Wednesday, June 30th, 2010

BP Slapped With $5.2 Million Fine for False Reports

Is it fair to compare BP to Toyota? Maybe. In some respects they’re becoming rather similar. The Department of the Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) has fined BP PLC’s U.S. unit $5.2 million for filing “false, inaccurate, or misleading” reports for energy production on Southern Ute Indian Tribal lands in southwestern Colorado, wrote the Wall Street Journal.

In a written statement, the Interior Department said the case is not related to the BP oil spill in the Gulf of Mexico.

The department contends tribal auditors discovered that BP incorrectly reported royalty rates and prices for those purposes. The firm also claimed well production on leases “other than those to which the production is attributable.”

“It is simply unacceptable for companies to repeatedly misreport production, particularly when it interferes with the auditing process,” said BOEM Director Michael R. Bromwich. “We are committed to collecting every dollar due from energy production that occurs on Federal and American Indian lands, and accurate reporting is crucial to that effort,” quoted YubaNet.com.

The government added that BPconcurred with the auditors’ findings and “repeatedly promised to correct the problems,” which they blamed on errors in their automated files. But subsequent reviews by the department turned up additional problems, “leading us to conclude that BP’s continued submission of erroneous reports was knowing or willful,” Mr. Bromwich said, quoted WSJ.

Bromwich praised the Southern Ute Tribal auditors who revealed the errors during an audit and which the Tribe first brought to BP’s attention August 2, 2007. The audit was done as part of a cooperative agreement with BOEM’s Minerals Revenue Management program (MRM). The Tribe also documented ongoing errors.

Bromwich’s sentiments were affirmed by Southern Ute Tribal Chairman Matthew J. Box. “The Southern Ute Indian Tribe and the MRM have had a highly successful 25-year-long audit relationship,” Box said. “Over the years, this relationship has yielded significant benefits for the Tribal membership. One of the more important aspects of the audit program is to encourage oil and gas companies to accurately report the Tribe’s royalties to the MRM.” Box added, “I appreciate the MRM’s recognition of its trust responsibility to the Tribe by assessing civil penalties when other means have failed to attain correct and accurate reporting,” quoted YubaNet.com.

BP has the right to challenge the civil penalty assessment through a Department of Interior hearing procedure.

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