BP plc (NYSE: BP) faces what may be the hardest decision in its history. The U.S. government has supposedly asked for a $20 billion escrow fund to cover clean-up costs and other liabilities stemming from the Deepwater Horizon disaster. The UK-based firm knows that its obligations may not end at $20 billion, but the Obama administration will pressure BP to allow the fund to be administered by an independent third party.

BP may have to write the check for PR and perhaps ethical reasons, but it will give up a great deal of the bargaining power it may have in the future.BP appears nearly ready to capture all the crude leaking from the pipe 5,000 feet below the Gulf based on information it gave the Coast Guard yesterday. That would help prevent the further spread of oil. BP has already offered relief to many of those who have been affected by the catastrophe. It now may turn that role over to the proposed independent board.

By succumbing to the request, BP may give up some of the future leverage it will have in court. Some members of Congress say that the oil company cut corners on the rig because it wanted to save money. Those documents released ahead of CEO Tony Hayward’s White House meeting this week are damning enough to make criminal and civil charges easier to bring and prove. BP will have to face the uncertainty that the $20 billion fund will be used to pay most claims, but it is hardly a guarantee that this will be the case.

BP has an alternative, and it is one the company should take. It should put the $20 billion into a special fund which it should administer itself. That would open it to the charge that it will act in the its own self-interest, but it will be plain enough whether that is true as the money is dispensed. No escrow system will be perfect no matter who runs it. The needs of some of those hurt by the incident will be overlooked no matter how the fund is operated.

The primary reason for BP to run its own fund is so that it can keep a portion of the capital for claims that will tie it up in courts for years. It can see what Merck (NYSE: MRK) went through with Vioxx liabilities and the tobacco companies did with charges that they covered up the risks of smoking.

If BP passes the power to control the $20 billion to an outside party, it gives up a large part of its ability to control its own financial fate.

Douglas A. McIntyre



http://247wallst.com/2010/06/15/a-20-bi ... om-bp-plc/


Here is another one...




BP Lines Up $7.4B Fund to Help Meet Costs of Gulf Spill

Published June 15, 2010



AP

June 12: Oil cleanup workers hired by BP clean oily deposits from the shore in Orange Beach, Ala.

BP was lining up a $7.4 billion fund to help meet the spiraling costs associated with the Gulf of Mexico oil spill, Sky News reported Tuesday.

The energy giant, which faces demands from the White House to set up an initial $20 billion recovery fund, was engaged in talks with banks including HSBC, and either BNP Paribas or J.P. Morgan, to provide additional funding lines.

The news comes as BP gets the go-ahead to start burning oil and gas piped up from the damaged well on the floor of the Gulf.

It's part of the company's effort to more than triple how much crude it is keeping from pouring into the ocean.

Federal authorities late yesterday gave the company permission to use a new technique. It involves pumping oil from the busted wellhead to a special ship on the surface. There, it will be burned off, rather than collected.

BP announced yesterday that it hopes to trap as much as 2.2 million gallons of oil a day by the end of June as it deploys additional containment equipment.

While BP has a strong operating cashflow, Sky News sources said the company's board was told to put its balance sheet on a firmer footing as the scale of the Gulf disaster continued to grow.

"BP has taken steps in recent days to bolster its liquidity position and balance sheet, working with a number of its regular banking partners," a person familiar with the situation told Sky News.

The person said enhancing the company's cash resources would send an important signal to investors about its financial health.

Fitch Ratings on Tuesday downgraded BP's Long-term Issuer Default Rating (IDR) and senior unsecured rating by six notches to BBB from AA, citing the impact of the Gulf of Mexico oil spill disaster. But shares in the company held steady on the London market, a sign of investor confidence in BP's position.

Click here to read more on this story from Sky News.

The Associated Press contributed to this report.


http://www.foxnews.com/world/2010/06/15 ... ulf-spill/



This is from Fox News



BP Plc (BP: 31.54, 0.14, 0.45%) has agreed to put aside $20 billion into an escrow account to be independently administered and used to clean up the mess and compensate people economically harmed by the oil spill in the Gulf of Mexico.

BP officials agreed to the fund during a meeting with President Barack Obama at the White House this morning.

BP didn’t immediately respond to a request for comment.

On Wednesday, BP Chairman Carl-Henric Svanberg, CEO Tony Hayward, and other officials were dropped off at the Southwest Gate of the White House, and together climbed the steps leading to the West Wing, where they met with the president.

Political analysts likened the entrance to a perp walk orchestrated by the White House for its full visual affect.

While the White House is telling reporters that no deal has been made, the Wall Street Journal is reporting that Ken Feinberg, the same arbitrator who settled claims for the families of victims of the Sept. 11 terrorist attacks, has been appointed to oversee the fund.

Feinberg also worked as a mediator for the Obama administration in setting executive salaries at big Wall Street banks that received bailout money during the recent financial crisis.


http://www.foxbusiness.com/story/market ... 706830741/


Lets hope who ever watches over this fund does so for the people effected not for the Governments slush fund....but I am sure there is a lot more to come...

Kathyet