A BRITISH backlash has begun against President Obama’s aggressive handling of BP over the oil leak in the Gulf of Mexico.
John Napier, the chairman of the British insurer RSA, accused the President of being anti-British and “prejudicial and personal” in his dealings with BP.
The criticisms came as the Government continued to keep away from the hostilities. David Cameron appeared to side with Mr Obama and said that he “completely understands” America’s frustration with the company.
Mr Napier circulated a letter last night criticising Mr Obama.
“Your comments towards BP and its CEO as reported here are coming across as somewhat prejudicial and personal. There is no doubt that BP, as a UK plc, is totally committed to do everything possible to contain the oil leak and meet all its obligations in the USA.
“The existing CEO is the best person to deliver that effort and has made that personal commitment and made himself available in the USA. In your words, `he has taken the heat’ and not hidden in his office. The real response has been total. You could argue a poor PR performance, but BP are not alone in that. There is a sense here that these attacks are being made because BP is British. If you compare the damage inflicted on the economies of the Western world by polluted securities from the irresponsible, unchecked greed and avarice of leading USA international banks, there has not been the same personalised response in or from countries beyond the US. Perhaps a case of double standards?
“Deep-sea oil exploration was pushed forward as part of a USA oil security strategy as have a number of foreign policy initiatives in key areas in the world where we are standing shoulder to shoulder.”
Mr Cameron disappointed those who had urged the Prime Minister to defend BP – which has been referred to by the White House as British Petroleum, 12 years after BP dropped the name.
“I completely understand the US Government’s frustration because it’s an environmental catastrophe,” said Mr Cameron. He added that BP needed to “do everything it can to clear up the situation”.
The Prime Minister was dragged into the row after Boris Johnson, the Mayor of London, said that the company’s falling share price, which has wiped tens of billions of pounds from British pension funds, meant that it was now a matter for national concern.
“I do think there’s something slightly worrying about the anti-British rhetoric that seems to be permeating from America,” Mr Johnson said.
P.J. Crowley, a spokesman for the State Department in Washington, said: “We’re conscious of the economic impact in this country and on BP’s share price. This is not about the relationship between the United States and its closest ally.”
The words from the President and US senators continued to damage BP in the financial markets. The oil company’s borrowings were moved yesterday to the level of junk bond status – meaning that it would have to pay a similar interest rate to Greece.
Shares fell a further 6.7 per cent after demands from US senators that BP cancel its dividend payment. BP, once Britain’s largest company, has lost almost half of its stock market value, about pounds 56 billion, since the explosion that destroyed the Deepwater Horizon oil rig in the Gulf of Mexico.
It is due to pay its next quarterly dividend on June 21, a sum of about $2.5 billion. A BP spokesman said that the dividend would definitely be paid. In the bond markets the cost of insuring BP’s bonds by credit default swaps increased to as high as 5.7 per cent. It means that a bond investor would have to pay $570,000 to insure $10 million of BP bonds, a large premium normally associated with junk bonds, where the issuer has a high risk of default.
“BP has been smacked. It’s very rare to see a company with such a strong balance sheet being hit in this way. This is what you expect from a company where there is fraud,” said Gary Jenkins, bond strategist at Evolution Securities.
There has been speculation in the US that BP could have to file for Chapter 11 insolvency protection in the country. The oil company issued a statement to the Stock Exchange yesterday saying it did not know the reason for the sudden fall in its share price.
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