New York City filed a lawsuit against BP plc (NYSE:BP) (LON:BP) claiming that the beneficiaries of the city’s pension fund suffered more than $39 million losses due to its “misconduct and fraudulent behavior” in connection with the Deep Horizon oil spill in 2010.
The city filed its complaint against the oil company at the Southern District Court of New York on Friday. New York City alleged that BP plc (NYSE:BP) (LON:BP) failed to reveal significant information about the dangers involved in offshore drilling operation, the extent of the oil spill, and estimated costs for the clean-up.
In a statement, New York City Comptroller John Liu said, “BP failed to disclose to shareowners the serious risks involved in its offshore drilling operation. After the spill began, it misleadingly attempted to minimize the extent of the damage and the cost to shareowners.”
The Comptroller’s office also stated, “The estimated transactional investment losses to City pension beneficiaries caused by BP’s misconduct and fraudulent behavior exceed $39 million.”
On the other hand, Inga Van Eysden, Chief of New York City Law Department’s Pensions Division noted, “In light of the Supreme Court’s ruling in Morrison v. National Australia Bank, Ltd., the City Pension Funds are barred from seeking recovery from BP under federal securities laws for the vast majority of its losses.” However, he argued, “We strongly believe the Funds deserve to be compensated for BP’s fraudulent actions and are therefore pursuing this case.”
Last February, the federal court in New Orleans presided by Judge Carl Barbier started the civil trial for direct damages related to the oil spill. The Department of Justice (DOJ)’s accused BP of gross negligence and gross willful misconduct during the incident that killed 11 workers and spilled approximately 4 million barrels of oil. The incident was considered the worst offshore oil spill in the history of the United States.
During the trial in March, executives of BP plc (NYSE:BP) (LON:BP) who led the company’s internal investigation defended their report regarding the Deep Horizon oil spill after Professor Robert Bea of the University of California, Berkeley testified that it was flawed. Mark Bly, former global head of safety for BP said his team’s investigation focused on the “engineering trade-offs and risk decisions” instead of evaluating the costs behind certain decisions that led to the explosion.
BP plc (NYSE:BP) (LON:BP) estimated that it would spend $42 billion for the cleanup, fines, and other liabilities. The company sold several of its assets to help cover the costs. A separate U.S. civil trial is scheduled on August 2014 regarding allegations that the company committed fraud and mislead shareholders before and after the oil spill.