The announcement of a federal criminal investigation in the BP Deepwater Horizon oil spill in the Gulf of Mexico provides in-house counsel with object lessons on criminal environmental liability, crisis management and the growing need to play a greater role on the operations side of corporations.
In the criminal case of the BP oil spill, proving corporate liability should be fairly easy for the U.S. government. To get a criminal indictment, however, the U.S. government will need to show a clear intent by BP to break the law or show a consistent disregard for safety in the interest of their profits. Political pressure and the volume of evidence will likely draw out the case over many years. But, in the investigation many are asking; will individual executives be indicted? According to a recent article by Steven Andersen, BP Under Investigation, published in the August 2010 edition of Inside Counsel magazine, opinions diverge.
In the article one lawyer is quoted saying,
"Do I think an executive could go to jail? Yes, the potential’s there. Do I think it’s likely? Absolutely not. You would have to literally show some type of smoking gun—a memorandum saying, ‘Environment be damned—we’re gonna drill, drill, drill!’"
Still, Michael Diaz Jr., a partner at Diaz Reus, and a noted white-collar criminal attorney, offers another opinion. In the article, he says political pressure for personal accountability could play a pivotal role in bringing individual indictments.
"The federal government can be as creative as it needs to be," he says. "They can lay out a RICO indictment using some of the regulatory framework here, whether it’s under the Clean Water Act or the other Comprehensive Environmental Response Act, and then toss in the general obstruction of justice and false statements as predicate acts."
Diaz says there is always an underlying tension when defending executives in environmental cases between the standard white-collar tactic of withholding as much information as possible and cooperating with investigators in a way that will not bring additional obstruction charges.
In this case, the information BP feeds investigators to mitigate criminal risk for the company could ultimately be used to indict executives.
"My suspicion is if they don’t get the money that they want, they’re going to take it out on somebody higher up in the company," he says. "There’s no reason to believe that they can’t find a responsible corporate officer to lay an indictment."
How this plays out will likely point back to BP’s handling of the crisis in the media. Statements and actions by the company’s CEO, Tony Hayward may have already compounded the situation.
"It just underscores the need for general counsel to get involved in the operational side or management side of the business," Diaz says. "Document everything that you’re doing, get those e-mails out, paper it to death.
“The legal department can’t undo the environmental damage in a disaster like this, but an active and appropriate response can certainly help prevent making matters worse.”