REGULATORS REDUNDANT

Oil giant BP, the mining company Massey Energy, and investors Goldman Sachs all have something in common. They’re all outwardly respectable firms involved in massive and irresponsible plunder in persuit of profit.

BP’s oil spill is already one of the biggest and most damaging in history. Company executives are now engaged in the blame shifting game. Giving testimony before the US Senate a top executive of BP focused on a critical safety device that was supposed to shut off oil flow on the ocean floor in the event of a well blow-out but which "failed to operate."

At the same hearing Transocean, which owned the rig that exploded, suggested work done by subcontractor Halliburton could have been the key factor. Halliburton and BP, meanwhile, say the blow-out preventer that failed on Transocean's rig was critical but "failed to operate."

"That was to be the fail-safe in case of an accident," Lamar McKay, chairman of BP America, said, pointedly noting that the 450-ton blowout preventer — as well as the rig itself — was owned by Transocean Ltd.

Massey’s April 5, 2010 mine disaster near Charleston (West Virginia) which claimed the lives of 29 miners was one of the worst in recent American history. The company had been cited for 515 violations at the same mine in 2009. (L.A. Times 7 April 2010).

Goldman’s alleged fraud is but one of number of swindles in recent years.

All three of these companies are primarily in the business of making money.

Shareholders benefited when BP made big profits extracting oil without paying attention to a possible “blow-out” – the technology involved has not changed in 20 years. Massey Energy increased earnings from its criminally negligent coal mining operations. The judge trying an earlier safety violation case stated that the firm “acted with deliberate intent regarding the unsafe working conditions in its coal mine.”

Goldman Sachs did very well for its own stock holders by allegedly defrauding others.

In fact it was pressure from their shareholders seeking the highest possible returns — and from their executives whose pay was linked to the firms’ share performance — that led all three companies to cut whatever corners they could cut in pursuit of the profits which are the lifeblood of capitalism.

So where were the regulators?

Even where regulations exist, the law has set such low penalties that disregarding the regulations and risking fines have been treated by firms as a cost of doing business. And for years, enforcement budgets have been slashed, with the result that there are rarely enough inspectors to do the job.

The assumption has been that markets and the profit motive know best. And these have been the results.

GT