Pittsburgh, PAThe BP oil spill that has had such a devastating effect in so many areas—from the environment to BP benefits—has prompted funds managers representing a collection of major portfolios with a combined asset value of an astonishing $2.7 trillion, to seek verification from major players in the oil industry as to their emergency response and risk oversight plans.
They don't want the BP tragedy to repeat itself.
As reported last week by the Pittsburgh Post-Gazette (08/06/10), no fewer than 50 managers overseeing both domestic and international funds sent communiqués to the CEOs of 27 major oil and gas companies in an example of what has been dubbed 'investor activism.'
In other words, if I have millions of dollars invested in your company, you'd better provide assurances that an accident like the one befalling BP in April can be handled, in an effort to minimize the kinds of losses suffered by holders of a BP plan.
In the state of Pennsylvania specifically, various retirement and pension funds hold what was at one time $65 million in BP investments. At least that was the paper value before the crisis in the Gulf erupted on April 20th. That investment has lost an astounding $24 million, or 27 percent of its value, since the accident happened.
"It is important for all companies involved in [deepwater] drilling to be open and transparent with investors and stakeholders at this crucial historic moment," the communiqué said. "The shareholder harm that has flowed from the BP spill has focused investor attention on governance, compliance and management systems needed to minimize risks associated with deepwater offshore oil and gas development worldwide."
Considering the horrendous loss in value of BP stock and the ensuing hit to BP employee benefits, it would not be outside the realm of possibility that a fund decides to pull its investment from BP, or any other oil or gas enterprise for that matter, in an effort to stem losses or even protest how a company is run. In the former, it should be noted that both investors and participants in BP pension plans have a lot at stake and can ill afford the kinds of staggering losses that no amount of time can make up.
The threat of withdrawal is not without precedent. In 2008 former Pennsylvania state treasurer Robin Wiessman announced that she was prepared to pull $1.2 million that the state had invested in China Petroleum & Chemical Corp.
The authors of the communiqués gave the recipients until November 1st to respond, without tipping their hand as to what they were prepared to do should those responses not prove satisfactory.
In a statement, Pennsylvania Treasurer Rob McCord said, "The Deepwater Horizon disaster was a game-changer for shareholders. It demonstrated the catastrophic consequences that can result when firms fail to provide essential risk assessment. ... Neither public nor private investors can make good decisions without better information that is delivered early and systematically."
With such a huge loss in BP employee stock, participants can only hope that the successful containment of the problematic well and the presumed dispersal of the oil in the Gulf, together with a new man at the helm of BP PLC, will help stem those losses and build the investment back up, in time for employees and investors to properly benefit.
If you have suffered losses in this case, please send your complaint to a lawyer who will review your possible [BP ERISA Plan Lawsuit] at no cost or obligation.