|Posted on June 10, 2010 at 12:04 PM|
Not too long ago, I was watching BBC World television in Norway. It was a few days after the terrible accident that continues to spill oil into the Gulf of Mexico. Sounding like this was some very difficult issue to understand, the BBC World reporter asked a British Petroleum executive the question on everyone's minds: "What effect will this have on the size of dividends BP shareholders rely on?" He assured her it was not a problem. I was more stunned by the question than the answer. These Brits had obviously never seen the Gulf of Mexico. They had never considered the complex and fragile role this huge bay plays in the global glory of sea life on Earth.
A few days later, I found myself, luckily, admiring some of the Gulf's stunning Florida beaches, pristine, filled with turtle nestings, feeding birds of many species, fish and sea life of every variety. I then heard that President Obama was interested in all ideas related to what to do. Immediately I thought of the lesson my favorite supervisor of all time, Kevin Carhill, taught me, as we audited government operations, management and programs: "Follow the money." This was always excellent advice. I knew what my suggestion to the President would be: Freeze BP's assets now.
And have they been? No. Well, we can assume that, with every passing oil-spilling day, BP is scrambling ever more frantically over their . . . um, money. Let's take a look at what I can find, just up to today, which, frankly, isn't much; I simply don't have the resources; much more investigative effort should be placed on BP financial activity just right now.
That said, 40% of BP is share-owned by UK owners, 33% of that by UK institutions and 7% by UK individuals. Surprisingly, and sadly, 39% of BP is share-owned by US sources, 25% by US institutions and 14% by US individuals. In 2008, BP had replacement cost profit before interest and tax of 26.4 billion USD, down from 2007's 35.2 billion USD. The usual tax rate runs about 28-33%, resulting in a conservative estimated after-tax profit of 17.7 billion USD. For 2009, BP claims after-tax profits of 14 billion USD.
What is BP's impact in the U.K.? Let's see. According to BBC News, BP employs 10,105 people in the UK, and paid taxes to the UK totaling 5.8 billion GBP in 2009, or 8.5 billion dollars. I think we can safely say that BP runs the UK. BP is responsible or paying 1 out of every 7 pounds entering UK pension funds. http://news.bbc.co.uk/2/hi/business/10282777.stm ) On June 10th, Anthony Reuben reported for BBC that Sir Christopher Meyer, former British Ambassador to the US has told BBC, "The government must put down a marker with the US administration that the survival and long-term prosperity of BP is a vital British interest." I find that quotation remarkably political – and remarkably unclear. Don't you? I mean, really. It could be as weak as: Tough guy demands wimpy national cheer. Still, I love that word, "marker." That's right, UK: Guarantee BP's debt over this – including ALL of what are, unfortunately, being called "ripple" effects. (Metaphors should be protected from abuse, too.)
But speaking of dividends, BP is feeling chipper, as they say in the UK. BP is getting ready to pay one of the highest quarterly dividends to shareholders in recent memory. On June 21st, BP will be paying their ordinary shareholders 10.6187 pence on the share. This amounts to 15.44 cents on the share. BP last paid this much in the first quarter of 2009 and last quarter of 2008, although generally, quarterly share dividend payments in CY 2008 averaged 8.9 pence per share, and in CY 2007, 6.26 pence per share.
Cutting to the chase, BP has, in the first quarter of 2010, 18,784,361,000 shares in issue. This means they are getting ready to pay a quarterly dividend of (18,784,361,000 x 15.44 cents)... 29 million dollars. Yes, BP is getting ready to pay 29 million dollars in dividends to their ordinary shareholders on June 21st, while the oil spill continues to ruin a global estuary of unimaginable and nearly incomprehensible importance.
Dividend payments should also be stopped. Granted, this hurts institutional investors - and individual investors. The institutional investors are probably supporting pension funds. In any case, ordinary people (maybe even 'rich people') are going to be hurt if BP's assets are frozen. Still, as Abraham Lincoln, said, "The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew.” I realize I'm lifting Old Abe out of context, but don't you agree?
And BP's cash is disappearing before their eyes. Are you watching also? BP's price per share is plummeting just now, from a late April high of 660 pence per share to its present rate of about 390 pence per share. (http://www.bp.com/onefeedsection.do?categoryId=152&contentId=2002499 )
Have I said enough? Is anyone listening? That's my part. I do what I can do.
Here are some outside references asking for the same action:
Here is a blog directly on point, also criticizing statements made by related federal administration officials: from Greg Hunter, with 9 years of experience as an investigative correspondent, for the ABC network and later for CNN: "Freeze BP's Assets Now!": http://usawatchdog.com/freeze-bp%E2%80%99s-assets-now/
'Wooglet Voot,' a Top Contributor to Yahoo's Answers service, agrees: Freeze BP's assets now. He adds several small points, "Capitalism will not work if they are able to shift the costs of drilling for oil to innocent victims. If BP cannot pay, they should be forced into bankruptcy as a warning to other operators that may want to cut corners. There was better technology available that they use in the north sea and they chose not to use it in the Gulf." According to Voot, the President of BP also indicated clearly he would not be responsible for all "ripple effects." The source for this was a Public Broadcasting Service interview. (http://www.pbs.org/newshour/bb/environment/jan-june10/oil1_05-03.html ) The videotape for that interview has since been pulled, production date, May 3. Voot's remarks are found at: http://answers.yahoo.com/question/index?qid=20100504214232AA2pKva
In the same PBS report, President Obama was reported as stating, "BP is responsible for this leak. BP will be paying the bill."
Change.org: This blog-based signature/response website now has a petition, "Freeze all of BP's assets, before it is too late" As of today's date, it has 208 signatures, some with additional actions taken. This should be millions of signatures. Millions upon millions. (http://www.change.org/petitions/view/freeze_all_of_bps_assets_before_it_is_too_late )
Facebook has several Freeze BP assets groups, none of which sports a high membership yet.