Eric Reguly of the Globe and Mail, wrote in the Globe last week that BP should have hired a big name U.S. PR company with better access to decision makers in order to “better fend off the wolf pack”. He is probably right about that – though I continue to be amazed at the lack of BP’s crisis preparedness. By failing to get out in front of the government, accept blame and share responsibility, Tony Hayward gave Obama the opportunity to obfuscate the Federal Government’s role in setting lax regulatory standards.
So Obama got his ‘butt covering’ win last week. With oil still rushing out of BP’s deep water horizon well, the President extracted a twenty million dollar fund to clean up the environmental damage and was able to get a temporary halt to BP’S shareholder dividends. Finally recognizing that his public statements were imperiling the future of BP, Obama added that he was confident that the company will “meet its obligations to the Gulf Coast and to the American people,” and “BP is a strong and viable company, and it is in all of our interests that it remains so.” Share values jumped almost 1.5%.
The lesson here is that the government will always seek cover by shifting blame. BP’s only chance to avoid government pressure was to accept full responsibility just as Maple Leaf did during the listeriosis crisis in Canada. You’ll remember that Maple Leaf’s CEO, Michael McCain did not give the government a chance to react. McCain disregarded his lawyers’ advice and accepted full responsibility because it was the right thing to do. His mea culpa TV ads and media appearances demonstrated the sincerity of his remorse. There was nothing government could do to top this display of concern and willingness to accept his just desserts.
Of course the two crises are different in complexity and as a principle shareholder, Michael McCain had far greater flexibility in deciding how far he was prepared to go to do the right thing.
Thankfully BP seems to be learning (though Tony Hayward surely must be a ‘dead man walking’ after his day on his yacht over the weekend). The company’s legal strategy now appears to be to minimize liability as much as possible and take care of legitimate legal claims as they arise so they don’t reach the level of law suits. By accepting responsibility for the spill, the company will be in a better position to negotiate the cost with its oil drilling partners in the future. The courts will be more lenient on a company that has given restitution without legal requirement.
For now Obama’s communications ‘top’ those of BP – but I expect the scrutiny will shift to Obama as soon as the well has been capped.
Authored by: Mike Coates