07.01.10 12:39 PM ET
July Fourth Outrage: British Gov't Elevates Disgraced BP Boss
The British government appointed Lord Browne, the former CEO of BP, as a new “super-director” to cut waste and increase the efficiency of the British government machine in Whitehall. The announcement of Browne’s appointment was delayed while officials weighed the consequences of inevitable controversy. Browne is widely blamed for the drastic cuts of BP’s safety and maintenance program of its oil installations in the U.S. while he was BP’s CEO between 1998 and 2007. The consequence of those cuts were three major accidents in the U.S.—an explosion at the Texas City refinery in 2005, two oil spills in Alaska in 2006; and the current catastrophe in the Gulf of Mexico. Adamantly, Browne has refused to discuss his responsibility for the Gulf crisis. He is undoubtedly relieved that the British government decided to ignore the allegations about his culpability and promote him to a senior position. Ever since he was forced to abruptly retire from BP after signing an untruthful court statement about his gay relationship with a young Canadian, he has struggled to restore his reputation as the “Sun King.”
The hapless Tony Hayward who inherited the poisoned legacy was never suitable to repair the damage which inevitably led to the explosion one mile beneath the Gulf’s waters.
• Lord Browne’s Spotty BP Tenure Small, dapper, and authoritarian, Browne transformed BP from a dying oil corporation in the early 1990’s into the world’s second largest oil behemoth. By re-focusing BP on “elephants”—the big oil reservoirs—and ruthlessly cutting costs, his mastery of financial engineering used BP’s rising share price to stage audacious takeovers of failing oil companies, especially Arco and Amoco in America. BP flourished by consistently discovering new reserves to replenish the oil it was extracting. His stint at BP showed he was the master of so-called efficiency savings and self-publicity. In a speech at Stanford, he re-branded BP as “Beyond Petroleum”—the world’s most environmentally friendly oil company. The re-labelling was condemned by many environmentalists as a cynical ruse but, with the help of lobbyists and donations to Congressmen and senators, Browne won praise in Washington as a pathfinder for the oil industry and, unusually, a CEO who could be trusted.
• Full coverage of the BP oil spillIn reality, behind BP’s new sunburst logo, some insiders were railing against an increasingly putrid organization. Unwilling to tolerate their criticism, Browne ruthlessly removed talented executives and potential rivals who threatened to prematurely inherit his crown. What remained were “the turtles,” the sycophants trusted by Browne to carry his burden and unquestioningly deliver his ambition. Tony Hayward ranked among the chosen ones, as did Robert Dudley, the new American supremo.
Cutting costs was Browne’s obsession. His philosophy was ‘More for less”—100 percent of a task would be completed at a cost of only 90 percent of the previous resources. Targets became his Gospel. On July 11, 2000, he announced that BP’s production would annually grow over three years by 5.5 percent to 7 percent, mostly in the Gulf of Mexico and Angola. In fact, growth never exceeded 2.9% and skilled oil men resigned rather than worship Browne’s impossible dream. Among them was Doug Ford, the ex-Amoco executive responsible for refineries including Texas City. Ford was appalled by Browne’s confrontational challenges to cut costs accompanied by the unspoken threat: “You’d better deliver.” Meetings with Browne were characterized by Al Kozinski, also an ex-Amoco refinery specialist as “a clash of big egos.” Browne expected clicking of heels in obedience rather than measured discussion. He ignored warnings about the consequences of his draconian cuts. Along with hundreds of BP’s engineers, Ford and Kozinski resigned and were replaced by a Browne “turtle,” John Manzoni, an accountant who zealously pruned safety and maintenance costs. The first casualties were 15 sub-contractors killed at an explosion in Texas City. A US government report blamed “systemic lapses” by BP’s management and budget cuts which knowingly left at Texas City “unsafe and antiquated designs…in place, and unacceptable deficiencies in preventive maintenance were tolerated.”
Although he paid lip-service to investing in maintenance, Browne rejected the criticism and continued to replace BP’s engineers with sub-contractors. Just as ExxonMobil was hiring engineers because “drilling is the core of our business,” Browne was ditching BP’s in-house expertise which could second-guess every technical operation on land and under the sea. Farming-out saved money but changed BP’s culture. Instead of specializing in oil engineering—needed to minutely supervise the sub-contractors working on Deep Horizon in the Gulf—Brown pursued financial engineering to fulfil his ambition: to overtake ExxonMobil and transform BP into the world’s biggest oil corporation. His goal could only be realised if BP’s high profits sustained a record share price to grease a merger with Shell. He was betting the house on beating his competitors.
Despite the condemnation of Browne by the U.S. government’s regulator in Texas, he approved Manzoni’s continued cut backs on maintenance in Alaska—even abolishing the employees annual lobster feast. When oil burst through a corroded pipeline, Browne pleaded honest apologies but Congressional investigators unearthed negligence and even suppression of the evidence. In London, Peter Sutherland, BP’s highly respected Irish chairman, was exasperated by Browne’s behaviour and suspicious of his excuses. He wanted Browne out but the wily executive had made the appointment of a suitable replacement impossible. No one of real aptitude had been left standing after Browne’s cull. The hapless Tony Hayward who inherited the poisoned legacy was never suitable to repair the damage which inevitably led to the explosion one mile beneath the Gulf’s waters.
Since his retirement, Browne published, Beyond Business: An Inspirational Memoir From a Visionary Leader. So far the British, with bizarrely civilized manners, have not damned Browne for his “vision.” Instead, the government has promoted him to deploy the same skills for Britain as he applied to BP.
Tom Bower is a distinguished investigative historian, broadcaster, and journalist, as well as the author of several bestselling books about tycoons, politicians, intelligence and post-war Europe.