By Emily Gosden
BP is being sued for tens of millions of dollars in the US by institutional investors who allege the oil major misled them over its safety policies and the scale of the spill in the Gulf of Mexico.
The company’s shares more than halved – wiping billions of pounds off the value of the group – in the wake of the April 2010 disaster, which killed 11 men and caused the worst offshore spill in US history.
Six investors who bought shares in BP in London prior to the accident or in its immediate aftermath claim that they would not have done so at the price they did “had they known the truth”. They include the South Yorkshire Pensions Authority, Skandia Global Funds and GAM Fund Management.
The funds allege that they lost “substantial sums as a result of BP’s misleading statements”, and are suing under Texas law for common law fraud and negligent misrepresentation, and for statutory fraud. The US Supreme Court blocked foreign investors seeking damages in federal courts.
The claimants are seeking damages “in an amount to be proved at trial” but the plaintiffs’ lawyers, Pomerantz Haudek Grossman & Gross, said the claims were likely to total tens of millions of dollars. They said they were in talks with further investors who could join the action.
The investors claim BP and its then chief executive, Tony Hayward, misled them over its “safety first” policies in the years before the disaster, the size of the oil spill following the accident, and “the degree of BP’s likely responsibility for the catastrophe”.
Yesterday the shares rose 2.35 to 443.7p.
Legal documents filed in Texas in July and August set out numerous occasions in which BP publicly professed its commitment to safety from 2007 to 2010.
The suits allege: “These ‘safety first’ statements were materially false and misleading. BP paid only lip service to such reforms, lacked any tools for dealing with oil disasters such as deep water spills, and continued to operate by sacrificing safety for savings. Indeed, BP’s reform failures led directly to the April 2010 disaster.”
They cite investigations into the spill which found safety failings at BP.
The investors allege that, after the explosion, BP “issued statements intended to assure investors that the leakage was limited and containable, that BP had done nothing wrong, and that consequential damages would be limited” and that “these statements minimised the decline of BP stock prices, and induced Plaintiffs to purchase additional shares”.
They claim BP executives “acted in reckless disregard of the truth, ignoring and concealing indications that the disaster was much larger than investors were being led to believe”.
The suit covers shares bought between January 16, 2007, when BP’s share price stood at 541p, and May 28, 2010, more than a month after the spill, when the shares had fallen to 494.8p.
The shares subsequently fell as low of 302.9p on June 29. BP and Tony Hayward declined to comment.