standard Oil of Indiana) the time was ripe for British Petroleum to change its name to reflect the fact that it was a major multi-national company. Thus BP Amoco plc came into existence.

In 2000, BP Amoco acquired Arco (Atlantic Richfield Co.) and Burmah Castrol plc. In 2001 the company formally renamed itself as BP plc.

BP is clearly a major global brand and a major multi-national corporation. BP plc operates in America and elsewhere via a large number of subsidiaries. The USA is clearly a major centre of economic activity and much of its ownership is in US hands.

So Why Does Obama Play Down the American Connection?

It would be just as sensible for Obama to refer to the company as Amoco (American Oil Company) – but then it suits him to play down the Amoco connection as that company has a very bad safety record. For example:

On March 16, 1978, the very large crude carrier Amoco Cadiz ran ashore just north of Finistère, France, causing one of the largest oil spills in history. More than a decade later, Amoco was ordered to pay $120 million (worth more than double that today) in damages and restitution to France.

On October 21, 1980, an explosion at an Amoco plant in Delaware, killed six people, caused $46 million ($135 today) in property damage, and eventually led to the loss of 300 jobs

In the 1980s and 1990s, six former Amoco chemical engineers at the firm’s Naperville, Illinois research campus developed a deadly form of brain cancer. Researchers who conducted a three-year study of the cancer cluster determined that the cancer cases were workplace-related, but they could not identify the source of the workers’ ailments. Relatives of those who died have won undisclosed multi-million dollar damages relating to these deaths.

Did Cost Cutting Cost Lives?

The UK government have just named Lord (John) Browne as the head of the Lib-Con coalition’s new Quango (I thought they were getting rid of them) to oversee public sector cost cutting.

Browne’s reputation as a cost-cutter dates back to his years as CEO of BP where he certainly did cut costs. However many industry commentators maintain that it was his cost cutting on matters of health and safety that led BP to the stage it is at today. Indeed during Browne’s tenure BP in North America (the old Amoco company) suffered one disaster after another. Illegal waste dumping in Alaska, a major explosion at  their Texas City Refinery, and the massive Prudhoe Bay oil spill to name just three.

BP has been named on more that one occasion (by Mother Jones Magazine) as one of the “ten worst corporations” based on its environmental and human rights records. In a period of just 15 months BP was responsible for 104 oil spills. In fact it was BP who developed and patented the Dracone Barge now used as an aid to cleaning up oil spills all over the world. No wonder the US government accepts that BP has more expertise than they do. They have more experience!

The fact is that most of these disasters have occurred in the areas managed by the old Amoco business. BP bought Amoco at a discount as the company (Amoco) had a bad reputation. This is also why the dropped the BP Amoco name. The fact is, Mr Obama, that it is the Amoco connection that is the real problem – not the “British” one. Look to your own Mr President.

Is BP Really to Blame?

Tony Hayward has accepted that BP have responsibility to deal with this disaster, but that isn’t the same as saying that BP are to blame, either wholly or partly.

The Deepwater Horizon was a semi-submersible drilling platform, which was carrying out exploratory drilling on behalf of BP in its Macondo Prospect field in the Gulf of Mexico. (By the way, Macondo is the doomed town which features in the Gabriel Garcia Marquez novel One Hundred Years of Solitude. Spooky!) The Deepwater Horizon was owned and operated by Transocean Ltd, the world’s largest offshore drilling contractor. Transocean is referred to as being a Swiss company but the fact is that out of over 25,000 employees only 12 work in its head office in Switzerland. The company was founded in the USA and only moved its HQ to Switzerland in 2008, via the Caymans Islands, to reduce is American tax bill. I thought you were going to stamp down on this sort of thing Mr President?

Transocean charge up to $650,000 per day to operate drilling rigs like the Deepwater Horizon. Transocean, not BP, are responsible for health and safety as well as all other operational aspects. BP has also been criticised for running the well without a remote control shut-off switch as used in two other major oil-producing nations, Brazil and Norway. However the use of such controls as a last resort protection against underwater spills is not required by U.S. regulators who don’t see any benefit in their being fitted. These are your regulators Mr President!

At the time of the explosion the well casing was run and cemented by the other major contractor – Halliburton, the world’s second largest oilfield services corporation. Halliburton is a major US corporation that employs over 50,000 people and has its headquarters in the oil city of Houston, Texas. Initial investigation into the explosion has suggested that the explosion was caused by “a sudden, catastrophic failure of the cement, the casing or both”.

So, Why is President Obama not criticising Halliburton? Surely it cannot have anything to do with the fact that until Dick Cheney resigned (with a $36 million payoff) to become Vice President of the USA, he was Chairman and CEO of Halliburton. Neither I am sure has it anything to do with Halliburton’s links to the Pentagon and in particular to Defense Secretary Donald Rumsfeld’s office. Even Osama bin Laden had a pop at the links between the US government and Halliburton when he claimed that the wars in the Middle East were being fought for Halliburton’s financial benefit. For more information on the activities of Halliburton have a look at the Halliburton Watch website.

So, why are the Americans, and President Obama in particular, laying the blame for this incident at the door of the British? All the companies involved are at least as much American as British. I think there is a lot more muck to come to the surface – and I don’t mean the oil still pouring into the sea in the Gulf of Mexico.

6 Responses to “Obama, Hayward, BP and Leadership”

  1. Jack J says:

    nice article, thanks

  2. James Green says:

    Hi Wayne. Yes I saw the Senate comments too and am not surprised that Obama has been silent on the subject. I feel an updated post coming on!

  3. Wayne D says:

    I notice that the US Senate have also come out and said that BP are not the only people at fault. However Obama, perhaps the worst President for years, seems to have kept quiet about that.

    Good post. Thanks.

  4. Liquet says:

    This has actually sparked up an idea in my mind. This really is a superb weblog article.

  5. Farouk says:

    Very good analysis. Thank you.

  6. Jan Smith says:

    Nice article. I agree with much of what you have said. It is incorrect to try to label BP as being only a British Company because clearly it is not. It is just one of the greedy multinational companies doing business (and maximising shareholder profits) from everywhere around the Earth.

    Halliburton is a company that should be taken apart, piece by piece and thoroughly examined. I believe they are evil.

    If BP stop paying dividends to shareholders (which I think they should) the effect on the retail sector is going to be felt both in the US and in England. And many other countries too.

    This mess is a loooong way from being over. Not to mention the missing oil. Where the heck has it gone??

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