World's Energy

02 May 2007 - The International Herald Tribune - John Browne, an aggressive but mannerly British magnate who transformed BP into one of the most successful global companies, resigned abruptly Tuesday after losing a court battle with a London tabloid over disclosure of his sexual relationship with a younger man.
In one of the most humiliating come-downs in British business life, Browne acknowledged offering an "untruthful account" to a court about the circumstances under which he had met the man, a former companion. His fall seemed all the more magnified after his rise to the top at BP, the company where he had worked since he was a university student. He had already been forced to announce an early retirement after the energy company suffered problems relating to its safety record, including an accident at its Texas refinery that killed 15 workers.
Now he said he would step down immediately, three months earlier than planned, in a resignation that could cost him more than $30 million in retirement and stock benefits. Perhaps just as damaging, he is haunted by personal exposure in newspapers worldwide, a highflying career brought low by a spat with a local newspaper, The Mail on Sunday.
At the height of his powers, Browne had been knighted in 1998 and Prime Minister Tony Blair made him a life peer in 2001, a token of the close relationship between the company and the prime minister.
BP called his resignation a "tragedy."
The announcement stunned Britain's business world, despite rumors for months that Browne's relationship with a former male companion was under scrutiny in the courts. In its online edition Tuesday, The Daily Mail newspaper said it had fought against an injunction preventing it from publishing an article that included accusations that Browne misused corporate funds to help support his former companion. The dapper Browne, 59, had stood on the global stage as an exemplar of business success. He had already said he would resign 18 months ahead of schedule — in July — even as he fought to shield his reputation, built on transforming BP from a sleepy second-tier European oil company into one of the biggest in the world.
A statement by Browne announcing his departure was framed in almost elegiac tones. "For the past 41 years of my career at BP I have kept my private life separate from my business life," Browne said. "I have always regarded my sexuality as a personal matter, to be kept private." "It is a matter of personal disappointment that a newspaper group has now decided that allegations about my personal life should be made public," he said. It remained unclear whether Browne's departure would draw a line under his woes or merely form the prelude to further legal action related to what Peter Wright, the editor of The Mail on Sunday, called "lies" in the legal case that led to his ouster.
The Daily Mail said on its Web site: "Browne, a close friend of Tony Blair, may now face a charge of perjury, and possibly jail." In his statement, Browne said: "Legal documents have been disclosed today containing allegations about me and my personal life. I wish to acknowledge that I did formerly have a four-year relationship with Jeff Chevalier. He has made these allegations about me and our relationship to Associated Newspapers, publishers of The Daily Mail, Mail on Sunday and Evening Standard." He did not give further details about the identity of Chevalier.
"The allegations are full of misleading and erroneous claims," Browne said. "I deny categorically any allegations of improper conduct relating to BP. The company has confirmed today that it has found no such wrongdoing."
But he acknowledged that he had made false statements to the court during the hearings involving The Daily Mail. "My initial witness statements, however, contained an untruthful account about how I first met Jeff," Browne said. "This account, prompted by my embarrassment and shock at the revelations, is a matter of deep regret. It was retracted and corrected. I have apologized unreservedly, and do so again today."
Last January, when Browne first disclosed that he would resign early, some oil industry analysts said they believed the gesture was meant to rebuild investor confidence after the company suffered a series of setbacks in the United States. An explosion at the Texas City refinery killed 15 people, and poor maintenance of pipelines from the Prudhoe Bay, a field producing 400,000 barrels a day in Alaska, caused a partial shutdown of the facility. Even then, his early departure was a fall from grace. Browne had set the tone for the industry's megamergers in the 1990s by buying Amoco and Arco, which made BP one of the biggest oil companies in America.
Exxon then followed with the acquisition of Mobil, and Chevron bought Texaco. Browne was credited with starting a trend: instead of simply sticking to exploring for oil in the fields, he would buy up the shares of rivals on Wall Street. Browne was the quickest to expand into Russia after the collapse of communism by buying into TNK. Browne also led a rebranding of BP that included the slogan "Beyond Petroleum." With this campaign, he was the first to declare that oil corporations needed to play some role in fighting global warming. During his more than a decade as chief executive, the company's share price rose 250 percent, BP said in January, despite worries in recent years about dwindling energy production. But some analysts said the transformation had come at a cost. The costs for cleaning up the spill in Alaska and for improving safety around the company's operations have taken a toll on financial performance. Last week, BP reported a 17 percent drop in first-quarter earnings, the weakest report card of the major oil companies.
BP shares rose Tuesday by a modest 0.1 percent on the London Stock Exchange to 556 pence. The company's share price was unchanged on the New York stock exchange, closing at $67.32. BP said Browne would be replaced immediately by Tony Hayward, who had been expected to take over in July. The company also exonerated Browne of suspected misdeeds relating to the use of BP facilities by his former companion. A company statement said: "BP chairman Peter Sutherland said that Lord Browne had informed the company of allegations relating to the limited use by Jeff Chevalier of BP computer and staff resources." The statement continued: " Sutherland said: "At John's explicit request, the board instigated a review of the evidence. That review concluded that the allegations of misuse of company assets and resources were unfounded or insubstantive." "John has made it clear to the BP board that he has decided to step down with immediate effect because he does not want this public focus on his private life to detract from the paramount task of running the BP group," the company said. "The board of BP has accepted John's resignation with the deepest regret. For a chief executive who has made such an enormous contribution to this great company, it is a tragedy that he should be compelled by his sense of honor to resign in these painful circumstances." BP said Browne's resignation would mean he would lose a bonus worth over ?3.5 million, or $7 million, and would forfeit inclusion in a long-term performance share plan for 2007-9 worth up to ?12 million, or $24 million.
On its Web site Tuesday, The Daily Mail said: "Lord Browne's problems started in January when Chevalier tried to sell his story to the newspapers. The BP chief, 59, obtained an interim injunction stopping publication. But in his witness statement he said he had met Chevalier by chance while exercising in Battersea Park." "Lord Browne later admitted that was false and had to apologize," the newspaper said.