In a speech broadcast live from the Oval Office, President Obama said, “We will make BP pay for the damage their company has caused.” The next day, BP’s then-CEO, Tony Hayward, and chairman, Carl-Henric Svanberg, were summoned to the White House, where they agreed to put $20 billion into an escrow account to pay for damages and to cancel stockholder dividends for the year.
Svanberg then held a press conference during which he apologized for the accident.
On April 20, 2010, BP’s Deepwater Horizon oil rig exploded, killing 11 rig workers and setting off a massive oil leak at the mouth of the damaged deep-ocean well.
Months later, the ruptured well, situated 50 miles off the Louisiana coast, continued to spew millions of barrels of oil into the Gulf of Mexico, causing an ever-widening spread of destruction and despair among fishermen, residents and businesses that depend on the pristine waters and beaches of the Gulf for a livelihood.
The company had come under fire from all sides — environmentalists, Gulf Coast residents, business executives, the media and the president of the United States — and seemed at a loss as to how to put an end to the crisis.
In fact, media reports stressed the chaotic nature of the situation, and both BP and the federal government were under intense scrutiny and criticism for the handling of the crisis.
Unable to cap the damaged well, BP’s efforts to focus on both the cleanup and its damaged corporate reputation were under increasing pressure.
Britain’s new prime minister, David Cameron, weighed in and suggested that BP was being unfairly criticized in the United States.
Though BP is a highly profitable and cash-rich giant ( billion in profits in 2009), the first whispers on Wall Street were heard in June that the company might indeed have trouble surviving this crisis intact.
Rumors of a potential takeover or even bankruptcy were rampant as BP’s shares tumbled and litigants began lining up.