Barack Obama's attacks on BP hurting British pensioners
Barack Obama has been accused of holding "his boot on the throat" of British pensioners after his attacks on BP were blamed for wiping billions off the company's value.
By Louise Armitstead and Myra Butterworth
Published: 10:12PM BST 09 Jun 2010
City investors said the president was jeopardising the pensions of millions with his "excessive" criticism of the energy company following the Gulf of Mexico oil spill.
Before the accident on April 20, BP was Britain's biggest company, with a stock market value of £122 billion. Since then, £49 billion has been wiped off its value.
On Wednesday, BP's share price fell a further 17.35p to 391.55p – representing a 40 per cent drop on the 655p price of a share two months ago.
Experts have said that the clean-up costs of the oil spill will run to between £10 billion and £20 billion but the biggest cost to the company is from investors dumping stock for fear of BP being further punished by the US Government.
Those fears have been heightened by Mr Obama's increasingly aggressive rhetoric towards BP, which some investors see as an attempt to deflect criticism of his own handling of the crisis. Last month, a White House spokesman said the President's job was to keep his "boot on the throat" of the company.
In the past week, Mr Obama, who insists on referring to BP by its former name British Petroleum, has suggested that its chief executive, Tony Hayward, would have been sacked if he worked for him.
BP's position at the top of the London Stock Exchange and its previous reliability have made it a bedrock of almost every pension fund in the country, meaning its value is crucial to millions of workers. The firm's dividend payments, which amount to more than £7 billion a year, account for £1 in every £6 paid out in dividends to British pension pots.
BP is so concerned about Mr Obama's power to affect share value that it has urged David Cameron to appeal to the White House on its behalf. Downing Street, however, has refused to get involved. "We need to ensure that BP is not unfairly treated – it is not some bloodless corporation," said one of Britain's top fund managers. "Hit BP and a lot of people get hit. UK pension money becomes a donation to the US government and the lawyers at the expense of Mrs Jones and other pension funds."
Mark Dampier of the financial services company Hargreaves Lansdown said: "[Mr Obama] is playing to the gallery but is not bringing a solution any closer. Obama has his boot on the throat of British pensioners. There is no point in bashing BP all the time, it's not helpful. It is a terrible situation, but having the American president on your back is not going to get it all cleared up any quicker."
Neil Duncan-Jordan, of the National Pensioners Convention, said: "Most ordinary people would not have thought that BP would have an impact on their retirement but if BP's share price goes down then their pension pot goes down.
"Most of those pension funds are invested in the default option, which is stocks and shares, and so if BP goes down the pan then their pension pot goes down the pan."
Although fund managers accept that BP must pay compensation for the oil spill and the damage it is doing to parts of America's coastline, they argue that the cost to the company's market value from the president's criticism is far outweighing the clean-up costs.
One investment manager said: "Experts have said that the clean-up costs could reach a maximum of £20 billion which means the hit to BP is excessive on any scale." (Remember, their worth is down £49 billion [$71,089,700,000]. -- j)
There is particular anger at US interference in the company's dividend policy. Earlier this week, two senators suggested BP should be banned from paying out to shareholders until the full clean-up costs are known. One fund manager said: "Who is Obama to dictate whether UK pension funds are paid a dividend? Others in a similar position have been able to pay dividends."
Jason Kenney, a oil and gas analyst at ING, said: "When you compare how Britain reacted towards the US company Occidental after its Piper Alpha disaster where 167 people died, they are worlds apart.
“The US reaction is getting towards hysterical. Half of them seem to think the US is knee deep in oil. It’s difficult to underestimate the effect 24-hour TV dinner media coverage of the spill is having over there.”
Tom Watson, the former Labour minister, was planning to table a Commons motion today in support of BP and urging MPs to understand the importance of the company to pensioners in this country.
He said last night: “BP is perhaps the most strategically important company for Britain and for UK pensioners. I want to see the UK government defend the company while it is under this attack.”
He added: “Of course the company must clean up the spill but let’s be under no illusion – all oil companies could have been in this situation whether British, American or any other nationality.
“I am sure there are American oil companies that want BP to fail but it is British pensioners that will badly lose out if they do.”
Ken Salazar, the US interior secretary, said yesterday that the Obama administration would require BP to pay the salaries of any workers who were laid off as a result of the government’s moratorium on offshore drilling, imposed while safety reviews take place.
“BP is responsible for all the damages,” Mr Salazar told the Senate’s energy and natural resources committee, in one of five hearings taking place on Capitol Hill. (Not if they are bankrupt and their assets auctioned. That is what these Bozos in our government do not understand. What they do understand is that they hate large businesses and they hate the petroleum industry. -- j)
BP is due to announce its second quarter dividend and results on July 27.
There is a fear that unless the Government intervenes on BP’s behalf, the company will continue to be hit, particularly in the run-up to the midterm elections in America.
Last week Vince Cable, the Business Secretary, described America’s anti-British rhetoric as “extreme and unhelpful”.
On Monday, The Daily Telegraph disclosed that the Foreign Office was concerned that the criticism of BP was harming Anglo-US relations.
