BP Internal Report, Export Overhaul, Fuel Labels: Compliance
BP Plc’s internal investigation of the Deepwater Horizon rig disaster pins some of the blame on the company for mistakes made when finishing the oil well, including misreading pressure data that indicated a blowout was imminent, according to a person familiar with the report.
BP managers aboard the Transocean Ltd.-owned rig misinterpreted a test of the Macondo well’s stability on April 20, deciding the test confirmed the well was in good shape, said the person, who spoke on condition of anonymity because the report’s findings haven’t been publicly released.
That positive interpretation of the test data cleared the way for rig workers to begin replacing drilling fluid in the well, which is heavier than oil and natural gas, with seawater.
The seawater was too light to prevent natural gas that had begun leaking into the well from shooting up the pipe to the rig, where it exploded and killed 11 workers. The damaged well eventually spewed more than 4 million barrels of crude into the sea, enough to fill two supertankers.
A federal investigative panel comprised of U.S. Coast Guard officers and Interior Department regulators has focused on how BP employees aboard the rig and in Houston failed to detect signals that the well was about to erupt.
The probe also has questioned why BP engineer John Guide, the team leader overseeing the project, disregarded warnings of a potential blowout from contractor Halliburton Co., and why rig-based managers neglected to test for flaws in the cement outside the well intended to prevent explosive natural gas from seeping up to the rig.
The 200-page report was compiled by a team of BP investigators led by Mark Bly, the London-based company’s head of safety and operations. The report concluded BP bears at least partial responsibility for the incident that led to the largest oil spill in U.S. history, the person said. Bly’s team also found that Transocean shares the blame, the person said.
To read more about BP’s internal investigation, click here.
Compliance Policy
Obama to Revamp U.S. Export Control, Ease Limits
President Barack Obama plans to ease restrictions on selling products with military applications to foreign buyers as part of a restructuring of U.S. export rules that companies said were too broad and burdensome.
Obama will announce the changes, which will create narrower and more consistent rules for defense, technology and aerospace products, in a video message to an export-control conference in Washington today, the administration announced.
“While there is still more work to be done, taken together, these reforms will focus our resources on the threats that matter most, and help us work more effectively with our allies in the field,” Obama will say in his remarks, according to a text released by the White House.
At the center of the new approach is a three-tier licensing system that will have stricter controls only for items that have direct warfare applications, according to an administration announcement. Restrictions will be looser for less military- sensitive products such as the brake pads used on tanks.
Additional changes, including the development of a single licensing agency, will require congressional approval, according to administration officials who briefed reporters before the announcement was made.
For more, click here.
Singapore Tightens Mortgages to Cool Property Market
Singapore increased down payments for second mortgages and imposed a stamp duty on property held for less than three years to curb speculation after home prices surged 38 percent in the second quarter.
Buyers who hold more than one mortgage can only borrow up to 70 percent of a property’s value, versus 80 percent previously, and must pay 10 percent in cash, up from 5 percent, the government said in a statement yesterday. A seller’s stamp duty will apply to all residential units and land sold within three years of purchase, from one year. The changes took effect yesterday.
Property prices have surged as Singapore’s $182 billion economy rebounded from last year’s global slump to expand at a record 17.9 percent pace in the six months through June.
Singapore’s property market would form a bubble if the current momentum continued, Mah Bow Tan, Minister of National Development, said yesterday after the measures.
The city-state has been attempting to rein in home prices since last year when the government barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built.
To read more, click here.
Auto Fuel-Efficiency Labels May Display Letter Grades
Autos sold in the U.S. may display letter grades assigned by the federal government in the biggest overhaul of fuel- economy labels in 30 years.
The grades, from “A+” to “D,” would be based on the vehicle’s fuel economy and greenhouse gas emissions, according to an Obama administration statement yesterday. The government may instead keep the current label design that focuses on miles per gallon and annual fuel-cost projections.
“We are asking the American people to tell us what they need to make the best economic and environmental decisions when buying a new car,” Lisa Jackson, who leads the Environmental Protection Agency, said in the statement.
The administration in April set the first national regulations targeting climate change, boosting standards by about 30 percent, to an average of 35.5 miles per gallon by 2016 models. The new label requirements would take effect with 2012 models, following a 60-day comment period.
Greenhouse-Gas Regulation Backed by Majority in NRDC’s Poll
A majority of U.S. voters say the government should regulate greenhouse gases linked to global warming and that the Environmental Protection Agency is up to the job, a poll for the Natural Resources Defense Council found.
Regulating global-warming gases from power plants and refineries is supported by 60 percent of likely voters and opposed by 34 percent, according to the survey commissioned by the environmental group, which backs such curbs. A smaller majority, 54 percent, say they are confident in the EPA’s ability to control greenhouse gases.
Pollster Joel Benenson of the New York-based Benenson Strategy Group conducted the survey through 1,401 telephone interviews nationwide with registered voters considered likely to cast ballots in the November congressional elections. The survey, conducted from Aug. 10 to 15, has a margin of error of plus or minus 2.6 percent. Benenson conducted polling for Obama’s presidential campaign.
Compliance Action
RBS Bid for Control of Russian Affiliate Rejected by Regulator
Royal Bank of Scotland Group Plc’s bid for control of its Moscow affiliate was rejected by Russian regulators because the lender is controlled by the U.K. government, the Federal Anti- Monopoly Service said.
Russian law prohibits foreign governments from controlling licenses to operate encrypted online banking services, the competition watchdog said yesterday in e-mailed response to Bloomberg questions.
RBS, based in Edinburgh, applied for permission to increase its stake in ZAO Royal Bank of Scotland to 100 percent from 38.3 percent, the service said. The U.K. government owns 68.4 percent of Royal Bank of Scotland Group, according to Bloomberg data.
Elena Levitskaya, a spokeswoman for ZAO Royal Bank of Scotland in Moscow, declined to comment on the decision. Jason Knauf, a spokesman for RBS in London, said he couldn’t comment until the bank’s lawyers finish reviewing the ruling.
Russia’s government is considering lifting the restrictions that led to RBS’s rejection, the service said.
Obama Widens Sanctions on North Korea, Targets Nuclear Money
President Barack Obama widened U.S. financial sanctions on North Korea in an effort to cut off sources of income that finance regime leader Kim Jong Il’s nuclear weapons program.
The U.S. blacklist names four North Koreans, including officials of the country’s atomic energy organization. Among the eight companies or organizations of the regime listed in the order are Korea Taesong Trading Co., Green Pine Associated Corp. and the Second Academy of Natural Sciences, according to details posted on the Treasury Department’s website yesterday.
The U.S. accuses those cited of supporting North Korea’s weapons industry by trading in luxury goods, drug trafficking and money laundering.
North Korea’s suspected sinking of a South Korean warship was among the justifications Obama cited for the action.
Rodents, Manure Found at Two Iowa Egg Farms by FDA Inspectors
Two Iowa farms that produced more than a half billion eggs linked to a salmonella outbreak failed to “fully implement” plans to prevent contamination, U.S. regulators said.
Wright County Egg and Hillandale Farms of Iowa, both closely held, failed to adequately prevent sanitation problems associated with rodents and manure, the Food and Drug Administration said yesterday in reports on its website.
“Live and dead maggots too numerous to count” and “excessive amounts of manure” were among the problems FDA inspectors found at the Wright farm, according to one of the reports. “Unsealed rodent holes” and “uncaged hens tracking manure” were found at Hillandale Farms, according to the other report.
This month’s recall, which has sickened as many as 1,470 people in the U.S., may be the biggest withdrawal of salmonella- tainted eggs from the market in at least eight to 10 years, Jeffrey Farrar, the Food and Drug Administration’s associate commissioner for food protection, said Aug. 23 on a conference call.
Courts
Rothstein Ordered to Repay $363 Million to Victims
Scott Rothstein, the former South Florida lawyer serving 50 years in prison for a $1.2 billion Ponzi scheme, was ordered by a judge to pay his victims $363 million.
U.S. District Judge James Cohn in Fort Lauderdale, Florida, imposed the order yesterday on Rothstein, 48, at a hearing where prosecutors said they recovered $50 million to $60 million in assets for 320 investors and clients who lost money in his scam.
Cohn is seeking to divide cash and the proceeds of homes, jewelry, a yacht and Rothstein’s interests in businesses seized after his arrest last November. He pleaded guilty to fraud and conspiracy, admitting the Ponzi scheme financed his expensive lifestyle, bankrolled his law firm and bought political influence.
The judge ruled that most of the victims should be paid on a pro rata basis, getting up to 16 percent of what they lost. Thirteen will be paid 100 percent of what the law firm held in trust for them, Cohn said. Their attorney, Seth Lerhman, said they engaged the law firm for legitimate purposes and most were of limited economic means.
The case is U.S. v. Rothstein, 09-cr-60331, U.S. District Court, Southern District of Florida (Fort Lauderdale).
Prudential Veterans-Insurance Suit Adds Fraud Claims
A lawsuit accusing Prudential Insurance Co. of America of improperly collecting interest on unpaid veterans’ life- insurance benefits was expanded to include claims of fraud.
The plaintiffs, seeking to have the case certified as a class action on behalf of 60,000 beneficiaries of military life insurance policies, filed an amended complaint yesterday adding the fraud claims and additional claimants. The case was originally filed July 29 in federal court in Springfield, Massachusetts.
The suit claims Prudential fails to pay beneficiaries in a lump sum as required by U.S. law and the language of the policies, instead encouraging them to leave the money in accounts with the company, which pays them a small amount of interest.
“The amount Prudential has made through this misconduct is believed to be half a billion dollars or more,” the amended complaint said.
Bob DeFillippo, a spokesman for Newark, New Jersey-based Prudential Financial Inc., declined to comment on the suit. He said the company informs death-benefit beneficiaries of their payment options and that they can immediately withdraw all the money and invest it wherever they choose.
The case is Lucey v. Prudential Insurance Co. of America, 10-30163, U.S. District Court, District of Massachusetts (Springfield).
Interviews
Broaddus Sees Fed Ready to Use Tools to Support Economy
Al Broaddus, former president of the Federal Reserve Bank of Richmond, talks about the Fed’s handling of the U.S. economy and possible options available to spur growth. Broaddus speaks with Deirdre Bolton on Bloomberg Television’s “InsideTrack.”
To watch the video, click here.
To contact the reporter on this story: Michael Bathon in Wilmington, Delaware, at mbathon@bloomberg.net.
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