Halliburton has agreed to plead guilty and pay the maximum fine for criminally destroying evidence during the 2010 investigation into the BP Gulf oil spill, according to a statement released by the Justice Department on Thursday. The $200,000 fine and 3-year probation is merely a slap on the wrist and will not achieve any sort of institutional change in the practices of the company. The announcement is indicative of the typical government deal that permits large companies to evade criminal prosecution for illegal and harmful actions. And this practice needs to stop (the Justice Department had charged Halliburton with a misdemeanor for destroying evidence during the investigation that followed the spill in the Gulf).
The Houston-based company was responsible for overseeing the pouring of cement during the time the Macondo well was being drilled. When the well malfunctioned on April 20, 2010, 11 workers were killed in the explosion and millions of gallons of oil spilled into the Gulf. In the aftermath, Halliburton conducted its own internal investigation of the well's design. In a statement, the company said they specifically looked at the whether the "number of centralizers used on the final production casing could have contributed to the blowout [of the well]." Prior to the construction, Halliburton had recommended to BP that they use 21 centralizers but BP said only 6 were required.
The internal-investigative team asked a program manger to run computer simulations on the cementing job to determine if using 6 centralizers instead of 21 resulted in a negative impact. The study did not find any significant difference between the two and the program manager "was directed to, and did, destroy these results," according to federal authorities.
A subsequent, similar simulation was completed and again the manger was asked to destroy the results. BP and Halliburton have blamed each other for the malfunction of the cement casings. Last year, BP asked the court to sanction Halliburton for destroying pertinent evidence with regard to the cementing project — leading to the peal deal.
In general, a misdemeanor for destroying evidence can carry a prison sentence of a few months or fine or both. Although the evidence that Halliburton destroyed actually proved that there was no difference in using either 6 or 21 centralizers, it does not remove the firm from culpability. It in fact proves that the malfunction resulted from another, more fundamental issue with construction of the cement. According to the presidential commission that investigated Halliburton, the company knew that the mixture of cement was unstable but continued to use it anyway.
While Halliburton has made a voluntary $55 million donation to the National Fish and Wildlife Foundation, proper action against the company has not been taken. The $200,000 fine the company is going to pay will in no way affect the company's revenue or operations; it is an ineffective punishment.
This is not an isolated problem. The Justice Department has continually made plea deals with large companies who have broken the law and have negatively impacted our environment. For these companies, the hefty fines are not a deterrent for future illegal actions on the part of other companies. Any senior-management official is content with paying large fee instead booking a one-way ticket to prison.
You may think billion dollar fines can have substantial consequences for companies, but the truth is they don't at all — I repeat, they don't at all.
Take BP for example. In February of this year, BP agreed to plea guilty to 11 counts of manslaughter for the workers who were killed during the 2010 disaster in the Gulf. Yet not one person went to jail. Instead the company had to pay a $4 billion fine to the U.S. Naturally, one thinks a $4 billion fee would seriously harm BP's business, but $4 billion is equivalent to just under 4 days of revenue for the firm. I fail to see how this result will be effective in changing the operations of the company.
Another, unrelated, settlement highlights the same issues. In May 2013, Walmart finally ended a decade long legal battle, with a payment of $81 million. The company violated the Clean Water Act by illegally disposing of hazardous materials and violated federal law by improperly handling pesticides returned by customer to numerous stores. "By improperly handling hazardous waste, pesticides and other materials in violation of federal laws, Walmart put the public and the environment at risk and gained an unfair economic advantage over other companies," commented Ignacia Moreno, the assistant attorney general for the DOJ's Environment and Natural Resources Division. For the immense damage the company caused, not one person was held accountable for their inaction to implement proper regulations.
The firm is culpable, but so are the individuals who made the decisions to continue with illegal or unsafe practices. If the Justice Department just continues to just fine large corporations without any grander repercussions, these ill-fated events will continue. In some cases, a simple fine is justifiable, but the actions of the companies such as Halliburton and BP, that caused the biggest oil spill in U.S. history, require greater legal ramifications. Our system needs to deter future inaction and negligence.