Wyden asks for Transocean investigation
By Steven Mufson
Interior Secretary Ken Salazar isn't the only person coming down hard on the companies involved in the Deepwater Horizon disaster that led to the oil spill in the Gulf of Mexico.
U.S. Senator Ron Wyden (D-Ore.) has written a letter with 17 of his Senate colleagues to Attorney General Eric Holder asking the Justice Department to investigate Transocean's plans to distribute $1 billion in a special dividend to shareholders.
"We are concerned that such action to quickly move money out of corporate coffers to individual investors may make it more difficult to pursue liability claims against the company," Wyden and his colleagues wrote. "Transocean's stockholders shouldn't take huge profits from polluting our country's Gulf Coast," the letter says.
But while Transocean's plan for the dividend was approved on May 14 three weeks after the accident, the dividend was announced on February 16, more than two months before the spill. So while it may be true that the company should be retaining some earnings in case it is found to be liable somehow for what happened, it did not hatch the plan as a way to shield money from potential claims. (The dividend will be paid in four installments over the next year. The company also announced at the same time plans to spend $3 billion buying back its shares, though that was not mentioned in the Senate letter.)
The senators' letter also said that Transocean "stands to make a $270 million profit from the insurance on Deepwater Horizon having insured it for more than it was worth." In fact, the Deepwater Horizon cost about $300 million to build in 1999-2000. But the high demand for offshore deepwater drillings rigs has pushed up the value of such rigs. Transocean insured the Deepwater Horizon for about $560 million. Replacing it is expected to cost $650 million to $700 million, according to sources close to the company.
In response to the Wyden letter, a Transocean spokesman said, "Transocean has made it clear that it will honor its legal obligations arising from this accident. The dividend was proposed and announced in February, outlined in the company's April 1 proxy, and approved by the company's shareholders at the Annual General Meeting on May 14. The amount paid to the company by its insurance carrier for the total loss of the Deepwater Horizon was based on the rig's fair market value at the time of the accident, and does not compensate the company for the loss of the asset's revenue-generating potential over its lifetime."
Transocean, though it has its main offices in Houston, is legally based in the Swiss canton of Zug
Delece Smith-Barrow| May 25, 2010; 11:01 AM ET Save & Share:
Previous: Greens call for Salazar's resignation | Next: Brown pelicans under seige