Updated June 4, 2010
Two pension plans in Louisiana that hold BP stock filed separate lawsuits against the company because of losses related to the oil leak in the Gulf of Mexico.
The $310 million New Orleans City Employees' Retirement System filed a lawsuit on June 3, and the $1.2 billion Louisiana Municipal Police Employees' Retirement System, Baton Rouge, filed a suit May 10. Both lawsuits were filed in U.S. District Court for the Eastern District of Louisiana.
Both lawsuits also name as defendants Transocean Ltd., the owner/operator of the rig; Cameron International and Halliburton Energy Services, which provided parts and services for the rig; and top BP executives. BP leases the rig from Transocean.
The New Orleans system's lawsuit says the BP board of directors and executive officers failed to reform the company's “troubled safety record,” which led to the explosion on the Deepwater Horizon rig April 20, causing BP's stock to drop roughly 40% and wipe out about $75 billion of BP's market value through June 1.
The New Orleans system has about 10,000 shares of BP stock, said Jerry Davis, system chairman. Louisiana Municipal Police director Kathy Bourque could not be reached for details on the number of BP shares held by that system.
Gregory Mark Nespole, an attorney with Wolf Haldenstein Adler Freeman & Herz representing the New Orleans system, said in a telephone interview that following 11 separate safety violations in BP's Gulf of Mexico operations from 2001 to 2007, BP formed an independent panel, chaired by former Secretary of State James A. Baker III, to review the company's safety procedures.
The report, issued in January 2007, concluded that “BP has not provided effective process safety leadership and has not adequately established process safety as a core value.”
“The Baker report lays out a litany of violations and mismanagement and want of internal controls that purportedly (BP CEO) Tony Hayward and the rest of the BP team were going to take to heart,” Mr. Nespole said.
Mr. Nespole noted that Fitch Ratings downgraded BP credit rating to AA from AA+ and Moody's Investors Service downgraded its rating to Aa2 from Aa1. “(The downgrades) rendered (BPs) debt much more expensive, making it difficult to go into the public marketplace and raise capital,” Mr. Nespole said.
The separate lawsuit filed by the Louisiana municipal police system also argues that BP failed to address safety problems, which led to the rig's collapse, causing shareholder losses. Mark Lebovitch of the law firm of Bernstein Litowitz Berger & Grossmann could not be reached for comment.
A BP spokesman also could not be reached for comment.