The real villain of BP

At Tony Hayward’s inquisition in Washington last week, the hapless BP chief executive resisted the temptation to condemn his predecessor, Lord Browne of Madingley, by name. Instead, pressed repeatedly to explain why BP had breached safety regulations on over 700 occasions, Hayward described 2006 as the corporation’s worst year. That was John Browne’s last full year as chief executive. He left the job humiliated, having been exposed for signing an untruthful court statement. Ever since, Browne has defended that dishonesty as a unique aberration. But as the American investigation of the Gulf catastrophe develops, the blame for the poisonous legacy inherited by Hayward will increasingly be heaped on Browne. The credibility of the British government’s proposed ‘cuts czar’ will be shredded.

To his credit, Browne transformed BP from a dying corporation in the early 1990s into the world’s second largest oil behemoth. He refocused BP on ‘elephants’ — the big oil reservoirs — and ruthlessly cut costs. He used BP’s rising share price to stage audacious takeovers of failing oil companies, especially in America. His success earned worldwide plaudits. The man who re-branded BP as ‘Beyond Petroleum’ — the world’s most environmentally friendly oil company — boasted during his visits to Washington’s power brokers that BP was not only the largest producer of oil in America but the most successful explorer in the Gulf of Mexico, one of the most challenging areas in which to discover oil. By then, BP, with its expanding operations in Russia, Asia and South America, was the trailblazer for the oil industry. The company flourished by consistently discovering new reserves to replenish the oil it had extracted.

Browne’s fatal flaw was his ambition to overtake ExxonMobil and transform BP into the world’s biggest oil corporation. His goal could only be realised if BP’s high profits sustained a share price high enough to grease a merger with Shell.