BP has received the biggest criminal fine in US history as part of a $4.5bn (£2.8bn) settlement related to the fatal 2010 ‘Deepwater Horizon’ disaster. As part of the agreement, BP will also plead guilty to 14 criminal charges. BP will pay an additional $525m to the Securities and Exchange Commission over a period of three years, the firm said. The $4bn resolution with the US Department of Justice includes a record criminal fine of $1.26bn, as well as $2.4bn to be paid to the National Fish and Wildlife Foundation and $350m to be paid to the National Academy of Sciences, over a period of five years. DoJ Attorney General Eric Holder said that, "In addition to the charges filed against BP, a federal grand jury returned an indictment charging the two highest-ranking BP supervisors, who were on board the Deepwater Horizon on the day of the explosion, with 23 criminal counts – including 11 counts of seaman's manslaughter, 11 counts of involuntary manslaughter, and alleged violations of the Clean Water Act. The grand jury also charged a former BP executive, David Rainey, with hiding information from Congress and allegedly lying to law enforcement officials. (Financial Times*, BBC, Guardian, Reuters)
FSA hands down record fine over the mis-selling of insurance
The credit card insurer CPP, has been ordered to pay a record-breaking £10.5m fine and hand over about £14.5m in compensation for, “widespread mis-selling” to millions of customers. The company reached agreement on the payments with the Financial Services Authority (FSA), ending a 19-month investigation into the company’s aggressive and inappropriate sales practices over credit card and identity theft insurance. The investigation could draw in several large banks which either sold CPP’s products or referred customers to the company. The banks are in discussions with CPP and the regulator about creating a compensation fund for customers. Analysts believe banks may have to pay out several hundred million pounds in compensation on the total £1bn of premiums sold by CPP. That is nowhere near the £15 billion banks will probably have to pay over PPI, but the issue is damaging because, as with PPI, banks have encouraged their customers to buy products they did not need. Barclays and Royal Bank of Scotland have used CPP in the past and Santander continues to use CPP. (Times*, BBC)
Walmart extends corruption inquiries
Walmart has revealed that internal probe into potential violations of anti-corruption law will be extended to include more countries. A spokesman from Walmart, the world’s biggest retailer by sales, said on Thursday that investigations had commenced in a number of foreign markets “including but not limited to Brazil, China and India”. The news has come at the same time as Indian authorities commenced an investigation in to claims that Walmart violated foreign exchange rules when it invested $100m in a domestic unit owned by its wholesale joint-venture partner. These allegations were raised in early September but this Friday – the 16th November – a senior official from India’s Enforcement Directorate announced the beginning of a formal government investigation. (Reuters, Financial Times*, New York Times)
EADS inquiry into Saudi bribe claims
The European aerospace company, EADS, has launched an external, group-wide investigation into its anti-corruption practices as it admitted for the first time that it had failed to react quickly enough to a whistle-blower’s claim that its UK unit paid bribes to secure contracts in Saudi Arabia. A month after EADS abandoned its quest to merge with Britain's BAE Systems, the company said it had hired the Ethic Intelligence agency to conduct a thorough audit of anti-corruption compliance systems across the group. The review comes after the Serious Fraud Office (SFO) opened an investigation into its UK subsidiary, GPT Special Projects, in August. This was prompted by whistle-blower allegations that GPT paid millions of pounds of bribes into a Cayman Islands bank account, as well as gifts of new cars, to secure and retain £2bn of contracts to provide communications and intranet services for the Saudi National Guard. EADS said it was fully co-operating with the SFO and said internal audits and a review by PwC had found no evidence of improper payments. (Independent)
Consumers
Ladbrokes to offer limits on machine use
Ladbrokes will allow gamblers to set limits on the amount of time and money they spend on machines in their betting shops, in the face of rising concern from politicians about gambling addiction. Ministers will announce a review in the next few weeks of the evidence relating to problem gambling and fixed-odds betting terminals (FOBT), an increasing source of revenue for bookmakers. John Leech, the Liberal Democrats’ gambling spokesman said: “these machines are highly addictive, easily accessible and carry vastly inflated stakes and lower prices,” and Labour said the machines have turned betting shops into “mini-casinos”. (Financial Times*)
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